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Analysis EO
Jun 19, 2020
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Analysis EO
Jun 19, 2020

ByteDance is Anchoring TikTok to Expand Business Overseas

► The recommendation algorithm has helped ByteDance attract massive users, further leading to a rapid increase in revenues. ► The number of TikTok’s monthly active users (MAU) is quite larger than Kuaishou’s after 2018, as it has quicker switching modes and video types. ByteDance has announced the closure of the overseas version of ‘Huoshan Xiao Shi Pin’ (火山小视频) – Vigo Video in the Indian market – as it wants to concentrate more resources on TikTok, hoping to attract more users. Moreover, it plans to close TopBuzz, the international form of the news platform 'Jin Ri Tou Tiao' (今日头条). ByteDance, the short-video giant, has developed from a small team of 30 people to 60,000 employees and 240 offices globally. The information platform 'Jin Ri Tou Tiao,' ByteDance's first product, is a solid foundation for this global video platform to implement an expansion strategy. After accumulating enough users, it started entering the short video field and released TikTok, its most popular app so far. According to Sensor Tower, TikTok ranked top in global mobile applications, with its download volumes approaching 0.112 billion.   There has been an upward trend for the firm’s total revenues, about 172% annual growth from 2016 to 2019. How could ByteDance grow so rapidly? Two main reasons cannot be ignored. Firstly, it utilizes a recommendation algorithm in its products. To be precise, ‘Jin Ri Tou Tiao’ is not merely an information platform, it can recommend news depending on users’ interests and characteristics. Thanks to big data technology, ‘Jin Ri Tou Tiao’ attracted 1.5 million active users at the end of 2013. Secondly, ByteDance has caught up with the wave of short video, whose user size keeps increasing. For instance, the emergence of TikTok helped it attract 442.6 million users in 2019. Moreover, the emergence of livestreaming also appeals to a crowd of entrepreneurs and Internet celebrities, benefitting ByteDance. Thanks to their participation, the short-video giant has obtained more advertising revenue – a total operating income of USD 5.64 billion for the first quarter in 2020. After setting a firm footing in the domestic market, the Internet giant started expanding overseas in 2015. But why is it considering shutting Vigo Video and TopBuzz? When compared with TikTok, Vigo Video and TopBuzz show some comparative weaknesses. As for TopBuzz, it was accused of hosting too much ‘fake news.’ As Elliott Zaagman, a blogger writer said, TopBuzz was always recommending rumors about the main two US political parties. Moreover, many users of TopBuzz were attracted by ByteDance’s subsidies. Once the firm stopped offering bonuses, the active users began to decrease sharply, as there are many local competitors in the Indian market, such as Dailyhunt. Regarding Vigo Video, its function is similar to TikTok, but the content is not creative enough. Specifically, TikTok had 81 million MAU in India last year, while Vigo Video merely got four million in India. Even some Hollywood celebrities were allured by TikTok’s new concept of video editing. Hence, ByteDance has been making more efforts in developing TikTok recently, because there is more room for it to attract overseas users. In the early stage of TikTok, it was not as popular as Kuaishou. In 2017, TikTok’s users were a half the size of Kuaishou’s, with its daily active users lower than 30 million. After 2017, ByteDance began changing its marketing strategies, covering users in all age groups. As for Kuaishou, its target users were mainly in the underclass, and it is not convenient enough as it requires users to choose videos themselves. While for TikTok, its algorithms could recommend videos to users based on their interests. Therefore, TikTok’s MAU have surpassed Kuaishou in the middle of 2018. Moreover, TikTok got 0.8 billion users in January 2020, while Kuaishou only had 0.3 billion. All in all, ByteDance has gained increasing attention these years. Not only does it develop more products, it is also expanding its market into the global field. Specifically, the closing of Vigo Video and TopBuzz should help the firm concentrate more on its popular app, TikTok, and further raise online traffic. Nevertheless, ByteDance should also improve the regulation of TikTok when entering overseas markets. An infamous acid attack video in India exerted a negative impact on TikTok – it is necessary to take action now. For instance, TikTok has set up a data center in India, which provides safer services to Indian clients.

