Forced TikTok US sale may turbocharge ByteDance’s Asia expansion, with S-E Asia to gain: analysts

[SINGAPORE] The forced sale of ByteDance’s TikTok in the United States was intended to curb the Chinese tech giant’s influence and standing in the global tech scene.

Yet, analysts who spoke to The Business Times believe that the reported US$14 billion deal – which is a little more than 25 per cent of ByteDance’s projected 2025 profits of US$50 billion – will give the tech giant an opportunity to accelerate its global expansion, particularly in Asia.

On Jan 23, TikTok announced a joint venture by an Oracle-led consortium that will run its US operations. The deal is expected to dilute ByteDance’s stake in the entity to just 19.9 per cent.

ByteDance did not respond to queries from BT.

Analysts told BT that the reduced stake is expected to translate into a smaller operating revenue from US operations.

Tim Lin, co-founder and partner at research house The Digital Infrastructure Collective Asia (TDICA), noted that the US accounts for at least 40 per cent of the video platform’s revenue.

Professor Lawrence Loh from the National University of Singapore Business School’s department of strategy and policy, similarly noted that the US market “has been a most critical revenue bastion for TikTok over the years”.

However, analysts said the reduced stake does not signal that ByteDance is exiting from the US market. Instead, they believe this is a move that could push the tech giant to strengthen its foothold in Asia.

To do so, ByteDance may have to adopt a “US-plus-world” strategy to hedge its position in the US, said Prof Loh. This means maintaining a presence in the US while scaling up in other regions.

Lin concurred, noting that the reduced US revenue will force ByteDance to double down on other regions such as South-east Asia.

Prof Loh does not rule out a potential lifting of the TikTok ban in India, following the restructuring of the company.

Lin added that it would “make sense” for TikTok to focus on markets closer to home and where there exists a large mobile-first population who may be more inclined to use the social media platform.

That said, Asia is not the sole bet for analysts; other emerging markets have been identified as potential beneficiaries of the US divestment.

“Emerging regions like Africa, Latin America and the Middle East may present key market possibilities which may be pursued in tandem with China’s broader global investment intent,” said Prof Loh.

Lin noted that regions where ByteDance can exert greater operational control with fewer geopolitical frictions, such as Europe, might be next in line for more expansion plans.

Driven by technological advances

Analysts predict that the expansion in Asia will be underpinned by technological advances.

“ByteDance is an extremely data-driven company,” said Li Jianggan, chief executive officer at research firm Momentum Works. “Its profits have been used in areas where the return on investment is the highest.”

One potential avenue where the money might flow is in artificial intelligence (AI) capabilities. Analysts believe the additional cash will be used to scale up deployment of the technology in ByteDance’s TikTok and Chinese short-video platform Douyin.

TDICA’s Lin highlighted that investment in compute infrastructure, AI models and chips is “strategically critical”.

Another avenue where the cash might be deployed is in e-commerce and payments.

Said Li: “We have seen a lot of investment in growing its e-commerce business in China and across the globe… Any cash generated from overseas transactions will likely enter the same calculations.”

Prof Loh agreed, noting that e-commerce – which represents a key revenue generator for many online platforms – can be “beefed up” to challenge major players such as Alibaba and Amazon.

To further bolster its platform offerings, analysts are not ruling out more mergers by the tech giant.

“Most significantly, cash can be used for mergers and acquisitions to jump-start capability development or product diversification in areas such as content and gaming which will have synergies with existing products,” said Prof Loh.

A new world order

The TikTok sale sets a precedent like no other: It is the first high-profile instance of a Chinese tech platform agreeing to cede control of its foreign subsidiary business under regulatory pressure, TDICA noted.

While the divestment brought about significant monetary gains for ByteDance, it provides a learning opportunity for companies with plans to expand into the US.

The move comes amid a broader recalibration of global tech ownership. Meta’s US$2.5 billion acquisition of Singapore-based but Chinese-founded AI startup Manus – a deal under review by Chinese authorities – highlights how geopolitical considerations are increasingly shaping control over digital assets.

Prof Loh noted that the TikTok saga is a great lesson for Chinese tech firms in the uncertain US business setting.

“In fact, this applies to any foreign firms (in the US),” he added.

Lin suggested that it would make sense for companies looking to operate or expand within the US to consider conducting business in partnership with local firms and investors, to mitigate regulatory risk.

Prof Loh added that Chinese tech firms can pre-emptively reduce their reliance on the US market.

“Any other Chinese tech firm operating (in the US) can be next,” he warned.