China's Toutiao buys teens social video app Musical.ly in latest expansion

Musically app Musically app acquired

In 2016, it rolled out a live-streaming app called Live.ly.

Digital lip-syncing aimed at teens is officially a big, big business: Chinese tech company Bytedance has announced it plans to "merge" with - acquire - Musical.ly, a popular lip-synching app launched in China in 2013.

The acquisition represents the biggest venture overseas thus far for a Chinese startup valued at US$20 billion that's already spawned one of the world's largest news services.

Toutiao's purchase of Flipagram, Musical.ly's primary rival in the self-shot-video-accompanied-by-music market, gives Bytedance dominance in soundtracks to personal videos. Bytedance proclaimed the contract Friday devoid of mentioning a price tag. The app has over 60 million monthly active users and is one of the first Chinese social media apps to gain popularity in Europe and North America.

Musical.ly, founded in Shanghai by Louis Yang and Alex Zhu in 2014, became very popular among United States teens in 2016 and has since expanded beyond its flagship app for creating and sharing personal music videos. The start-up's smack contracts with media firms including Viacom Inc. Bloomberg has reported it is also looking to make interactive content for a younger audience.

Bytedance, meanwhile, is best known for the Toutiao app, which uses artificial intelligence to create customized news feeds for its users. The app's cofounders, Alex Zhu and Louis Yang, will join Bytedance and will continue running Musical.ly as an independent platform.

Its parent company was valued at more than US$20 billion, a person familiar with the matter said, on par with Elon Musk's SpaceX. Started by Zhang Yiming, Toutiao is on track to make about United States dollars 2.5 billion in revenue this year, largely from advertising. It's also worth noting is that Cheetah Mobile was an early investor in Musical.ly, in which Cheetah held a 17.4% stake of the end of 2016.

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