ByteDance

ByteDance Ltd. (Chinese: 字节跳动; pinyin: Zìjié Tiàodòng) is a Chinese internet technology company headquartered in Beijing and incorporated in the Cayman Islands.[6]

ByteDance Ltd.
Native name
字节跳动有限公司
TypePrivate
IndustryInternet
Founded13 March 2012 (2012-03-13)
Founders
Headquarters
Area served
Worldwide
Key people
Products
RevenueIncrease US$85.2 billion (2022)[4]
Increase US$2 billion (2022)[4]
Number of employees
c. 150,000 (2023)[5]
Subsidiaries
Websitebytedance.com

Founded by Zhang Yiming, Liang Rubo and a team of others in 2012, ByteDance developed the video-sharing social networking services and apps TikTok and Chinese-specific counterpart Douyin. The company is also the developer of the news platform Toutiao. As of June 2021, ByteDance hosts 1.9 billion monthly active users across all of its platforms.[7]

ByteDance has attracted legislative and media attention in several countries over security, surveillance, and censorship concerns.[8][9][10]

History

In 2009, software engineer and entrepreneur Zhang Yiming collaborated with his friend Liang Rubo to co-found 99fang.com, a real estate search engine.[11] In early 2012, the pair rented an apartment in Zhongguancun and, along with several other 99fang employees, began developing an app that would use big data algorithms to classify news according to users' preferences, which would later become Toutiao.[12] That March, Yiming and Liang founded ByteDance.[13]

Launch of first apps

In March 2012, ByteDance launched its first app, called Neihan Duanzi (内涵段子, lit. "profound gags"). This allowed users to circulate jokes, memes, and humorous videos. Before being forced by the Chinese government to shut down in 2018, Neihan Duanzi had over 200 million users.[14]

In August 2012, ByteDance launched the first version of news and content platform Toutiao (头条, lit. "headlines"), which would become their core product.[15]

In January 2013, in an attempt for commercialism and nationalism, a four-part plan for the future was presented to executives. Part four of the plan was to build an English version of Toutiao to gain users in English-speaking countries. At the time, there was an app race for video views and the attention of phone users.[16]

Expansion

In March 2016, ByteDance established its research arm, called the ByteDance AI Lab. It is headed by Wei-Ying Ma, the former assistant managing director of Microsoft Research Asia.[17][18]

From late 2016 until 2017, ByteDance made a number of acquisitions and new product launches. In December 2016, it invested in the Indonesian news recommendation platform BABE.[19] Two months later, in February 2017, it acquired Flipagram, which was later merged with Musical.ly into TikTok upon the latter's acquisition in November 2017. Other notable acquisitions include the UGC short video platform Hypstar (Vigo Video) in July 2017,[20] and News Republic from Cheetah Mobile in November 2017.[21]

In December 2018, ByteDance sued Chinese technology news site Huxiu for defamation after Huxiu reported that ByteDance's Indian-language news app Helo was propagating fake news.[22]

In March 2021, the Financial Times reported that ByteDance was part of a group of Chinese companies that aimed to deploy technology to circumvent Apple's privacy policies.[23][24]

In April 2021, ByteDance announced that it had created a new division called BytePlus to distribute the software framework underlying TikTok, so that others may launch similar apps.[25]

In August 2021, ByteDance acquired Pico, an Oculus-like virtual reality startup.[26]

In June 2022, the Financial Times reported on a culture clash at ByteDance's London office that has led to a staff exodus.[27]

In March 2023, The Wall Street Journal reported that former employees allege that the company engages in a practice called "horse racing," in which several teams are assigned to build the same product.[28] When one version is deemed to perform better, the team designing the better version is provided with more support.[28]

In April 2023, ByteDance filed a trademark for a book publisher called 8th Note Press.[29]

Corporate affairs

Funding and ownership

ByteDance is financially backed by Jeff Yass' Susquehanna International Group, Kohlberg Kravis Roberts, SoftBank Group, Sequoia Capital, General Atlantic, and Hillhouse Capital Group.[30][31] As of March 2021, it was estimated to be valued at $250 billion in private trades.[32]