Analysis EO
May 22, 2020
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Analysis EO
May 22, 2020

ByteDance Bought a Healthcare Encyclopedia

► ByteDance acquired Baikemy.com - the only officially authorized healthcare encyclopedia source to popularize medical sciences. ► The Hainan-registered Internet hospital now under the name of this short-video platform may show a potential business diversification. ByteDance has started to look closely at the healthcare business. It closed the Baikemy.com deal on May 19. This soft landing, rather than taking a hard high-tech strategy, shows a sound match between a popular medical science intelligence and a content platform. Both have not disclosed relevant financial details in this deal. Before this acquisition, Baikemy.com, received several bankrolls following the Angel round in 2016, followed by tens of million US dollars from Cenova Ventures and BlueRun VC, the serial investor in this knowledge platform after 2017. Founded in May 2010, Baikemy.com is the only nationally authorized knowledge platform. The National Health Commission has approved its use to popularize medical sciences and has become the largest professional content channel in China so far. In a professionally generated content (PGC) mode, this platform levers doctors from the Chinese local triple-A hospitals to provide a systematic knowledge pool. Equipped with Natural Language Processing (NLP), deep learning, knowledge graph and AI, it has covered a wide range of areas in illnesses, pharmaceutical, treatment, healthcare, recovery, nutrition and Traditional Chinese Medicines (TCM). Amid the continued pandemic, the public healthcare issue has become more heated than ever before. For large content platforms, or multi-channel networks (MCNs), such as ByteDance and Kuaishou, it is a golden time to attract more traffic and keep users by providing authentic content and valuable information. Indeed, ByteDance will not miss this chance. It has deployed early, just after Baikemy.com secured many millions of US dollars in its Series B round to keep ahead of other peers in the content chasing-game. Not long before this announcement, ByteDance launched its TouTitao Baike (literally, TouTiao Encyclopedia) at the end of April. Undoubtedly this merging with a high-quality PGC platform will become another driver for boosting traffic and user stickiness. One noteworthy thing is the potential intention of ByteDance to conquer telehealthcare or healthcare IT. Baikemy.com has always been producing professional content that has been referred to by many prestigious Internet giants, such as Baidu Baike Encyclopedia, TouTiao and Tencent Medpedia. Beyond deploying in the Internet world, this medical tech company founded an Internet hospital in Hainan, Pugongying Hospital (literally ‘Dandelion Hospital’). Internet hospitals have been entering into the sight of the public since the first registration of Wuzhen Internet Hospital in 2015 – a year has witnessed the rise of this innovative industry. Later on, following the first trail policy introduced in Hainan province, more Internet platforms joined. Three months from June to August in 2018 saw many players flocking into this arena. Among them are WeDoctor, PingAn Good Doctor, Ali Health, Haodf.com, Miaoshou Doctor, Sogou, Baikeyiming and SoYoung – and it will be no surprise to see more soon. As for ByteDance, it is making a great leap from the short-video platform to healthcare service. However, considering push from the pressure from the content business, it is the right time to seek new growth opportunities by expanding to other companies. Undoubtedly, there will be an escalated struggle in the content economy, as more and more players from different segments join in with their characteristic eye-catching flair. Short-video companies are levering the livestreaming trait to accumulate more traffic. Livestreaming video game players cultivate online communities to engage in multiple businesses, from e-commerce to virtual gifts to advertising. (See EqualOcean’s livestreaming cases in our livestreaming report). And this leaves a question. How much business space can these new players imagine, and later occupy?

Analysis
Apr 5, 2020 · EO Company
Analysis
Mar 31, 2020 · Huxiu
Analysis EO
Mar 18, 2020
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Analysis EO
Mar 18, 2020

