🧠 Food for thought

Implications, context, and why it matters.

ByteDance’s AI costs and subsidy-led ecommerce growth

• ByteDance spent about US$20 billion on capital expenditure in 2025, with most of that money going to AI 1.
• The company plans to spend 160 billion yuan, or US$22.7 billion, in early 2026 to build out AI further. That keeps it on an expensive path against hyperscalers, the largest cloud and AI infrastructure companies such as Amazon, Microsoft, and Google 1.
• In the US, up to 50% of some TikTok Shop sellers’ profits came from TikTok incentives such as warehousing, shipping, and traffic subsidies 2.
• TikTok Shop’s US business produced about US$9 billion in gross merchandise value, the total value of goods sold on the platform, in 2024. That missed its US$17.5 billion target 2.

ByteDance’s spending raises pressure in AI and cross-border ecommerce

• ByteDance is part of a wider AI spending race. That pushes rivals such as Meta and Google to keep pouring money in, which can squeeze margins across the sector 1.
• AI spending by hyperscalers could top US$500 billion in 2026, forcing a choice between long-term AI buildouts and near-term profits 1.
• In ecommerce, TikTok Shop’s fast expansion has raised pressure on Amazon in the US. In Southeast Asia, it also competes with Shopee and Lazada, two large online shopping platforms in the region 3.
• Cross-border sellers face policy risk as governments tighten duty-free rules for low-value parcels. The European Union (EU) ended the exemption for small packages in July 2024, and the US announced plans to do the same in September 2024 2.