Caixin Weekly | Special Report: ByteDance's Advancements (AI Translation)

财新周刊｜特别报道：字节进击

[para. 1] At the beginning of 2025, ByteDance is expanding rapidly in China and the United States, confronting a severe situation in nearly 13 years. In the U.S., TikTok faced a temporary shutdown, which ended upon President Donald Trump's intervention. He allowed TikTok to operate on the condition that 50% of its shares be held by American owners within 75 days. This move was part of a broader geopolitical maneuver that included threats of tariffs to coerce cooperation from China.

[para. 1][para. 2] In China, ByteDance continues to excel in internet verticals like micro-short dramas and AI applications. Notably, apps like Hongguo Short Drama and Tomato Novel have surged in user growth and rank highly on QuestMobile's list. Despite this, ByteDance manages operations using a startup-style culture where new products emerge from bottom-up innovation. A flat hierarchical structure aids in the swift implementation of innovative projects.

[para. 2][para. 4] In consumer applications such as micro-short dramas, ByteDance leads despite being a late entrant. Hongguo Short Drama and Tomato Novel boast significant user numbers, indicating their dominance in their respective marketplaces. For AI assistants, Doubao has achieved remarkable growth, leaving competitors like Baidu lagging. TikTok, with 700 million monthly active users, propels these applications into fast adoption.

[para. 5] ByteDance's expansion struggles include challenges in mid- to long-form video platforms. Its agile decision-making and feedback mechanisms are not optimized for these products, as they require long-term development without relying heavily on A/B testing. Despite this, ByteDance remains highly valuable, with revenues surpassing $140 billion in 2024, spurred primarily by its overseas markets and AI developments.

[para. 6] Regulatory scrutiny is intensifying, especially concerning content rules and platform algorithms. ByteDance has to align with new regulatory expectations to handle the increasing risks associated with content distribution in China. The acquisition of new app licenses and regulatory compliance are becoming formidable challenges for the company.

[para. 8] ByteDance utilizes free and price-reduction strategies to gather user bases quickly in content and AI cloud services. Platforms such as Tomato Novel implemented free-to-use models that have reshaped the market dynamics by facilitating large user influxes. In 2024, these apps dominated reading times, indicating the success of ByteDance’s alternative content monetization methods, compared to traditional subscription-driven models.

[para. 9][para. 10] The competitive landscape extends to cloud services where ByteDance deploys aggressive pricing strategies with its Doubao Large Model. This approach has led to an exponential increase in user activity within months, asserting ByteDance’s dominance in the AI cloud sector.

[para. 13] The success of ByteDance's applications partially lies in leveraging its traffic-rich ecosystem. Apps like Tomato Novel benefit from Douyin's vast network for user acquisition without substantial cost implications. Meanwhile, the overseas replication of its free model is being pursued, with applications like Melolo entering markets like Indonesia and the Philippines.

[para. 15][para. 17] However, the practice of offering free content has led to homogeneous material proliferation. The inclusion of AI technologies exacerbates these conditions, highlighting potential copyright issues within content platforms.

[para. 20][para. 24] ByteDance's foray into long-form video content faces difficulties. The company seeks to establish a dominant ecosystem by fostering collaborations or exclusive copyrighted content with partner platforms. This effort is analogous to its previous ventures in micro-short dramas.

Ultimately, ByteDance maintains a critical position within the digital market landscape, evidenced by its strategic diversification and innovation-driven approaches towards content creation and user engagement. Despite regulatory and market challenges, ByteDance continues to find expansive opportunities both domestically and overseas, asserting itself as a formidable player in the global digital content arena.