ByteDance Plans to Explore Education Further, as Online Education Gets Hot

Zhang Yiming, the founder of the world’s most valued unicorn, ByteDance, has expressed his intention to consider and plan new strategic directions towards education in a letter released on the eighth anniversary of the company.  “The online tutoring market has been very hot recently, and many people ask about my company's business progress. In fact, I am not anxious and have patience. I think it is still very early. The education business must have more fundamental innovations, of course, provided we have a deeper understanding. Especially for a company that already has a successful business, starting a new business is not easy. Bold attempts in new fields are an important sign of always starting a business.” Zhang said. CEO of one of ByteDance’s flagship product, JinriTuotiao, had similar views regarding venturing into education. He believes that in addition to recruiting the best teachers, the firm also needs to make breakthroughs in products, technologies and the combination of software and hardware.  “ByteDance’s education business is still recruiting people, and we expect that the number of employees of the business exceeds 10,000 this year,” Chen mentioned. In fact, as early as 2018, ByteDance was actively showing ambitions of stepping into the education industry.  The firm launched children’s English tutoring products GoGokid in 2018, the year when Children’s English tutoring was the hottest topic in the industry. ByteDance pounced at that opportunity to grab market share, however with tough competition from Tencent backed VIPKid, and a few other firms, ByteDance’s product didn’t see much success.  Then in 2019, Bytedance formed an online education platform for kindergarten, primary, and high school students, according to 36Kr. The platform planned to hire former employees of major educational training sites such as Xueersi and Yuanfudao. In November 2019, ByteDance took part in a strategic investment round of ‘Hope n Rising’ (新升力), a children's education products and content provider, making the TikTok creator its third-largest shareholder. ByteDance also announced last year that it is set to release a 24-hour artificial intelligence teacher for K12 students in China by early 2020. The latest AI teacher project is being led by Yang Luyu (阳陆育), who is also the co-founder of Musical.ly. The project team is working together with the former tech staff of Smartisan. In January, ByteDance acquired some patents and hired employees from Smartisan. In addition, LatePost has also revealed that Chen Lin (陈林), who is currently responsible for the innovation business side of Bytedance, is focusing more on educational hardware. This is an indication that educational hardware is seen as a crucial element of the firm’s move to break into the industry. Overall, it may represent a breakthrough point in its hardware strategy. As a veteran, in the internet industry, it should be easy for ByteDance to penetrate the online education market. While other companies burn millions of dollars in advertising, ByteDance has an advantage in areas such as traffic and algorithm creation. Previously ByteDance’s traffic was more entertainment-oriented and ‘fast-paced,’ whereas educational traffic has a ‘slower’ emphasis, with products that tend to associate quality and personalization.  Other than that, Zhang Yiming also announced a major corporate structure update saying that he will be focusing on the global markets – this move supports the realization of the ambitious globalization plans that he set at the firm's inception. It is evident that the epidemic has created a window of opportunity for huge tech giants to enter the education industry but at the same time firms which are already are in the business have stepped up to prove the strength and advantages of online education. By providing free online classes, companies such as Yuanfudao, GSX Tecchedu and Zuoyebang gained millions of users. Phyllis Zhang, head of the global market for ClassIn, one of the biggest online classroom providers told EqualOcean that, there would be two big impacts for the industry. First, the acceleration of offline institutions online and after the coronavirus, they will go back to their regular offline classes and leverage the technology for better learning and growth. The future of the education industry will be mixed with offline and online. Second, there will be an impact on the massive online dual-teacher’ classes also. The core of classes' quality still relies on teachers. When offline institutions go online in the small group class’ model, which is also the biggest strength of the offline institutions, the online dual-teachers’ classes would shift and target Tier 5 and Tier 6 cities.   Other than that, the firm is now planning to support more universities in Europe and North America to go online, as COVID-19 is now in pandemic status leading to the closure of offline schools around the world. UNESCO recently recommended a number of applications and platforms as distance learning solutions for the pandemic. The UN organization said these products tend to have a broad reach and user base, most of which are free, and some of them support multiple languages. Among the collaboration platforms that support live video streaming, Chinese products such as Feishu (飞书), DingTalk, and Hangouts Meet from Google and Teams from Microsoft were selected. Technological hurdles as 200 million Students and 200,000 educational institutions move online With the sudden change due to the pandemic, the supply-demand balance has been broken, and the ‘live broadcast platform’ is one of the most famous options.  After the official announcement from the ministry of education about the closure of all offline educational institutions, more than 200 million students and 200,000 institutions launched plans of migrating from offline to online. This caused problems for online education firms, whose platforms crashed due to the sudden overflow of users.  Platforms such as TAL Live Cloud announced that it would stop its services for some time. DingTalk faced a similar problem as tens of millions of companies used video conference feature at the same time. On the first day of a free live course streamed last month by Zuoyebang – a platform where students can seek answers to homework problems, and which has over 400 million users – its server crashed when five million users came online at the same time.  Another thing ByteDance will have to keep in mind is that for how many months will the schools remain closed? March, April or May? Should the parents really go for long-term paid online courses of stick to free online classes till school resume? Can the effect of online education, be compared to offline teaching? Is the online convenience more important, than the service experience? Companies will have to be careful with the effectiveness of online education.  One-on-One or One-to-many? In the early development stages, one-on-one teaching was considered as the main method. The core is to break geographical restrictions through the Internet to connect high-quality teaching resources across regions with students. It is similar to the C2C platform model of the e-commerce industry, the model used by firms like VIPKid, Zhangmen 1on1, etc., One-on-one online education is the earliest form of development in live lessons due to lower requirements for teachers and higher standardization of products. However, due to its relatively low teacher retention and relatively short user life cycle, the cost of customer acquisition is high. In the current situation, reaching profitability for this model is difficult. In other words, one-on-one online is a good demand solution but it is not necessarily a good profit model. On the other hand, one-to-many online classes are similar to the B2C model in e-commerce. The platform not only connects but also outputs standardized products and services, and undertakes more responsibilities of teacher training. The model is further divided into two classes with Xuersi, Yuanfudao, Zuoyebang and GSX techedu representing the dual teacher large class and New Oriental’s, DFUB representing the single teacher small class. Compared with one-on-one online, one teaching teacher can serve 20 to thousands of students at the same time. This results in the decline in the cost of teachers as a proportion of income, thereby achieving a higher gross profit margin and better profitability.  

