The email hit staff inboxes on a Tuesday in early November. With it came a significant change to ByteDance, the Chinese company behind the hit app TikTok and its domestic counterpart, Douyin. An organization famous for its flat hierarchy—any employee, regardless of their standing, has long been able to direct-message founder Zhang Yiming on Lark, ByteDance’s version of Slack—was starting to build silos and more formal structures for its business.
Six new units, it was announced, were being established within ByteDance, covering the Chinese and international versions of its short-form video apps; an online learning arm; Lark, its workplace collaboration tool; Nuverse, its game development unit; and BytePlus, a business-to-business enterprise unit selling white-labeled versions of ByteDance’s proprietary algorithms. Until the reorganization, individual units sat in a hodge-podge business structure with confused lines of reporting.
The question ByteDance employees who received the email may have asked is why the restructuring is happening—and why now? The company is expected to post healthy revenue growth of 60 percent this year, despite a challenging year of regulatory intervention at home and abroad. TikTok recently crossed 1 billion users outside China, and the company continues to ride high.
Only those who steered the company’s new direction have the precise answer. But perhaps the reasons can be found in ByteDance's ambitions to be known for more than its video-sharing services—it wants to be as irreplaceable to internet users in the future as Facebook has become now.
TikTok was the first non-Facebook app to cross 3 billion downloads worldwide, and more than one in four Brits and one in three Americans are estimated to use it every single month. But it’s just one part of ByteDance’s business—and its grip on us could just be the beginning. Though few people realize it, the parent company behind the all-conquering short-form video app is a behemoth with eyes on capturing our attention at work, at school, while we listen to music, and while we play games.
“TikTok is just one part of ByteDance, and while it has potential, it’s not currently contributing much in terms of revenue,” says one former ByteDance employee, who left the company earlier this year and asked for anonymity because of non-disclosure agreements. Instead, ByteDance has a loftier goal: to simultaneously build up TikTok’s revenue-generating capabilities, while using its success in Western markets as a launchpad for its broader suite of apps and services. “They’re trying to become a westernized Tencent or Alibaba,” says Fabian Ouwehand, cofounder of creator management company Many, which was recently bought by Home Shopping Europe. Through Many and Ouwehand’s other company Uplab, he has worked extensively with TikTok and Douyin, the Chinese version of the app. Since ByteDance’s inception, Zhang, the founder, wanted it to be perceived more as a Western company than a Chinese one, according to Ouwehand. And while most of their investments and reorganizations remain based in China, Ouwehand believes the bigger plan is to go global. A ByteDance spokesperson says the company is “constantly looking to develop new and innovative offerings” that follow the company’s ethos.
The way ByteDance does that could be by following in the footsteps of Facebook. After establishing a key base through its core app in the early 2000s, the tech giant, now called Meta, expanded its ecosystem through acquisitions of WhatsApp and Instagram, as well as by becoming a single sign-in source for other services. It insinuated itself into all aspects of users' lives online. “ByteDance’s overseas layout is not only limited to the short video industry, but also includes some upstream news and music platforms,” says Ashley Dudarenok, a China marketing expert and founder of digital marketing agencies Alarice and ChoZan. “ByteDance has great ambitions for the overseas markets, and its competition with Facebook has become more apparent.”
ByteDance has already managed to grow this way in China to a certain extent, says Arnold Ma, CEO of Qumin, a China-focused digital marketing agency. “There’s basically a fully integrated content journey for users, whether they’re just looking to discover content or seeking information in an encyclopedic way,” he says. “Them splitting out a little more is creating a more diverse and segmented business model.”
“Being global has always been their ambition,” says Rui Ma, founder of Tech Buzz China, a community of investors and operators in Chinese tech. “A lot of entrepreneurs in China of [Zhang] Yiming’s generation made it their mission to build a global company.” And by global, Chinese entrepreneurs usually mean more than 50 percent of their revenue comes from outside China. Currently, ByteDance’s Chinese apps—key among them Douyin and Toutiao, a news aggregator app—make up the majority of its revenue. But that could change as ByteDance tries to more explicitly cash in on its billion-strong TikTok user base by introducing ecommerce and bumping up ad revenue from the app.
If you look carefully, you can already see the seeds of a plan to build on TikTok’s success outside China and develop a broader business around ByteDance and its core product. Despite appearances, that’s not actually TikTok or Douyin, but the algorithmic engine that powers all of its apps. “Because of the nature of the company—that is, it’s an AI company at the core—they can do so much,” says Ouwehand.
