Caixin
Nov 14, 2018 08:04 PM
BUSINESS & TECH

Could Bytedance Be China’s First Global Internet Success Story?

Bytedance’s headquarters in Beijing on Aug. 6. Photo: IC
Bytedance’s headquarters in Beijing on Aug. 6. Photo: IC

* Bytedance’s app TikTok was the fourth most downloaded app in both the Apple and Google app stores in the first three quarters of 2018

* TikTok has been a hit in Japan, for example, where it had more than 10 million monthly users by early this year

(Beijing) — Chinese internet companies are known for taking ideas from the West, adapting them to the local context and developing gigantic businesses.

But when it comes to overseas expansion, China’s internet giants have struggled to win over significant numbers of users outside their home market. Even Tencent Holdings Ltd., creator of the WeChat social media platform used daily by hundreds of millions of Chinese people, has seen its efforts to lure Indian and Southeast Asian users go largely in vain.

But there is one exception — internet upstart ByteDance Technology Co. Ltd., which is said to be around $75 billion after its latest round of fundraising, making it the world’s most valuable startup.

The success of the six-year-old Beijing-based company is largely based on its international smash hit app TikTok, which launched almost simultaneously in 2016 with its local version Douyin.

Douyin has stood out among China’s many short-video apps thanks to its vertical video format and automatic scrolling function, as well as its popular built-in special effects, which include a “beautifying” filter. Its fast-learning algorithm which quickly figures out what kinds of videos a user likes and then offers them a seemingly endless supply helps to get users hooked.

In the first three quarters of 2018, TikTok was the fourth most downloaded app in both Apple and Google’s app stores, behind only social-media goliath Facebook Inc. and two apps the U.S. company also runs — Facebook Messenger and WhatsApp Messenger — according to App Annie, a market data analytics company.

TikTok firstly gained success among teenagers in Asia. In Japan, for example, it had more than 10 million monthly users — nearly a one-tenth of the country’s population — by early this year.

After gaining traction in neighboring markets, the company looked to break into Western markets, noticeably the U.S., the home turf of Facebook.

Late last year, Bytedance announced that it would pay $800 million to $1 billion to acquire the teen-focused U.S. social app Musical.ly. In August, the company said that it would merge Musical.ly into TikTok as a single platform for international users.

As of April, TikTok and Musical.ly combined had over 100 million monthly active users, according to Zhang Nan, a Bytedance executive. By contrast, its Chinese version Douyin has amassed around 200 million active users.

Zhang Yiming, founder and CEO of Bytedance, has said that “internationalization” will be the company’s major strategy in the years to come as it faces increasing scrutiny at home. Bytedance has fallen afoul of regulators for failing to screen content on its various platforms, including news aggregator Toutiao.

This global push has drawn the attention of U.S. firms. Earlier this month, Facebook announced the release of a new short-video app — Lasso — to counter the challenge from TikTok.

Contact reporter Mo Yelin (yelinmo@caixin.com)

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