Its apps have threatened the dominance of Facebook and Instagram.
It has even been touted as a rival to news sites such as Buzzfeed.
ByteDance is arguably one of the biggest app companies in the world.
Valued at over $100 billion dollars, ByteDance is also one of the most valuable tech start-ups.
It was only in recent years when the company made headlines for its apps
such as Toutiao, and its most popular product TikTok.
But now the company is finding itself in the crosshairs of Washington
amid rising geopolitical tensions between the U.S. and China.
Chinese tech companies have been expanding globally in recent years and ByteDance is no exception.
However, its path to prominence has been unique, considering the Chinese behemoth was only
founded in 2012 by tech entrepreneur Zhang Yiming, who was then 29.
Casting himself as a tech maverick, Zhang launched ByteDance in 2012 without taking
a single cent from the Chinese trinity of Baidu, Alibaba and Tencent,
while becoming embroiled in lawsuits against his domestic rivals in the process.
Its first of many apps, Neihan Duanzi, was a platform for jokes in the form of memes
and short videos, boasting 30 million users at one point.
However, its flagship app was Toutiao, an algorithm-based news aggregator app powered
by artificial intelligence.
By using machine learning, the app generates a personalized content feed catered to each user.
Barely one year after its founding, Zhang, who was a former Microsoft employee,
trained his sights on the global stage to compete with the likes of Google and Facebook.
Douyin, an app tailored to short videos typically lasting for 15 seconds,
followed four years later, capturing the domestic Chinese market by storm.
If that sounds familiar, that’s because ByteDance managed to replicate its success
in Douyin with an international version: TikTok.
In 2017, ByteDance acquired Chinese social media network Musical.ly — which was wildly
popular in the U.S. and Europe — and merged the lip-sync app with Tiktok
allowing it to capture a sizeable international market.
By 2020, TikTok boasted 100 million users in the U.S. alone
with over 2 billion downloads worldwide.
Other notable apps in the ByteDance stable include Helo, a social-media app catered to
the Indian market, and BaBe, a news aggregator app in Indonesia.
Together, these apps generated about $2.9 billion in profits in 2019
with the bulk of its revenue coming from advertisements.
But why are ByteDance’s apps so popular?
For one, the company’s strength lies in artificial intelligence.
From video streaming apps to news services, ByteDance leverages on artificial intelligence
to draw users to its apps and get them hooked.
During the 2016 Olympics, ByteDance co-created an AI writing bot that wrote hundreds of
short articles for Toutiao.
One such article, which had 50,000 views, was published just two minutes after an event had ended.
The bot, which has more than 150,000 followers on social media,
has since written over 600,000 articles.
It is the same AI that powers TikTok, tapping on information such as location data
and viewing habits to create personalized feeds that are addictive.
In 2019, TikTok was the 6th most actively used app worldwide, with its users spending
68 billion hours on the platform.
As the company’s fortune rose, so did the scrutiny of its products, amid growing concerns
about its Chinese ownership and the privacy of its users’ data.
In August, U.S. President Donald Trump issued executive orders requiring TikTok to
shut down in the U.S. or find new owners within 90 days, citing national security concerns.
Despite attempts by TikTok to localize as it expanded, such as hiring more senior American
executives and tripling its U.S. employees from 300 to over 1,000 in a span of 12 months,
these moves came to naught.
But the misgivings with ByteDance go beyond TikTok or U.S.-China relations.
In November 2019, American teenager Feroza Aziz was locked out of her TikTok account
after she uploaded a video condemning the Chinese government’s treatment of
Uighur Muslims, an ethnic minority group in the country.
TikTok later issued a public apology and lifted the suspension of Aziz’s account
although it denied claims of censorship.
ByteDance has also been accused of deleting articles critical of Chinese authorities on
BaBe, its Indonesian news app.
Content deemed sensitive to the Chinese government, such as the Hong Kong protests,
and the Tianenmen Square incident, or the lack thereof, have cast a spotlight on
ByteDance’s alleged ties to the Chinese Communist Party.
This formed the basis of a U.S. National security investigation into TikTok and ByteDance, and
it’s part of a wider move to curtail reliance on Chinese technology and products.
The rise of Chinese juggernauts has largely mirrored China’s ascendancy on the world stage.
However, China’s fraught relations with other countries, including India, has largely
proven to be stumbling blocks for the international expansion of its homegrown tech firms
including ByteDance.
In June, India banned nearly 60 Chinese apps, including ByteDance’s Helo and TikTok after
bilateral relations soured over a border clash.
With Indian users forming about 30% of the 2 billion TikTok downloads, the potential
ban could potentially result in a loss of more than $6 billion for ByteDance.
Besides India, TikTok is also facing broader scrutiny in other places such as Turkey,
Australia, and the European Union.
Even as Bytedance’s woes pile up, the company remains defiant, vowing to continue charting
its plans for global expansion.
And it is no stranger to regulatory pressure.
In fact, its first app, Neihan Duanzi, was ordered by Chinese censors to shut down in 2018.
Toutiao was also temporarily removed from app stores in the same year,
but the company emerged relatively unscathed.
This time, ByteDance is caught between a rock and a hard place, with Chinese nationalists
branding the company as a ‘traitor’ for yielding to U.S. demands, while foreign governments
remain wary of its alleged ties to Beijing.
So what’s next for ByteDance?
The fate of its apps, especially TikTok, exemplifies the challenges ByteDance is facing
after years of growth.
Until it can reassure local regulators over concerns about user privacy, it is likely
that ByteDance’s plans for global expansion will take a backseat as the scrutiny intensifies.
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