First, over the weekend we learned that Twitter is supposedly interested in acquiring TikTok. That comes a week after Microsoft said it would continue to pursue a deal with the popular video app used mostly for posting 15-second dance clips. Twitter might be a more obvious fit, though the company doesn't really have the best track record with video apps--especially when it comes to monetizing them. (Remember Vine? Exactly.)
Also, Twitter's market cap is roughly $30 billion, on a good day. TikTok is expected to fetch somewhere in that same neighborhood, meaning it's hard to see a scenario where it makes sense financially for Twitter to buy it. Then again, Twitter's stock rose five percent on Monday on the news that it had had preliminary talks with TikTok, so apparently the stock market thinks these talks might be worth something.
There is almost no chance, however, that Twitter could outbid Microsoft, whose market cap is north of $1.5 trillion. The only advantage Twitter has in such a negotiation is that it's far less likely to spur antitrust concerns.
Now, we learn that TikTok is preparing to file a lawsuit against the Trump Administration over the executive order signed by the president that would ban the social media app in the U.S. effective September 20 if it hasn't been acquired by an American company by that point.
You can imagine TikTok, which has over 100 million users in the U.S., would be a bit upset about that move, and the company made as much clear in a blog post:
We are shocked by the recent Executive Order, which was issued without any due process. For nearly a year, we have sought to engage with the US government in good faith to provide a constructive solution to the concerns that have been expressed. What we encountered instead was that the Administration paid no attention to facts, dictated terms of an agreement without going through standard legal processes, and tried to insert itself into negotiations between private businesses.
That sounds about right. It's no surprise then, that the company is considering its options. According to NPR, those options include a lawsuit that will "argue that President Trump's far-reaching action is unconstitutional because it failed to give the company a chance to respond. It also alleges that the administration's national security justification for the order is baseless."
By the way, the most fascinating part of all of this isn't the politics, or even the kickback demanded by the president. The most fascinating thing to me is why TikTok has become such a valuable acquisition in the first place.
And that part isn't complicated at all. The thing that makes TikTok so desirable is that it has the most valuable of assets: a large and engaged audience. Plus, it has perfected an algorithm that reinforces that engagement. Though the companies pursuing TikTok may value that audience for different reasons, make no mistake, they're after the audience, not the dance videos.
That's actually a powerful lesson for every business. Hopefully, you never find yourself at the other end of a tweet-induced fire sale, but that doesn't mean you shouldn't do everything you can to build an audience and find ways to keep it engaged. That may just be your most valuable asset after all.