China’s most addictive news app Toutiao eyes world domination with AI feeds

Chinese news aggregator Toutiao sucks in daily active users for 74 minutes per day. Photo credit: Antonio Tajuelo.

Despite multibillion-dollar valuations, Chinese tech giants have little presence overseas – excluding investments – especially on the consumer side. Bytedance, a rising Chinese unicorn, does not want to suffer the same fate.

The Beijing-based tech company operates one of the stickiest apps in mainland China. Bytedance estimates that its flagship content aggregator Toutiao hooks in 120 million daily active users, each of whom spends an average of 74 minutes per day inside the platform – more than double that of Snapchat.

This year, the company expanded its focus abroad – mostly through a spree of overseas investments, such as its estimated US$800 million purchase of video-based social app Musical.ly. Bytedance believes it can replicate its success in China by focusing on regions with similar content consumption habits, fast-growing mobile growth – resembling China’s landscape a few years ago – and artificial intelligence.

“We have identified several key markets that we want to really focus on, [including] Japan, Korea, Brazil, the US, Europe, Southeast Asia, and India,” Liu Zhen, senior vice president at Bytedance, told media at the company’s AI conference last week. Previously, Liu was the head of strategy at Uber China.

In five years, about half of the company’s revenue will come from overseas, she estimated – an ambitious claim given that at present, most of Bytedance’s business comes from mainland China.

Tencent is still king in terms of addictive apps. Its messaging apps WeChat and QQ are ahead of Toutiao, as well as Baidu-backed video streaming app Iqiyi.

Bytedance is somewhat of an anomaly in China’s tech industry. Unlike most startups, the tech firm hasn’t received funding from Alibaba nor Tencent, making it a relatively independent entity in an increasingly binary ecosystem. Its massive content platform, which monetizes through advertising, also challenges established players, such as Tencent’s news products, Tian Tian Kuai Bao and Tencent News.

Bytedance was one of the earliest companies in China to use algorithms to recommend content.

“Before they get rid of you, you need to grow into a player that can’t be overlooked,” says Pheona Chen, investment manager at Autobot Capital Partners, referring to China’s Baidu, Alibaba, and Tencent tech giants. Autobot is a Chinese VC firm that invests in entertainment startups.

Bytedance, she says, managed to pick a vertical and push forward aggressively and quickly scaled up their short-video business. They’re also “one of the earliest companies in China to use algorithms, not simply editors or manpower, to recommend content.”

Ride the mobile wave

At first glance, it’s hard to understand how Toutiao became so popular in China, a country where consumers are spoiled for choice when it comes to news and other kinds of content. In the short video industry, there are dozens of apps. Tencent and Sina Weibo both operate their own news portals. Chinese superapp WeChat also serves up a dizzying variety of news, blogs, and videos.

Scaling short videos

Dual learning