Analysis EO
Mar 17, 2020
report
Analysis EO
Mar 17, 2020

ByteDance and the Rise of Three Zhangs: A Corporate Structure Story

On the eighth anniversary of ByteDance, Zhang Yiming sent an internal mail announcing a major corporate structure update and saying that he will be focusing on the global markets – this move supports the realization of the ambitious globalization plans that he set at the firm's inception.  Many see ByteDance as an outstanding Chinese firm that could continue to globalize its products and achieve the universal recognition that hasn't been achieved by any other social platform from the Asian nation. It is obvious that, for Zhang, the 'success' of TikTok and other notable brands is just the beginning. "He was never content with the extending ByteDance across the emerging world economies; he wants Europeans and North Americans,"  a founding member of ByteDance's overseas team who has previously managed major foreign markets for the firm told EqualOcean.  "He won’t stop until he conquers them" Zhang’s latest mail showed one thing. He is finally betting all of his experience in those regions where his iconic TikTok could not manage to penetrate. Meanwhile, he is leaving his largest market in the hands of those with the greatest track record. Kelly Zhang Nan (张楠) and Zhang Lidong (张利东) are the Bytedance team members that deserve the next greatest measure of credit for attracting hundreds of millions of users and translating a heavy user data-reliant business into a flexible, cash-making machine. The rise and rise of the three Zhangs The brand new China CEO, Kelly Zhang Nan, is the firm's ‘product guru.’ She is one of the creators of Douyin (抖音), TikTok's domestic version and ByteDance's flagship product, and she was there when Huoshan (火山)  – a social short-video platform that was designed to strike at Tencent (0700: HKEX) backed Kuaishou (快手) – was rising. After achieving exponential user growth with Douyin, she had also managed to keep Douyin's user growth while Xigua (西瓜) was positioning in the market in 2018, another short video product of the firm.  At the beginning of 2020, Douyin's average daily active users (DAU) reached 400 million in the mainland only. This figure was around 250 million at the beginning of 2019. This growth happened in a saturated Chinese market with many formidable contenders. She trumped any other product in the market. Huoshan’s DAU rose to around 50 million people at the beginning of 2020, which was around 25 million at the beginning of 2018. Meanwhile, Xigua was transformed into a Tencent Video challenger application, reaching over 55 million DAUs at the beginning of 2020.  Kelly Zhang Nan has transformed the way Chinese users absorb information, from texts to short videos, and taught them how to express themselves through the lens of smartphones. She was not only a simple product manager but a social engineer in the world's most populous country. She was lucky enough to be promoted as the head of Douyin while the short video market was booming in China and smart enough to seize the chance. Zhang Lidong, the firm's former head of monetization, was not cultivated in the country's burgeoning IT industry, unlike most of the executive members of ByteDance. He used to work in traditional media as a reporter and was invited to ByteDance by Zhang Yiming in 2013 as a partner and Senior Vice President. His main task and paramount Key Performance Index (KPI) was to monetize Jinri Toutiao (今日头条), ByteDance's news aggregator.  In those years, ‘Jinri Toutiao’ and ‘ByteDance’ (字节跳动) were terms used interchangeably by the Chinese netizens. It was ByteDance's largest and only significant product. 2013 was also the year when China's mobile internet users began to surpass desktop ones. Yet this obvious revolution was not seen by some other players. The names of those who watched this shift and failed to react on time were mostly deleted from the Chinese search engines later on, including Sina News (SINA: NASDAQ) which later on compensated for its loss with a Twitter-like product, Weibo (微博). Jinri Toutiao was an interesting news product. It collected news from a plethora of sources and recommended the stories to users based on their previous searches and interests. This mechanism, ingenious at the time, accumulated an impressive user base of around 50 million in only a couple years after its launch. It was also a costly operation to purchase all the intellectual property and media copyright rights to those news sources. Accumulating users was one thing, monetizing was another story. The company was amongst the first to integrate ads targeting different user groups, in a move to craft a lucrative advertising-driven business. In 2016, the news aggregator achieved annual revenue of around CNY 10 billion (an equivalent of around USD 1.4 billion). It was USD 2.2 billion for Twitter's advertisement revenues that year. The Rest At a regular Chinese internet company, stability is often key.  From the line manager to the employees, stability and loyalty count massively in performance evaluations. Stability is, of course, a kiss of death when it comes to a product's user growth performance. In the Chinese IT industry, investors, analysts, and entrepreneurs must see exponential growth – or at least solid growth – to give a piece of positive judgment. Chen Lin (陈林), for instance, one of the earliest founding members of the firm, joined ByteDance as a product manager in 2012 and was promoted to be the CEO of Jinri Toutiao in 2018. Although it is the market leader, Jinri Toutiao's monthly active users (MAU) have been hanging around the 300 million mark since the beginning of 2018, while the company's short video products had already grown multiple times over.  This ‘stable’ performance apparently was not welcomed. Technically, Chen Lin still holds the same authority as the Jinri Toutiao CEO and supposed to report to Zhang Yiming, yet it is a question as to who now will actually be reporting to who, as the China CEO is now Kelly Zhang Nan. Human resources management is part of the ByteDance story – it is one of the strongest weapons of the company. Thanks to its thorough HR practices and competent hiring managers, the firm has made a difference in global markets, with TikTok crushing its overseas competitor Kwai. It will broadly be supervised by Zhang Lidong after the strategic update. Global expansion and 2020 ByteDance has been seeking a Global CEO, one who can understand the west, the east, user data, and government relationships – so far they have failed to find one, so Zhang Yiming took up the responsibility. When Facebook and Twitter first went viral in the emerging markets and in the new territories, user acquisition costs were rock bottom and there was a clear need in the market. One didn’t have to invest much in user growth. There was no need to contemplate on local regulations as the legal systems weren’t sophisticated enough to respond. Things have since changed. ByteDance will have to do even better if Zhang Yiming is to realize his initial mission. Until he makes ByteDance a truly global company, he may defer going to the public. The costs of late globalization are getting higher and higher every day. Time is not Zhang Yiming’s friend in this quest, and he knows it well.

