Beijing ByteDance Technology Co. has moved to expand its footprint in the United States in addition to its huge presence in China by purchasing popular karaoke app Musical.ly for nearly $800 million, according to a new report from Bloomberg, citing anonymous sources privy to the matter. ByteDance also confirmed the news of its acquisition of the teen social video app, the report indicates, although the Chinese company fell short of making mention of the deal's amount. ByteDance is the parent company of Jinri Toutiao, a startup company based in Beijing, China which provides news and information content.
As part of the acquisition, ByteDance will be incorporating Musical.ly into Jinri Toutiao's business, including the karaoke app's 100 million users. Musical.ly has gained much traction among American teenagers last year, increasing its user base consisting of lip-syncing video performers. The app became an overnight sensation in particular because of its teen-focused feature, which allows users to share a 15-second long video showing their lip-syncing or dance performance with their friends. While Musical.ly is a video app basically, it also borders on being a social media app since it engages other people who would like to watch short video clips of ordinary people dancing and lip-syncing to the latest music hits.
Bytedance Technology, on the other hand, is currently valued at approximately $20 billion following the latest funding round for the company. Its core business is advertising, a business model that has been adopted by Jinri Toutiao as well, though with a slight modification. The startup company serves ads to its nearly 120 million users in China through its artificial intelligence-powered news aggregator. Content aggregation was also among Jinri Toutiao's interests in recent times: the startup tried to acquire Reddit in 2016. However, Reddit rejected the Chinese startup's offer due to several factors, which reportedly included Jinri Toutiao's proposal to offer its private stock as part of the deal, as well as Reddit's uncertainty over the startup's value and revenue at the time the offer was made. Had the acquisition bid succeeded, Jinri Toutiao would have tremendously expanded its presence in the West. It now remains to be seen how Bytedance's successful purchase of Musical.ly can help grow its business outside of its home country.