TikTok And Douyin Owner ByteDance Charts Path Through Tech Slowdown

ByteDance has had its fair share of ups and downs. Douyin, China's version of TikTok, has quickly evolved from a viral short-video app to become a powerful e-commerce platform that caters to both domestic and international luxury and beauty brands. Despite its market dominance and success, ByteDance is hitting a growth ceiling for its biggest product Douyin and faces several challenges, such as a lack of momentum for its metaverse plans. What’s more, the company is not immune to the general industry slowdown — it announced layoffs earlier this year. ByteDance now seems to be looking at new e-commerce initiatives and investment in AI technology to boost revenue. Let’s take a closer look. Growth ceiling Douyin Mall, which is fully integrated with Douyin’s payment and promotional services, offers brands the ability to create unique experiences for its users. Douyin’s live-streaming feature, which generated 232 billion (1.5 trillion RMB) in transaction value in 2021, is especially powerful, and has been utilized by brands like Louis Vuitton and Estée Lauder. Despite fierce competition from other tech giants like Kuaishou and Taobao, Douyin remains a leading force in the social commerce landscape. The platform has grown extremely fast, and now the question is, what’s next? The last time Douyin released official user growth data was in September 2020, when the company disclosed it had hit 600 million daily active users. Analysts estimate current daily active users at 747 million, which would equate to average month-on-month growth of 3 percent. Obviously, 747 million is not a trivial number. It’s a mark of success. But market dominance comes with its own challenges. Getting non-users to join will be a hard sell. If they haven’t joined Douyin by now, would they in the future? What’s more, ByteDance insiders revealed in December last year that its domestic advertising revenue had almost stopped growing for the first time since 2013. In 2022, the company’s revenue fell short of expectations. ByteDance CEO Liang Rubo emphasized the importance of reducing costs and increasing efficiency. Following tech layoffs across the industry, ByteDance is laying off 10 percent of its staff this year as part of Rubo’s plan. Metaverse slowdown ByteDance’s plans for the metaverse haven’t been halted, but they do seem to be slowing. In August 2021, the firm bought VR startup Pico, a move interpreted by many as a way to join the global Web3 race. Metaverse momentum continued, and in January 2022, ByteDance launched Party Island, its first metaverse social app. Party Island was similar to Mark Zuckerberg’s vision of a virtual world. The app comprised an online virtual world where people could hang out and connect through their avatars. Yet, the app was shuttered in October last year, less than a year after its launch. ByteDance earlier this month announced a series of “small layoffs” at Pico. Luxury is still moving forward in the metaverse, though. In 2021, LVMH joined forces with Prada and Cartier to create the world’s first global luxury blockchain, the Aura Blockchain Consortium. And just last week, Decentraland announced the second iteration of Metaverse Fashion Week, touting designs from Dolce & Gabbana, Tommy Hilfiger, Coach and more. Turning to the platform side, amid tanking cryptocurrency prices and scandals like the collapse of FTX exchange, it seems Meta’s metaverse vision and the ensuing hype was more visionary than grounded in reality. Layoffs and the prospect of a “tech winter” won’t make 2023 the most conducive year for capital-intensive bets such as the metaverse. However, because of its investment in Pico and last year’s acquisition of Chinese virtual social platform Poli, ByteDance is still in prime position to forge ahead once the market recovers. Meanwhile, the company is hoping its new e-commerce initiatives, including the newly launched Douyin Supermarket, and its food delivery efforts, will pan out, but both fields are extremely competitive. A paradigm shift? Feishu, ByteDance’s answer to Slack, generated 100 million in revenue in 2022, a year-on-year increase of 270%. Chinese companies tend to be wary of paying for B2B software, so this growth can be considered a significant achievement. What’s more, the global craze around AI large language models (LLM) like ChatGPT could be the paradigm shift the industry has been looking for. Though ChatGPT is restricted in China, the government is supportive of the underlying technology. On February 24 this year, China's Ministry of Science and Technology announced it would push for further integration of AI technology domestically, highlighting the possibilities that technology like ChatGPT could offer. Baidu announced plans to launch its own LLM platform, called ErnieBot, earlier this month. ByteDance kicked off research earlier this year on creating its own LLM. In many ways, ByteDance is already the world’s largest AI-driven company. TikTok’s success wouldn’t have been possible without its dazzling machine-learning capabilities and algorithms. Given the speed of tech advances and intense competition in the market, it’s possible that the AI landscape in China will look completely different by the end of the year. ByteDance’s successes stand it in good stead for the road ahead.

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TikTok And Douyin Owner ByteDance Charts Path Through Tech Slowdown