ByteDance's owners include its founders and Chinese investors (20%), global investors (60%), and employees (20%).[33] In 2021, the state-owned China Internet Investment Fund purchased a 1% stake in ByteDance's main Chinese subsidiary, Beijing ByteDance Technology (formerly Beijing Douyin Information Service), as a golden share investment[34][35][36] and seated Wu Shugang, a government official with a background in propaganda, as one of the subsidiary's board members.[37][38][39]

Management

Zhang Yiming was ByteDance's chairman and CEO from its founding in 2012 until 2021, when co-founder Liang Rubo took over as CEO.[40]

On 19 May 2020, ByteDance and Disney released an announcement that Kevin Mayer, head of Disney's streaming business, would join ByteDance. From June 2020 to his resignation 26 August 2020, Mayer served as the CEO of TikTok and the COO of ByteDance, reporting directly to the company CEO Zhang Yiming.[41][42] In 2021, Shou Zi Chew, former CFO of Xiaomi, took over as TikTok CEO.[43]

As with many Chinese companies, ByteDance has an internal Chinese Communist Party (CCP) committee with Vice President Zhang Fuping serving as the company's CCP Committee Secretary.[44] According to a report submitted to the Australian Parliament, Zhang Fuping stated that ByteDance should "transmit the correct political direction, public opinion guidance and value orientation into every business and product line."[45][46]

Partnerships

ByteDance's China business has a strategic partnership with the Chinese Ministry of Public Security for the ministry's public relations efforts.[47] The partnership also said that ByteDance would work with the Ministry of Public Security in cooperation on unspecified "offline activities."[48][49]

In 2018, ByteDance helped to establish the Beijing Academy of Artificial Intelligence, an initiative backed by the Ministry of Science and Technology and the Beijing municipal government.[45][50]

In 2019, ByteDance formed joint ventures with Beijing Time, a publisher controlled by the Beijing municipal CCP committee, and with Shanghai Dongfang, a state media firm in Shanghai.[51][52] In 2021, ByteDance announced that its partnership with Shanghai Dongfang had never been in operation and was disbanded.[53]

Lobbying

ByteDance's lobbying efforts in the U.S. are led by Michael Beckerman.[54][55] According to disclosures filed under the Lobbying Disclosure Act of 1995, ByteDance has lobbied the United States Congress, White House, Department of Commerce, Department of State, and the Department of Defense.[56][57] ByteDance has spent more than $17.7 million in lobbying since it first reported payments to federal lobbyists in 2019.[58]

ByteDance's lobbying has included hiring K&L Gates, LGL Advisors, and other firms to influence bills such as the United States Innovation and Competition Act, American Innovation and Choice Online Act, and the annual National Defense Authorization Act.[55]

Products

CapCut

First released to the public in April 2020, CapCut is a video editing software made for beginners.[59] As of March 2023, CapCut has more than 200 million active users each month, and according to The Wall Street Journal, it was downloaded more than the TikTok app in March 2023.[60] In March 2023, it was the second-most downloaded app in the U.S. behind that for Chinese discount retailer, Temu.[28]

Douyin
Main article: TikTok § Douyin

First released to the public in September 2016, Douyin (Chinese: 抖音; pinyin: Dǒuyīn), previously named A.me, is the Chinese version of TikTok. The application is a short-form video social media platform that differs from its international counterpart version by having more advanced features, such as e-commerce.[61] TikTok and Douyin have almost the same user interface but no access to each other's content. Their servers are each based in the market where the respective app is available.[62]

Lark
Main article: Lark (software)

First released to the public in 2019, Lark is ByteDance's enterprise collaboration platform.[63] Lark was originally developed as an internal tool, becoming ByteDance's primary internal communication and collaboration platform, but was eventually made available to external users in certain markets.[64]

TikTok
Main article: TikTok

First released to the public in September 2017, TikTok is a video-sharing social networking service[65] used to make short-form videos, from genres like dance, comedy, and education.[66][67] On 9 November 2017, ByteDance acquired Shanghai-based social media start-up Musical.ly for up to US$1 billion. They combined it and prior acquisition Flipagram[68][69] into TikTok on 2 August 2018, keeping the TikTok name.

