Best known for its video sharing app TikTok and news aggregating site Toutiao, ByteDance is the most valuable AI unicorn. Last year, it raised a whopping $1.3 billion at a valuation of $75 billion.
Beijing-based ByteDance was founded by former software engineer Zhang Yiming in 2012 to leverage artificial intelligence and mobile Internet to revolutionize the way people consume and receive information.
Toutiao or Jinri Toutiao (Today’s Headlines) was its first product and flagship news aggregator app that is based on algorithmic content distribution. Similar to Facebook’s Newsfeed, it pushes a tailored feed of articles and videos to the users’ interface. By 2018, Toutiao had over 100 million daily active users and an average engagement time of 74 minutes per day, 50% more than that of Facebook.
Another top offering is news aggregator TopBuzz, which was launched in 2015 to target the North American and Brazilian markets. It also expanded to other markets via acquisitions and investments. In 2016, it invested in Indian news app Dailyhunt and became a controlling stakeholder of BABE in Indonesia.
Its latest success is TikTok, which was formed as a result of the integration of its 2017 acquisition of US social video app Musical.ly into its Chinese app Douyin. TikTok has over 1.2 billion downloads worldwide and 656 million installs. There were about 124 million downloads in the US market. Its gross in-app spending was about $87 million for the fourth quarter, up 521%.
Last year, ByteDance launched a search engine within Toutiao, pitting it against Chinese search engine leader Baidu. It also acquired Baike.com, a Chinese website on the lines of Wikipedia.
To expand in markets outside China, ByteDance launched a work efficiency app Lark and is planning to launch a paid music-streaming app.
For the first half of 2019, ByteDance reported revenue of 50-60 billion yuan ($7 billion to $8.4 billion) and turned profitable. It expects revenue of 120 billion yuan ($17.2 billion) for the year 2019. Its revenue for the full year 2018 was $7.2 billion.
ByteDance has so far raised $4.6 billion in funding from private investors including Softbank, KKR, General Atlantic, and Sequoia Capital China. A funding round in October 2018 valued the company at $75 billion.
But the picture is not completely rosy. In February 2019, Musical.ly, which was bought by ByteDance, was fined $5.7 million by US Federal Trade Commission for illegally collecting personal data from children under 13. In April 2019, Indian courts ordered TikTok to be taken off Google and Apple stores due to “inappropriate” content.
ByteDance also has to deal with concerns about the Chinese government accessing US data. ByteDance maintains that all TikTok US user data is stored in the United States with backup redundancy in Singapore. It has also been reported that ByteDance is considering selling its TikTok stake to protect the value of its business.
In our last post on ByteDance, we had wondered why ByteDance was chasing international markets where content doesn’t monetize well in contrast to the Chinsese market. It was looking to expand in international markets before going public. But that plan seems to have gone awry.