ByteDance

The Ban Seems Less Dangerous for Tencent than ByteDance

August 6, 2020, Trump took additional steps in his mobilization against Chinese technology, targeting another China's giant in the form of Tencent. Similar to the action on TikTok, the messaging service app WeChat owned by Tencent will be banned, as will any US transactions with Tencent. Those executive orders, released late Thursday, will take effect in 45 days. Again, the US government cited national security issues when announcing restrictions on two popular Chinese social media apps. Now, under extremely high pressure, ByteDance is seeking an acquisition agreement with a US company; Microsoft is currently negotiating with ByteDance to acquire part of TikTok, which is scheduled to be completed on September 15. About the impact of this executive order: 1) In 2019 Q4, Tencent's overseas game revenue accounted for 23% of overall game revenue, which was a relatively low percentage of its total revenue. It's been estimated that revenue from the US accounted for about 20% of overseas game revenue, and less than 5% of Tencent's overall game revenue, and less than 1% of the company's overall revenue – therefore, the ban has a limited impact on the company's revenue; 2) In terms of advertising, overseas WeChat users account for a relatively low proportion of WeChat's overall users. The number of US users is limited, and the level of monetization is low. It will not have a significant impact on advertising business revenue; 3) In other social entertainment fields (video, music, reading), the company's main business is concentrated in China. The current domestic market payment penetration rate is still low, and long-term development space is sufficient; 4) In terms of cloud business, in April 2018, the US Trade Representative Office (USTR) began to work on restrictions on cloud computing services invested by Chinese companies in the U.S., After that, Chinese activity in the US is relatively limited. The main overseas revenue comes from the European and Southeast Asian markets. Tencent's current major investments in the US include: Riot Games (holding controlling interest); Epic Games (holding 48.4% stake); Activision Blizzard (holding 6.0% stake); Spotify (holding 10.0% stake); Snapchat (holding 10.0% stake; Tesla (holding 5.0 stake). According to an analyst from Huatai Financial Holdings, Tencent's current investments in the US are mainly in the field of entertainment content and do not involve the social communications field that this ban focuses on, and Tencent does not have a controlling stake in most of the companies it invests in, that is, it does not have the authority to obtain and manage user data. It's been estimated that Tencent's main investment in the US currently only accounts for about 3% of Tencent's current market value, and the overall risk is controllable.

ByteDance Releases Fight Back Statement against Executive Order

On August 7, ByteDance issued a statement against the Executive Order of the US government, stating that if the US government cannot give ByteDance a fair treatment, it will resort to US courts. ByteDance stated that it has been communicating with the US government in good faith for the past year, but in this process, the US government has never followed due process nor acted in accordance with the law. The source of the 'report' cited by the Executive Order is unknown or unproven, and there is no substantive basis for the concern that the app 'may' be used for propaganda activities. In the statement, Bytedance also pointed out that TikTok has never shared user data with the Chinese government, and has never reviewed content upon request. In fact, it has disclosed its review policy and algorithm source code through the establishment of a Transparency Center.  ByteDance has stated it will make every effort to take all feasible measures to ensure that the rule of law is not abandoned and that the company and users are treated fairly. ByteDance will build TikTok in the long run, and the platform will continue to exist for a long time. Check here for the original statement: https://newsroom.tiktok.com/en-us/tiktok-responds

Trump's Tencent Ban Won't Affect Game Business

Microsoft Expands TikTok Acquisition Plans to the Global Business

According to several people familiar with the matter, Microsoft is seeking a deal to acquire TikTok's global business, including viral video applications in India and Europe. The American software company said on Sunday that it is in talks with ByteDance, the creator of the app, to discuss "purchasing TikTok services in the United States, Canada, Australia and New Zealand." At the same time, Microsoft executives tried to reassure the Chinese government to avoid a crossfire between Beijing and Washington. It is difficult to solve the considerable challenge of untangling TikTok's technology from ByteDance. Employees said that, before the talks began, ByteDance had been working hard to separate data and algorithms between China and the rest of the world. Microsoft has discussed adding an agreement under which it will have a one-year period to separate TikTok from the Chinese parent company and resolve the US government's occupation of the security of application-generated data. On Monday, Donald Trump, US president, said that whoever bought TikTok would have to pay a "substaintial" fee to the US Treasury. Later, on Wednesday, he said that Microsoft agreed to this payment.

Trump to Ban Any US Transactions with Tencent and ByteDance

Targeting TikTok, Facebook Launches Short Video App Reels

Taking advantage of TikTok's ongoing deep political crisis, Reels stands a good chance of taking advantage of the conflagration and succeeding. On August 5th, Facebook officially launched its short video application, Instagram Reels, in more than 50 countries and regions, including the United States, Japan, and Australia. Reels was first launched in Brazil in 2018, followed by France, Germany and India. Its function is similar to TikTok; through Reels, users can record a 15-second video, and add music and a series of filters and effects. Earlier, TikTok CEO Meyer said in a blog that Facebook is currently "disguising as patriotism" its intention to provide "imitator" services. At the same time, it was pointed out that Reels was the second time Facebook tried to imitate TikTok. Facebook tried a TikTok clone software called Lasso before, but this disappointed. In a video conference call with reporters on Tuesday, Instagram’s vice president of product, Vishal Shah also acknowledged the similarities between Reels and TikTok, and said that “the inspiration for the product comes from anywhere, including the Facebook team and the wider ecosystem system.” However, Instagram product director Robbie Stein said that, although TikTok popularized the short video format, the two products are different. "I think TikTok's promotion in the field of short videos is commendable. This is a great job," Robbie Stein said. "But in the final analysis, no two products are exactly the same, and neither is ours." According to Robbie Stein, the biggest difference between Reels and TikTok is the connection with the Instagram ecosystem. People can send videos to friends directly on Instagram, and they can also use Instagram-specific AR filters and tools. Earlier, the Wall Street Journal reported that Reels had laid out a generous incentive plan in an attempt to attract creators on TikTok to transfer to the platform. In fact, due to the uncertain future of TikTok, some of the top creators on the platform have indeed begun to transfer to other platforms. There is no doubt that TikTok has always been regarded as a threat to Facebook. Taking advantage of TikTok's woes certainly seems to be the primary motivation in launching Reels around the global at this point in time.

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