Analysis: Why ByteDance Matters More Than DeepSeek in the Global AI Race

1. In January 2025, Chinese artificial intelligence startup DeepSeek released its self-developed R1 model, causing significant anxiety in global markets about the potential challenge to U.S. dominance in AI technology. The Nasdaq experienced a sharp downturn, with Nvidia’s stock plunging nearly 17% and almost $600 billion in market value lost in a single day, as investors feared DeepSeek’s cost-efficient model might undermine demand for advanced AI infrastructure and directly threaten the revenues of U.S. tech firms like Nvidia. [para. 1][para. 2]

2. Although DeepSeek continued to release updated versions of its models, none matched the disruptive impact of R1. Nvidia's stock has since rebounded, rising approximately 80% from its January 2025 low, while DeepSeek faded from immediate attention. The firm's roadmap indicated that its next major release, the V4 model, was scheduled for February, with expectations for significant programming capabilities that could potentially rival leading closed-source models like Claude and the GPT series. Whether this new release will be as impactful remains uncertain. [para. 3][para. 4]

3. Global AI leaders do not consider DeepSeek an existential threat, though they recognize potential competition from China. Google DeepMind CEO Demis Hassabis explicitly downplayed DeepSeek's immediate impact, suggesting the advantages were overstated and expressing skepticism about Chinese firms' ability to “innovate beyond the frontier,” pointing out that about 90% of foundational AI technologies were developed by Google itself. However, Hassabis noted that ByteDance could be as little as six months behind the global AI frontier, highlighting its rapid progress. [para. 5][para. 6][para. 7][para. 8]

4. Hassabis's perspectives are valued due to his landmark achievements, such as DeepMind’s AlphaGo and AlphaFold, with the latter solving the protein folding problem and winning the 2024 Nobel Prize in Chemistry. His strategic view is rooted in both technical understanding and the successful application of AI, allowing him to focus on long-term sector evolution rather than temporary disruptions. [para. 9][para. 10][para. 11]

5. While DeepSeek and other Chinese firms have progressed in large language model (LLM) training and algorithmic optimization, Hassabis views these as instances of technological catch-up, not true innovation. In contrast, ByteDance stands out for its sophisticated AI strategy, integrating technical competitiveness with successful business models, user-focused ecosystem development, and deep innovation across content generation and recommendation systems, making it a potentially transformative force in the industry. [para. 12][para. 13]

6. ByteDance’s AI initiatives are grounded in a deep understanding of user needs and massive data/application advantages, elevating its capacity for impactful AI ecosystem creation. Unlike simply boosting computational parameters, the company emphasizes solving real-world problems, in line with Hassabis's priority for AI’s ultimate social and economic value. [para. 14][para. 15]

7. ByteDance’s Doubao, China’s foremost AI application, has surpassed DeepSeek in adoption, boasting 172 million monthly active users by September 2025 and over 100 million daily active users by December. Its daily token usage exceeded 50 trillion, second only to OpenAI and Google Cloud, positioning Doubao as a leader in scaling AI use among hundreds of millions of Chinese users. [para. 16][para. 17][para. 18][para. 19]

8. ByteDance’s ecosystem compares favorably to global peers like OpenAI, Anthropic, and Google, with super-apps Douyin, Toutiao, and Doubao each claiming over 100 million daily active users. ByteDance’s robust data resources and scenario depth give it platform advantages similar to Google’s in the West, and founder Wu Yonghui’s AI expertise further strengthens ByteDance’s foundational research and application capabilities as it integrates its AI teams and launches long-term AGI projects. [para. 20][para. 21][para. 22][para. 23][para. 24][para. 25][para. 26]

9. Despite rapid advances, experts note that while Chinese companies like ByteDance are catching up, surpassing U.S. firms in AI innovation remains a major challenge. China’s strength lies in rapid scaling and application delivery once a path is clear, but U.S. firms continue pushing the boundaries through exploratory research and risk-taking. ByteDance’s balanced strength across enterprise, consumer, and research fronts offers a solid foundation, but whether it can achieve real breakthroughs depends on continued long-term investment and innovation. [para. 27][para. 28]

10. The commentary was contributed by Yu Dawei, an independent technology writer, reflecting his perspectives rather than those of the publication Caixin. [para. 29][para. 30][para. 31]