The increasingly difficult growth problem of the parent company TikTok

 The increasingly difficult growth problem of the parent company TikTok

Faced with challenges at home, ByteDance is increasingly leveraging TikTok to find growth opportunities abroad.

Revenue of Chinese social media giant ByteDance 2021 reached 58 billion USD, up 70% compared to 2020. This is a slow growth compared to more than double the previous level. The reason is that Beijing tightens supervision of the Internet sector and the economic downturn affects advertising revenue.

Over the past year, Chinese authorities have enacted antitrust and data collection regulations to limit the influence of leading technology companies. The country's leaders criticize the disorderly expansion of technology firms. At the same time, they are concerned about the cybersecurity and social stability risks arising from companies controlling data and affecting the daily lives of millions of people.

The name ByteDance at a corporate headquarters. Photo: Nikkei

The name ByteDance at a corporate headquarters. Photo: Nikkei

ByteDance is one of China's most famous startups. In the latest funding round at the end of 2020 from Sequoia Capital and SoftBank, this startup was valued at $180 billion. Their revenue is mainly based on advertising services.

The company has gained popularity in China and globally with its Douyin and TikTok short video platforms. As of September 2021, TikTok has over one billion monthly regular users. The app is considered by many to be China's most successful export social media.

After years of strong growth, revenue and user numbers for ByteDance's two most popular apps in China, Douyin and Jinri Toutiao - both appear to have peaked.

Last November, ByteDance told employees that its domestic advertising business had stalled for several months due to fierce competition and a dismal business environment. At the same time, they are also affected by stricter regulations in other industries such as education, gaming, e-commerce and real estate.

In recent years, ByteDance itself has also expanded into education, gaming and other businesses. However, it has begun withdrawing from some companies since the middle of last year as part of a restructuring process under the leadership of new president Liang Rubo.

ByteDance founder Zhang Yiming stepped down as chairman last November to focus on long-term strategy. Taking over this hot seat, Mr. Liang has been cutting costs and streamlining operations. The group also cut thousands of employees.

On Wednesday, ByteDance said it would dissolve its strategic investment unit as Chinese regulators prepare to introduce new regulations requiring major internet companies to acquire Official approval for investment and fundraising transactions. Employees from ByteDance's venture capital arm will be transferred to other departments, a company spokesperson said.

With ByteDance facing challenges at home, the company is increasingly focusing on TikTok overseas to drive growth. Last year, TikTok's ad revenue was nearly $4 billion. The company has set ambitious goals for TikTok this year and is expanding its global team.

However, ByteDance's overseas expansion could soon run into its own set of difficulties. Last month, TikTok said that it would modify the algorithm on the app to avoid the negativity of certain types of content.

Policymakers around the world have stepped up their investigation of TikTok and its rivals, particularly Meta Platform's Instagram, over data privacy concerns and the psychological impact these platforms have. may be fraught with young users.

TikTok lost its head of global marketing, Nick Tran, this month following disagreements between Mr. Tran and management. Vanessa Pappas, Global CEO of TikTok, will take over Mr. Tran's responsibilities until a replacement is found.