Unless your social circle includes teenagers, it was possibly only in the last month or two that the social media platform TikTok appeared on your radar. While current global headlines continue to be flooded with news surrounding TikTok, what further makes this video sharing app special is its China-based parent company, ByteDance. Not only does ByteDance have a logo that few might recognise, but, surprisingly to some, it currently holds the title of the world’s most valuable start-up – having been recently valued at up to a staggering $140 billion. The king of the elusive Unicorns.
So, what exactly is ByteDance and how did this Beijing internet technology company come to hold such a prestigious crown?
Founded in March 2012 by software engineer Zhang Yiming in a small private residence (as seems to be the norm amongst successful start-ups), the signs of success were there from the beginning. Just a few months after launching its first product – a news aggregator app called Toutiao – the company was already boasting 1 million daily active users. ByteDance’s popularity was spurred by a combination of the successful technology behind Toutiao, as well as international investors seeking the next big Chinese investment following Alibaba’s 2014 record setting IPO in the US. This ultimately led to ByteDance’s first significant capital raise, spearheaded by the well-known VC firm Sequoia Capital, which laid the foundations for their rapid expansion. A short eight years later, having raised a cool $7.5 billion in funding (including from the likes of SoftBank) and multiple technology acquisitions, ByteDance now boasts a portfolio of over 20 apps which are enjoyed by their 1 billion active monthly users and is realistically looking to cement itself amongst the giants of “Big Tech”.
The most well-known of ByteDance’s apps is, of course, the latest social media craze – TikTok. TikTok is a video-sharing social media platform where brevity is the name of the game. Users create video clips that are less than 60 seconds long and generally focus on music, dance, and comedy skits. What differentiates TikTok from the traditional social networks – the likes of Instagram, Facebook and Twitter – is that a significant portion of user interaction is with content that is delivered based on powerful artificial intelligence-driven (AI) recommendation algorithms. This is in contrast with content delivery being limited to the creators that users actively choose to follow. TikTok goes one step further by recommending content for users to create and not just consume, thus further increasing engagement by motivating creators to upload potentially viral videos that can reach a significantly larger audience. Short videos coupled with a powerful AI recommendation algorithm is the driving force behind TikTok’s worldwide popularity explosion, with the result being that users are always engaging with fresh content. The numbers do not lie: usage statistics for TikTok indicate an average of 52 minutes of user engagement per day across an estimated 800 million active monthly users.
Aside from TikTok, ByteDance also develops and runs a host of other apps spanning the full spectrum of the internet ecosystem. This includes video sharing, music streaming, mobile gaming, messaging, news, search, e-commerce, productivity, office collaboration and education. Much of the company’s success lies behind its personalisation and recommendation algorithms. More than creating the platforms for users to engage on, ByteDance is ultimately a powerful artificial intelligence engine that increasingly aids in content discovery and feeds users exactly what they want to see. This is the key ingredient that ByteDance has leveraged in most of their products as they attempt to lure users and capture markets across all corners of the internet.
Unlike some of the other big Chinese tech companies, ByteDance has actively focussed on expanding in the international market outside of China (notably in the US and India). Aside from opening offices and hiring staff in major international cities, ByteDance has also taken the unique approach of running a separate but effectively mirror version of TikTok in both the Chinese and international markets so as to presumably protect their international users from potential Chinese government censorship.
However, even with all that ByteDance has going for it, the future success of its global expansion has now been marred with significant ongoing political hurdles. The biggest elephant in the room is the potential forced sale of TikTok’s US operations to a suitable buyer following President Trump’s threat of a total ban. This comes on the back of President Trump and his fellow politicians claiming TikTok presents a threat to US national security, as well as accusing ByteDance of unsavoury data collection policies. However, the company’s woes do not stop there. TikTok and various other ByteDance apps have recently been blocked in India – one of their fastest growing markets – following political clashes between India and China. Given the approach ByteDance has previously taken to protect its international growth from possible Chinese censorship, it is somewhat ironic that it currently finds itself in this position. Adding fuel to the fire is the recent resignation of the newly appointed TikTok CEO – ex Disney executive – Kevin Mayer, who cited the changing landscape of the global role he signed up for as the reason for his stepping down.
So, while it is clear that ByteDance has the products and audience to continue propelling it directly into the ring of the global Big Tech players, what exactly the current political challenges it is facing mean for its future growth is yet to be seen. Only time will tell whether this king retains its crown.