TikTok Music

Formerly Resso, the service is TikTok's "social music streaming app" launched in Indonesia and Brazil.[70] The platform allows users to highlight and share lyrics, comments and other user-generated content with each other alongside streaming of full-length tracks.[71] ByteDance says that it has licensing agreements in place with Warner Music Group, Sony Music Entertainment, Merlin and Beggars Group, among others.[72]

Toutiao
Main article: Toutiao

Toutiao (Chinese: 今日头条; pinyin: Jīnrì Tóutiáo), launched in August 2012,[15] started out as a news recommendation engine and gradually evolved into a platform delivering content in various formats, such as texts, images, question-and-answer posts, microblogs, and videos.[73][74]

In January 2014, the company created the "Toutiaohao" (头条号) platform to attract more content creators. Later in the year, it added video capabilities. Toutiao used interest-based and decentralized distribution to help long tail content creators find an audience.[75]

In 2017, Toutiao acquired Flipagram. ByteDance would later expand Toutiao's features to include: a missing person alerts project whose alerts have helped find 13,116 missing persons as of June 2020;[76] short-form video platform Toutiao Video, later rebranded as Xigua Video (西瓜视频, also known as Watermelon Video), which hosts video clips that are on average 2–5 minutes long;[77] and Toutiao Search, a search engine.[78]

Xigua Video
Main article: Xigua Video

Initially launched as Toutiao Video in 2016, Xigua Video (Chinese: 西瓜视频; pinyin: Xīguā shìpín) is an online video-sharing platform that features user-created short and mid-length videos and also produces film and television content.[79]

Nuverse

Initially launched in 2019, Nuverse has launched as a video game publisher company.[80] The first game launched outside Mainland China was Warhammer 40,000: Lost Crusade in 2021. Later in 2021, Moonton became a subsidiary of Nuverse, after winning the bid, initially set by Tencent.[81][82]

In 2022, the studio has launched Marvel Snap in October worldwide, after closed alpha testing in the Philippines, and gradually entering open beta with the first country being New Zealand.

Other products and acquisitions
  • Gogokid was launched in May 2018 as an online English learning platform for children that provides one-on-one classes with native English speakers.[83] In August 2021, ByteDance announced that the app business will be shuttered and most of Gogokid's staff will be laid off, following new regulations imposed on the after-school tutoring industry in China.[84]
  • Moonton was acquired by ByteDance in 2021 and was the developer of the mobile eSports game Mobile Legends: Bang Bang.[85][86]
  • Neihan Duanzi, ByteDance's first app, was shut down in 2018 following a crackdown by the national media regulator.
  • Party Island (Chinese: 派对岛; pinyin: Pàiduì dǎo) is a social media app that allows users to create avatars, join virtual events like concerts, and chat with other participants. It also has a messaging function within the app, so users can send texts to each other privately and join group chats. It is open to public testing in July 2022.[87]
  • TopBuzz was a content platform for videos, articles, breaking news and GIFs.[88] The service was launched in 2015 and abandoned in 2020 due to dwindling business.[89][90] Former employees alleged that TopBuzz was used to push content sympathetic to the Chinese Communist Party to foreign users.[88]
  • 8th Note Press, a publisher established by ByteDance in 2023.[29]

Censorship, surveillance, and data privacy concerns
Further information: Censorship on TikTok

ByteDance has garnered attention over surveillance,[91][92] data privacy,[93] and censorship concerns,[94][95] including content pertaining to the Uyghur genocide.[note 1] In response to a 2022 BuzzFeed News report, ByteDance stated that certain employees, since terminated, had misused their authority to surveil journalists working for BuzzFeed and the Financial Times in order to find leaks to the press.[101][102]

Concern has also been raised over the potential effects, including extraterritorial jurisdiction, of China's National Intelligence Law and Cybersecurity Law on ByteDance and its employees.[103][45]: 42–43 