Analysis EO
Mar 7, 2020
report
Analysis EO
Mar 7, 2020

ByteDance Pushes Feishu to the Front in Virus-Hit China

The year 2020 started in an unexpected way; disasters came in bundles and undermined the foundation of the world economy. For China, COVID-19 pressed the deacceleration button for the country’s economy. The National Bureau of Statistics released that PMI (Purchasing Managers’ Index) for February dropped to 35.7%, which is 14.3% lower than the number for January. Compared to the threshold of 50.0%, a low PMI implies a slowing-down of economic activities as well as being a red flag to all economic bodies. Presumably, without the influence of COVID-19, enterprises and factories were to be back to work at the beginning of February. The disease put the country’s economy into hibernation and the back-to-work time is yet to be determined. Except for factories and go-outside business, companies are seeking solutions to sustain their business during the particular period while employees have to stay at home. This situation yielded a boom of remote work SaaS, which allows people to work together without violating the quarantine order. Acceleration caused by deacceleration Work collaboration tools were pushed to a vertex in one month. Among those tools, Feishu (飞书), the work collaboration platform designed by TikTok’s parent company ByteDance, rushed in the front, as well as Ding Talk (owned by Alibaba) and WeChat Work (owned by Tencent). Worth to mention, Feishu is the version for China market and its sister app, Lark. is for markets outside China. The remote work topic peaked as a search term on February 10th – the first workday after holidays. However, only a few companies resumed on-site work mode. Ding Talk attracted the most attention, then followed by WeChat Work and Feishu. Meanwhile, Ding Talk was topped in both IOS and Android app stores during February and sustained the ranking for straight 29 days. As Ding Talk disclosed last year, it had accumulated over 200 million individual users and 10 million enterprise accounts on its platform. Though the number presents a great success, the penetration of SaaS in China tells a different story. The manufacturing industry presented the highest SaaS penetration rate in 2018 while most other sectors remained below 5%. SaaS can be divided into several categories by its function such as CRM, ERP, HR, SCM, OA, IM, and so on. Among businesses requiring intervention due to the disease, OA and IM are the two most boosted SaaS types. How are the twins, Lark and Feishu? The three platforms Ding Talk, WeChat Work and Feishu have become the most popular work collaboration tools since the quarantine. They feature instant message, file sharing and some other OA functions. Being different from Ding Talk and WeChat Work’s parent companies, Lark, or say Feishu, is the first approach from ByteDance to dabble in the 2B business world. As an inner-incubated OA software, Feishu tries to make internal communication and work collaboration run smoothly; all other OA software offerings apparently failed to satisfy ByteDance’s own needs. The so-called ‘product factory’ launched Feishu as early as 2017. In looking at ByteDance’s investment activities, traits are apparent. Since 2016, ByteDance has begun to invest in and buy out startups whose core product might be integrated into Feishu. For instance, Sortime (朝夕日历), a calendar management SaaS startup, was purchased by ByteDance in 2017, and its CEO Chen Hao (程昊) joined the Feishu team at the time. In the meantime, ByteDance granted Feishu the highest degree of freedom – almost an independently-run company. Founder of ByteDance, Zhang Yiming (张一鸣), wrote on Weibo, “Develop a company as a product.” ByteDance has been mocked as the Foxconn of mobile applications for its fast pace in product development. It is undeniable that ByteDance is excellent in making C-end products like Toutiao and TikTok. ByteDance has green fingers in culturing the garden of million-user apps for the C-end market. Still, it must know how to improve enterprises’ efficiency to stand in the 2B service market. This pre-requisite  is bringing success to Feishu’s competitor Ding Talk in China, even though its parent company, Alibaba, is not the best ‘product manager.’ Alibaba is the behemoth in e-commerce, ably covering B2B, B2C and C2C. With nearly two decades of practice, Alibaba knows its customers’ needs – to be more specific, enterprises’ needs. It penetrates every ring of commercial activities: purchasing, transaction, logistics, marketing and so on. Synergy matters and for Alibaba, it has developed a service matrix to help its clients do business. The e-marketplace is the backbone of Alibaba’s business and products and services developed in the past two decades have contributed considerably to today’s prosperous e-commerce. Experienced in communicating with B-side clients, Alibaba’s Ding Talk was born with a natural advantage – relying on the mega-size client pool of Alibaba. Compared with the 6-year-old Ding Talk, Feishu seems to be a latecomer in the OA game, as it was founded in 2017. ByteDance is not as enriched in 2B experience as Alibaba, but from the perspective of digital marketing, it is a big vendor on a global scale and is still in a fast-growing status. Ding Talk is well-design for the majority of China’s firms based on Alibaba’s understanding of its clients. WeChat Work relies heavily on the national IM app WeChat, which has a billion-sized user pool. Either Feishu or Lark hardly depends on ByteDance’ pre-existing products like Toutiao, TikTok and Douyin (China version of TikTok), but its design fits better for Internet companies because Feishu was originally designed for ByteDance, the biggest new unicorn app producer in the world. Tools are designed for efficiency “Work tools reflect productivity level and Internet companies may prefer using Feishu on accounting; so Feishu is well-tailored for Internet companies…” said the former VP of Ding Talk, Zhang Sicheng (张斯成) in a previous interview with EqualOcean. Lark was first released in the overseas market, mainly the United States and Europe. In the second half of 2019, ByteDance released Feishu in China. Since then, its marketing team has lit the match and intends to heat the OA market via this product. Conversion costs are often a pain for users switching products, something which applies to OA services. Ding Talk acts like a platform and involves third-party SaaS developers, who provide varied add-on functions for Ding Talk users, including e-documents, payroll management, legal services, etc. As a pioneer in the OA area in China, Ding Talk has enjoyed the first-mover advantage – a deepening user pool introduces more developers and a bigger service matrix attracts users who need these functions. Feishu is light at the current stage, and it is a tool emphasizing work collaboration, which is vital for Internet firms. Third parties are joining the platform to provide SaaS products as well. For the SaaS market, products may share some similar functions, but their features explain what pain points they target at in an enterprise’s daily operation. Ding Talk serves companies with a clear vertical structure and Feishu fits better for horizontal organizations. Different products are designed for different needs and needs are changing as enterprises step into the next phase. Because of COVID-19, the quarantine flooded millions of new users into OA, and Feishu stands at the same beginning line with Ding Talk and WeChat Work. Ding Talk and WeChat Work are just as equal as Feishu – at least it is a comparatively fair game for Feishu. How does Feishu rush to the front when Alibaba’s business ecosystem has rooted deeply and firmly in the land of China? The question can apply to other SaaS services created by giants like Huawei and Tencent. The sunny side of this question goes back to the beginning of the topic – the SaaS market is still a blue ocean in China and the market is yet to be educated.

Analysis EO
Mar 5, 2020
report
Analysis EO
Mar 5, 2020

ByteDance’s Chances for a US IPO Further Dented

In a recent in-depth article published by EqualOcean, we reported TikTok’s determination to stay in overseas markets despite cybersecurity concerns. It was concluded that TikTok seems to be playing its cards well enough to stay buoyant in overseas markets. In France, where lawmakers are intervening heavily on content moderation, ByteDance, TikTok’s parent company, recently joined Syntec Numérique, one of the country’s main trade associations. In the United Kingdom, TikTok joined the Internet Watch Foundation, an organization fighting child pornography online that counts Google, Facebook and Snapchat among its members. As for the United States market of TikTok, things aren’t looking good. Recently, Republican Senator Josh Hawley said he will introduce legislation banning federal employees from using social media app TikTok on their devices and accused the company of sharing data with the Chinese government. Ignoring the fact that TikTok has previously said US user data is stored in the US and that China does not have jurisdiction over the app’s content, the Senator told reporters after attending a hearing on big tech’s connection to China that, “TikTok is scooping up immense amounts of data and they are sharing it with Beijing; they are required to.” According to SensorTower, lifetime user spend in TikTok has hit USD 175 million worldwide across the App Store and Google Play. This has largely been driven by Chinese users, who have spent USD 84.5 million or 48.3% of all revenue using the app. The US placed second, accounting for USD 62.4 million, or 35.7%. In its defense, a TikTok’s spokesperson said on Wednesday the company recently reached out to several lawmakers to express an interest in meeting them in the near future. The spokesperson added, “While we think the concerns are unfounded, we understand them and are continuing to further strengthen our safeguards while increasing our dialogue with lawmakers to help explain our policies.” With the company being valued over USD 70 billion, it looks like the time to go public isn’t very far, but if the situations remain this way, ByteDance might not opt for a listing in the US to dismiss the notion that it is desperately looking for an IPO. However, according to an analyst from China Guodi Securities, it’s unlikely ByteDance is worth that much. His statement might have some truth especially after witnessing the struggle of other huge companies such as Uber and Lyft IPO’s.  In October last year, people familiar with the matter told Financial Times that TikTok wants to go public in the first quarter of 2020 and has chosen Hong Kong instead of NYSE, but the company quickly denied the claim.  We believe that the company would go public eventually but the timing and the situation confronting it is very important and without the interest and support of US investors, its IPO has a big chance of failing. The short video platform loved by the nation’s teenagers with an MUA of 26.5 million, has already been banned by several US agencies that deal with national security and intelligence issues. TikTok is currently one of the most popular apps in the US, having been downloaded more than 123 million times in the country, but has experienced increasing scrutiny over the years. TikTok is owned by the Beijing-based company ByteDance which is accused of sharing user data with the Chinese government. Recent US lawsuits and regulatory actions found TikTok guilty of saving huge amounts of personal user data and supplying it back to China. The Federal Trade Commission fined TikTok for illegally collecting data on children, who comprise most of the app's user base. This is not the first time the company is facing such an issue. In December last year, following a ‘Cyber Awareness Message’ from the government, the US Navy banned TikTok from government-owned devices. A Navy spokesperson told The Guardian that generally, Navy personnel are allowed to use social media apps, although sometimes specific apps thought to be security risks are banned. The ban is enforced by the US army and the air force.

Analysis EO
Mar 3, 2020
report
Analysis EO
Mar 3, 2020

TikTok Determined to Stay in Overseas Markets Despite Cybersecurity Concerns

In recent years, there have been increasing concerns that misinformation and disinformation and other cybersecurity threats are spreading rapidly, with adverse effects on society, in particular through abuses of user trust. In response, many governments have started to legislate – and are applying existing laws more strictly. The difference between the first two threats refers to whether inaccurate information is deliberate (disinformation) or unintentional (misinformation). ‘Cybersecurity threats’ is a larger term encompassing all malicious actions based on abuse of digital systems, including hacking, viruses, unwanted surveillance, sexual abuse, and more. The inclusion of false information as a form of cyber threat is a phenomenon that has gained particular importance recently. Misinformation and disinformation came to the forefront through two highly publicized events in 2016: the US election (when accusations of ‘Fake News!’ flew frequently) and the UK’s Brexit referendum. During the build-up to these important votes, misinformation was spread, both by small-scale outlets and individuals and state-level actors in the form of covert or overt propaganda. Research on the aftermath of both events has shown that fake news undermined public trust and possibly influenced election outcomes. However, the spread of misinformation and disinformation is not limited to the US and Europe – it has also been spreading in Latin America, Africa, South Asia and Southeast Asia. In India, for example, the ruling Hindu-nationalist BJP party has been accused of fomenting and benefitting from numerous disinformation campaigns. These events reflect that political actors around the world have realized that social media can be used to influence electorates, both inside their countries and in foreign countries. Overall, two broad drivers of misinformation/disinformation and cyber security threats can be distinguished: propaganda and commerce. The commercial drivers of misinformation and disinformation are the ‘clickbait’ triggers that persuade us to engage with and share content online. Modern algorithms have enabled actors large and small to attract large audiences on social media platforms, which is then monetized. Some people have responded by creating fake news or clickbait to make an income. Income is generated by attracting attention and serving targeted advertisements. The publisher of the disinformation is paid by the ad network based on the number of visitors they manage to attract. Other threats that overlap with the commercial drivers of online content have clustered around the gathering and monetization of user data. A resonant scandal in this regard cropped up after Donald Trump’s election, when a British research firm was found to have been able to access data for millions of American voters, enabling the Trump campaign to target them more narrowly. Much of the blame for the bulk of the fake news and data scandals has been laid at the door of Facebook. However, other social media networks and search engines, including Twitter and Google – as well as ByteDance products – are also increasingly implicated as sources of cybersecurity threats, often as creative bad actors use new (sometimes under-regulated) technology to stir trouble. Take TikTok. TikTok is a Chinese-developed social network that allows for creation and sharing of original content, especially videos and pictures. Used by millions of mostly young users worldwide, over the past 12 months, the app was downloaded more than 750 million times on app stores, outpacing US competitors Facebook, Instagram, YouTube and Snapchat, according to data from research firm Sensor Tower. It now counts more than 500 million monthly active users across the globe, including some 12 million in its largest markets in Europe – mostly in Germany, France and the UK. However, the app’s developer, Beijing-based ByteDance, was labeled a national security threat by US lawmakers earlier this year. The Federal Trade Commission found the app had illegally collected personal information from children, and in February and fined the company USD 5.7 million. Moreover, the United Kingdom’s data protection authority launched its own investigation, looking into whether TikTok violated privacy rules in handling the personal data of its underage users. According to The Guardian, Information Commissioner Elizabeth Denham told a parliamentary committee that the probe started in February after the US Federal Trade Commission levied a USD 5.7 million fine against TikTok for breaking laws protecting children’s privacy. Denham further said that the commission is examining how TikTok collects private data and has concerns about the open messaging system, which may allow adult users to contact children. “We are looking at the transparency tools for children. We’re looking at the messaging system, which is completely open, we’re looking at the kind of videos that are collected and shared by children online. We do have an active investigation into TikTok right now, so watch this space,” she said. In addition, European interventions could follow, under the EU’s tough General Data Protection Regulation, which allows for fines of up to 4 percent of a company’s annual global turnover. Recently, The Italian authority for Privacy (GPDP) has launched a coordinated action to review the risks linked with the TikTok app – an attempt to protect children’s privacy rights. The Italian DPA is calling on the European Data Protection Board (EDPB) to set up an ad-hoc task force. In a letter sent to the EDPB on the 20th of January, Antonello Soro, President of the Italian DPA, confirms that they have already received alerts regarding alleged vulnerabilities of the smartphone app and that other supervisory authorities such as the UK ICO and the US FTC have already started separate investigations. Soro asked that this issue be put on the agenda of the next plenary meeting of the EDPB, to be held in Brussels on the 28th and 29th of January. On the other hand, ByteDance seems eager to get itself a seat at the policymaking table. In the past few months, the company has hired policy experts in London, Dublin, Paris, Berlin and Brussels to help it navigate the European legislative environment and get involved in policy debates. In fact, this is not the first time a Chinese technology company has been faced with disinformation /misinformation and data security concerns. TikTok’s domestic competitor KuaiShou is even worse when it comes to data protection, especially children’s data protection. While this writer was working at KuaiShou’s headquarters in Beijing two years ago, the company’s app didn’t have any algorithm whatsoever to prevent adults sending private messages, or videos with unsuitable content, to children. Moreover, if those adults were reported to the company for harassing others, the company would only freeze their account for a week or two. There were also loose controls over collecting parental confirmation from users under 13. As a result, there were a lot of complaints from overseas markets, and their brand in those markets started to decline. Currently the company has lost most of its foreign market share and is trying to boost its domestic market more. However, it seems like TikTok is playing its cards well enough to stay alive in overseas markets. In France, where lawmakers are intervening heavily on content moderation, ByteDance recently joined Syntec Numérique, one of the country’s main trade associations. In the UK, TikTok joined the Internet Watch Foundation, an organization fighting child pornography online that counts Google, Facebook and Snapchat among its members.

Analysis EO
Feb 10, 2020
report
Analysis EO
Feb 10, 2020

Unveiling the Most Influential MCN in Kuaishou

Why be interested in YOWANT? Live streaming has been the most loved type of service in China’s consumer market for a while. KOLs or influencers are the content generators during a typical hot live streaming show. Two of the most celebrated KOLs, Viya (薇娅) and Li Jiaqi (李佳琦), who attracted 30 million viewers last Double 11, have raked in CNY 2.7 billion (USD 389 million) and CNY 1 billion (USD 144 million) in sales respectively. However, the whole industry chain is more complicated than a live streaming studio. Factories, brand merchants, advertisers, KOLs, MCNs, e-commerce and UGC/PGC platforms have altogether created an ecosystem behind the shows. The MCNs who possess (have signed contracts with) over 90% of the KOLs are the real force that generating hype and sales to support the rising medium. Kuaishou, one of the top short video platforms in China, has been releasing the most influential MCNs on its app since February 2019. One MCN company named YOWANT stands out, having retained the number one ranking since May 2019. At present, YOWANT has built co-operations with Douyin (the Chinese version of TikTok), Kuaishou, