What you should know about ByteDance, the company behind TikTok

Thanks to a recent clash with the Trump adminsitration, ByteDance has been thrust into the spotlight. If you haven’t heard of ByteDance, you will have definitely heard of its biggest app, TikTok (also known as Douyin in China), the viral short-video app taking over the world one smartphone at a time. TikTok is now the third most downloaded non-game app in the world, behind only WhatsApp and Facebook Messenger, and has been downloaded 1.57 billion times as of March 2020, with nearly half of those downloads in 2019 alone.

Yet despite TikTok’s virality and popularity, relatively little is known about the company behind it.

If you’re serious about marketing in China, we think it’s worth being familiar with ByteDance. In this post, we take a closer look at who Bytedance is, what you should know about them, and what might happen to TikTok in the US.

Who is ByteDance?

Bytedance is a Chinese multinational tech company that has enjoyed unprecedented success over the past few years. Founded by tech entrepreneur Zhang Yiming in a four-bedroom apartment in Beijing in 2012, the company is now reportedly worth over $100 billion, making it one of the world’s most valuable unicorns.

So why is so little known about it?

Yiming himself rarely gives interviews, few industry analysts have visited the company, and its workers can only speak to journalists if they have received prior permission. With the company’s global headcount expected to reach 100,000 this year, however, it’s understandable that information does get out occasionally.

This attempt to stay low-profile is perhaps to try to deflect the attention of regulators both in China and overseas. But ByteDance’s size, reach and opacity have been difficult for people to ignore, with questions recently being raised about where users’ data goes, what ByteDance’s content regulation policies are and how much influence the Chinese government has over its products like TikTok – not just in the US, but also countries like India and even Australia.

What should I know about ByteDance?

They’re not just TikTok

While TikTok is probably ByteDance’s best-known product, it is in fact a relatively recent addition to its repertoire.

One of its earliest and core products is Toutiao, or Jinri Toutiao, which literally translates to “Today’s Headlines”. Toutiao is an AI-powered news aggregator, which uses algorithms to curate news articles and videos based on users’ previous behaviour on the app. This high-level of personalisation makes the app highly addictive, with the average Toutiao user spending 74 minutes a day on it. It’s no wonder that ByteDance decided to replicate this algorithmic personalisation on its other products like Douyin and TikTok – and clearly that was a smart move.

ByteDance’s ecosystem isn’t limited to just Douyin/TikTok and Toutiao – they also own a myriad of other Chinese apps, such as video app Xigua Video, humour app Pipixia, photo app Qingyan and reading app Tomato Novel.

ByteDance also seems have its eyes set on the online education sector, having launched several new education apps in the past couple of years, including Gogokid, a one-to-one English tutoring platform connecting Chinese kids to foreign teachers; AiKID, a foreign teacher live-streaming platform; and Dali Ketang, which offers courses from primary school to high school.

Clearly ByteDance are not content to rest on their laurels. Could any of these eventually grow into the next TikTok?

They’re global

Douyin was launched in 2016 and was actually inspired by the Western short-video app Vine which never really took off, despite the fact that it was acquired by Twitter. Douyin, on the other hand, quickly became embedded in Chinese internet culture, becoming one of the fastest-growing apps in China. But Bytedance didn’t stop there – in 2017, Bytedance acquired social media start-up Musical.ly for an estimated US$ 1 billion to drive their global expansion. They merged Musical.ly with TikTok in 2018, after which TikTok was made available worldwide.

TikTok is not Bytedance’s only international foray, however. It also has a stake in Indian news app Dailyhunt, Indonesian news aggregator Babe, and Singaporean productivity suite Lark, among others.

ByteDance now has 230 offices across over 30 countries, with foreign employees making up 10% of the company’s talent pool in 2018. Yiming aims to increase that figure to 50% by 2021.

But it hasn’t all been smooth sailing. Its troubles in the US have been well publicised, with Trump calling for a ban on TikTok, citing threats to national security and users’ privacy. But Bytedance have also run into trouble in other countries – in India, for example, TikTok was temporarily shut down in April 2019 as a state ruling said it was spreading pornography. TikTok has now been permanently banned in India for the foreseeable future along with 48 other Chinese apps due to rising political tensions between those neighbouring countries. The UK government has also been investigating whether TikTok has deployed sufficient measures to protect children on the app.

As ByteDance attempts to navigate these bumps in the road, other Chinese tech companies are watching with great interest, and learning from its successes and failures. ByteDance’s global takeover has potential implications for other Chinese tech companies, who may try to follow suit if it can pave the way. On the other hand, there is a possibility of ByteDance being forced to return to China.

“Others might think twice before going abroad – and even put their overseas expansion plans on hold,” said David Dai, an analyst at Bernstein Research in Hong Kong.

So what’s going to happen to TikTok in the US?

The US government have long feared that American users’ data could potentially be transferred to China, and these fears are possibly not unfounded – but they are also not limited to ByteDance apps. Chinese law requires that technology companies support the government in cases of national security.

Earlier this year the president issued an executive order effectively banning the app’s use in the US, and said he would not allow the app to operate in the country unless it was owned by an American company.

Since than ByteDance has been in negotiations with several US companies. The current front runners are software multinational Oracle and retail corporation Walmart, with reports that the deal will give the two companies a combined 20% stake in a new entity, TikTok Global.

Where this will leave ByteDance, however, is unclear, with some reports saying ByteDance will continue to own the remaining 80%, and other reports saying they will not own any part of TikTok Global. ByteDance have said in a statement, however, that Yiming will be on TikTok Global’s board, along with four other American members.

In order to go ahead, though, the deal must be approved by both President Trump and the Chinese government, thanks to new laws recently introduced by Chinese regulators that govern the sale of certain kinds of technology to foreign buyers. Whether one or the other might throw a spanner in the works remains to be seen, though early signs indicate they will both sign off on the deal.

In the meantime, a federal judge in Washington has granted a preliminary injunction blocking the TikTok ban ordered by the Trump administration, arguing that denying access to TikTok would be the equivalent to “locking the doors to a public forum” only a few weeks before the presidential election.

Watch this space.