When we think of TikTok, we often associate it with its vast popularity and the countless viral videos that have captivated us. But have you ever wondered who really owns this global phenomenon? In this article, we delve into the complex corporate structure of ByteDance, the parent company of TikTok, and explore its ownership composition.
A Look Inside ByteDance’s Corporate Structure
ByteDance, like many Chinese companies seeking international investors, utilizes a variable interest entity (VIE) structure. This structure involves incorporating an umbrella entity in the Cayman Islands. TikTok and its subsidiaries, based in Cayman, fall under one side, while Douyin and its mainland-based subsidiaries form the other side.
It’s important to note that ByteDance is a private company, so its ownership composition and structure are not subject to the same disclosure requirements as publicly traded companies. However, by compiling data from various sources such as Crunchbase, Chinese media reports, government submissions, and interviews, we can gain some insight into ByteDance’s ownership.
Who Holds the Reins?
ByteDance has been successful in attracting over $9 billion from more than 30 investors through various funding rounds. Two-thirds of these investors are non-Chinese, with the majority coming from the United States, as well as Europe and Latin America. Some notable investors include Sequoia Capital, General Atlantic, and K3.
Although the composition of the company’s board provides an indication of key investors, it’s important to note that some information may be outdated. While certain individuals like William E. Ford, Arthur Dantchik, Philippe Laffont, and Neil Shen were listed as board members, it seems that their positions may have changed.
The Ownership Landscape
As of November 2021, it was reported that 60% of ByteDance shares were owned by global investors, 20% by employees, and another 20% by its founders Zhang and Liang. However, due to recent restructuring and Zhang stepping back from the company, the extent to which this division remains accurate is uncertain.
What is clear, however, is that American investors have a significant stake in TikTok’s success. This becomes apparent when we consider the financial implications for these investors in the face of further damage to TikTok, which operated at a loss in 2022.
Beijing’s Involvement and the Power Dynamics
The Chinese government has a 1% “golden share” stake in ByteDance’s China-based subsidiary, Beijing Douyin Information Service Co., Ltd. Through this share, the government exercises influence over business strategy, investment plans, mergers and acquisitions, and profit allocation. However, the Chinese government’s involvement does not extend to ownership or board seats in the parent company.
The existence and operation of golden shares have attracted attention both in China and abroad. While these shares provide insight and a seat at the table for the government, they do not necessarily equate to control over the company. The influence that Party cells exert on firms’ decisions remains a mystery.
Uncertainty and Future Clarity
The complexity of ByteDance’s ownership structure leaves much room for uncertainty. The Chinese government’s multiple logics for involvement, whether content-oriented or strategic, adds to the opacity surrounding their true influence.
An initial public offering (IPO) for ByteDance has been a topic of speculation for some time. Zhang Yiming’s recent pledge of a 99% equity stake has once again sparked rumors. Should an IPO occur, it would undoubtedly shed more light on ByteDance’s ownership.
For now, TikTok continues to thrive as a global social media platform. While its roots may lie in China, the significant presence of American and global investors underscores their vested interest in TikTok’s ongoing success.
*Note: The above information is based on various sources, including Crunchbase and official submissions to government bodies.