Government regulation

China
See also: Internet censorship in China

In April 2018, China's state media regulator, the National Radio and Television Administration (NRTA), ordered the temporary removal of Toutiao and Neihan Duanzi from Chinese app stores. The NRTA accused Neihan Duanzi in particular of hosting "vulgar" and "improper" content and "triggering strong sentiments of resentment among internet users".[104] The following day, Neihan Duanzi announced it was permanently shutting down.[104] In response to the shutdown, Yiming issued a letter stating that the app was "incommensurate with socialist core values" and promised that ByteDance would "further deepen cooperation" with the authorities to promote their policies.[105][106] Following the shutdown, ByteDance announced that it would give preference to Chinese Communist Party members in its hiring and increase its censors from 6,000 to 10,000 employees.[107][108][109]

In November 2019, the Cyberspace Administration of China (CAC) ordered ByteDance to remove "slanderous" information on Fang Zhimin from Toutiao.[110] In April 2020, the CAC ordered ByteDance to take down its office collaboration tool, Lark, because it could be used to circumvent Internet censorship.[111] In January 2021, Chinese regulators fined ByteDance for spreading "vulgar information."[112][113] In April 2021, ByteDance was among 13 online platforms ordered by the People's Bank of China to adhere to tighter data and financial regulations.[114] The bank stated that ByteDance must conduct comprehensive self-examination and rectification to adhere to the country's laws.[115] In May 2021, the CAC stated that ByteDance had engaged in illegal data collection and misuse of personal information.[116]

In March 2021, the State Administration for Market Regulation fined a ByteDance subsidiary and other companies for antitrust violations.[53]

In April 2022, ByteDance announced that it would report users' content on Toutiao and Douyin that engaged in "historical nihilism" in contradiction of official CCP history.[117]

In November 2022, during the 2022 COVID-19 protests in China, the CAC directed ByteDance to intensify its censorship of the protests.[118]

India
See also: Censorship of TikTok

Citing national security issues the Indian Government banned CapCut and TikTok along with 58 other Chinese apps on 29 June 2020.[119] The ban was made permanent in January 2021.[120][60] In March 2021, the Indian government froze ByteDance's bank accounts in the country for alleged tax evasion, which ByteDance disputed.[121]

Taiwan

In December 2022, Taiwan's Mainland Affairs Council announced an investigation into ByteDance on suspicion of operating an illegal subsidiary in the country.[122] The company reportedly registered "Tiktoktaiwan Co Ltd" in March, which changed its name to "ByteDance Taiwan" in November.[123]

Federal Trade Commission action

On 27 February 2019, the Federal Trade Commission (FCC) fined TikTok US$5.7 million for collecting information from minors under the age of 13 in violation of the Children's Online Privacy Protection Act in the United States.[124][125] ByteDance later added a kids-only mode to TikTok which blocks the upload of videos, the building of user profiles, direct messaging, and commenting on other's videos, while still allowing the viewing and recording of content.[126]

In June 2022, FCC Commissioner Brendan Carr described ByteDance as "beholden" to the Chinese government and "required by law to comply with [Chinese government] surveillance demands."[127] Carr called for Apple and Google to remove TikTok from their respective app stores.[127] U.S. senators Mark Warner and Marco Rubio also called for an FCC investigation of TikTok and ByteDance.[128]

Executive orders
Further information: Donald Trump–TikTok controversy

On 3 August 2020, U.S. president Donald Trump ordered TikTok to be sold within 45 days or be effectively banned in the country.[129][130] The order faced legal challenges.[131] On 14 August 2020, Trump issued an executive order mandating that ByteDance divest from all U.S. operations of TikTok within 90 days.[132] On 28 August 2020, China announced an update to its export control rules that, according to experts, could give Chinese authorities a say in any potential sale of ByteDance's technology to foreign firms.[133]

FBI investigation

In March 2023, the United States Department of Justice and the Federal Bureau of Investigation opened an investigation into ByteDance over its alleged surveillance of journalists.[8] The company acknowledged that ByteDance employees, who have been terminated, improperly accessed the user data of journalists from Forbes (previously at BuzzFeed News) and the Financial Times. It would cooperate with governmental investigations and continue its own internal review.[134]

Notes
  1. See references[96][97][98][99][100]

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