A new empire threatens Tencent

We already know that China’s Bytedance is now the world’s most valuable startup (US$75 billion) and that it’s the maker of viral video app TikTok. But what might have been overlooked is the statue-toppling peril this six-year-old newcomer represents to Tencent, the two-decade-old tech giant behind WeChat.

To get the big picture on this new rivalry, let’s first look at the entirety of Bytedance’s fast-growing app empire, starting with the social and fun apps:

• TikTok, known as Douyin in China, has 500 million active users around the world. It absorbed Musical.ly, which Bytedance acquired in late 2017.
• Xigua Video focuses on longer videos than TikTok, allowing for up to 20 minutes.
• Vigo Video, known as Huoshan in China, was born out of Bytedance’s 2017 acquisition of Flipagram. It’s a lot like TikTok and, to add to the confusion, it was at some point called Hypstar.
• Pipixia, China’s answer to Reddit, is the place for memes, jokes, and GIFs.
• Buzzvideo – also called TopBuzz – is a mix of Reddit and AOL, but devoted to videos.
• Helo is a Reddit-style site for India, available in 14 Indian languages.
• FaceU is a selfie and beautification app for China.
• Duoshan is a possible new rival to WeChat within China, with a minimalistic look that borrows heavily from Snapchat. It launched earlier this month.
• Feishu, still in development, looks set to be a Slack-style workplace chat app.

Making a TikTok video. Photo credit: Riva Quenery

Next, Bytedance’s news apps:

• Toutiao is its first smash hit, an algorithm-powered news app for China with 120 million daily readers. Its full name, Jinri Toutiao, translates to “Today’s Headlines.”
• News Republic is like Toutiao for the rest of the world, bringing together content from over 3,000 media partners, including big names like CNN, Bloomberg, and The Guardian. Bytedance acquired the app in 2017.
• Topbuzz is a less serious version of News Republic, with GIFs and funny videos sprinkled amid news items.
• BaBe is devoted to Indonesian news readers.

Bytedance also has recent moves into education:

• Gogokid plays host to overseas teachers tutoring Chinese kids in English.
• Haohao Xuexi, literally “study hard”, features paid content on a range of self-improvement topics – from parenting to wealth management.

Plus, Bytedance has made a tentative move into gaming, quietly rolling out a games distribution service. If this ramps up into a games publisher, it’d go head-on with Tencent’s lucrative games.

Strategic empire

Bytedance’s app catalog reveals the company’s strategies so far:

• Create a media and social media superpower, including apps that blur the lines between those two realms.
• The only way for a Chinese tech company to expand overseas is to use segregation. Bytedance’s apps are strictly segregated between the Chinese version, which requires intensive self-censorship to avoid being whacked by authorities, and a more freely run overseas version. Thus, a TikTok account doesn’t work within the identical-looking Douyin app that’s available in China.
• Go after youthful or fast-growing markets outside its homeland, such as India or Southeast Asia. TikTok first gained traction in Southeast Asia before going viral in the US and Europe.
• Acquire apps outside China, which is a good way of bridging a gap in familiarity with new markets.
• Recycle its AI-powered content wizardry across an array of media and social media apps.

Poking Tencent

Much of what Bytedance is building is a direct attack on Tencent, both in terms of eyeballs and revenues across a number of money-making channels.

“Bytedance poses a major threat to Tencent at the juncture of slowing user activity growth for the latter,” analyst Ke Yan tells Tech in Asia. “Last year, the overall internet users in China only grew by 4 percent versus 17 percent a year ago. Meanwhile, Tiktok’s monthly active users grew more than five-fold.”

Ke, co-head of research at Aequitas Research who publishes on Smartkarma, reckons Bytedance has done a better job than Tencent of catching the mood of web users as they move from mainly reading to mostly watching online content.

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