When ByteDance first launched TikTok outside China, it sought to try and build a base for the app in southeast Asian countries like Indonesia, Japan, and Thailand. The company then moved on to developing countries including India, where TikTok gained more than 200 million monthly active users before it was banned in June 2020 by the Indian government as part of a geopolitical dispute, and Indonesia, where TikTok had 44 million users by mid-2020, according to internal data. Brazil too is a key market for the video sharing app, with some third-party estimates placing it as TikTok’s second-biggest global market. It’s not coincidental that the three testbeds for Resso, ByteDance’s Spotify-like music streaming service launched in 2020, are Indonesia, India, and Brazil. Resso now has more than 40 million users split between the three countries, and has eyes on greater expansion.
ByteDance’s growth in emerging markets could be an augur of what’s to come. We may even see the development of a new future of tech where our lives are shaped by ByteDance and its apps—just as the norms of the internet in the past 15 years have been shaped by Facebook’s all-powerful family of apps. But it requires an answer to what Rui Ma calls a multi-multi-billion-dollar question: TikTok was a monster breakout hit; how does ByteDance now meet the challenge of the difficult second album?
In China, Douyin and Toutiao dominate. In the west, TikTok is ByteDance’s flagship app, with an attempt to replicate Toutiao, called TopBuzz, widely regarded as a flop. But ByteDance’s game development and publication arm is ever-growing, and in some Chinese workspaces Lark is a popular choice for communication. Resso is building a base in key developing markets that could act as a springboard for global music domination. Whether ByteDance will be able to transfer the runaway success of TikTok into a broader business, one that touches all aspects of our lives, is something observers are split on. “I would say 90 percent of the other business units, whether it’s the Lark unit or Nuverse or education, will never go anything further than domestic,” says Arnold Ma. “No one really uses any of the other platforms outside of China.” Rui Ma—no relation—disagrees. “If you talk to any gaming company in China, they all think Chinese game developers are competitive, if not number one worldwide,” she says. “They’re all increasingly looking at global markets. It’s a business opportunity.” The process, say ByteDance insiders, is still in its early stages, but will pick up pace in a gradual transition period as the new company structure takes hold.
Did politicians in the United Kingdom and United States who railed so much against TikTok’s rise, trying to put it out of business for much of last year, miss the wood for the trees and the larger existential threat of ByteDance? “Given ByteDance is still Beijing-based, this sounds unwise for Brits to use if they value their privacy,” says Tom Tugendhat, a British member of parliament who has long warned about the risks of Chinese tech and campaigned against its human rights violations.
Ouwehand believes ByteDance is attuned to the risk of that perception. “That’s what I’ve seen in the last year,” he says. “I think they got a feeling like, ‘Fuck, we cannot survive alone, we need support from the Western brands out there.’ You see them opening their APIs up so other companies can integrate.” Ouwehand points to TikTok tie-ins with Shopify and Spotify in the West as indications that ByteDance has been chastened by the vituperative political response to its rise, and wants to try to mediate growth in other areas through more established Western platforms. That flag has also been planted in a similar manner to Facebook, thanks to the way it helps users log in to a slew of third-party apps. In May 2021, ByteDance quietly announced a login kit for TikTok, allowing people to access third-party apps through their TikTok profile, much in the same way people can sign up for Tinder or read news websites with their Facebook profile.
That’s important to ByteDance because of the user data it gives the company—and the chance to gain income from that knowledge. It’s a pattern Facebook has previously followed to great success. “That is obviously important to [ByteDance],” says Rui Ma. “They have a lot more data on you because they can track you and all your different user habits on different platforms that they own.”
And as ByteDance increases its role in our lives, that has an impact on user behavior too. Just as Facebook’s absolute dominance over the past 10 years means we live in a world shaped by its ideals—with Meta hoping this will be extended once everyone adopts its vision of the metaverse—so a ByteDance-dominated social media sphere could alter how we live. ByteDance’s feature and business innovations have primarily come from inside China and emanated out, says Rui Ma. “They’re looking at what works inside of China and replicating it globally,” she says. That’s already had an impact on not just ByteDance products but its competitors. Full-screen, immersive video that puts an emphasis on livestreaming—popular first on Douyin in China, and now on TikTok—has become the norm in the West, with other platforms mimicking TikTok’s most popular features. Likewise, the growth of shoppable livestreams and deep ecommerce integration, where you can seamlessly click to buy items as they’re mentioned in a video, is an innovation first tested in China, filtered through TikTok, and now adopted by YouTube.
Western platforms’ propensity to cannibalize each other’s features means that, as ByteDance’s suite of apps become more commonplace across the world, its impact on shaping our lives grows greater. It’s something that Zhang, ByteDance’s founder, wouldn’t be all that unhappy with. When he established the company, he set out to create an organization “as borderless as Google.” He could soon get his wish.
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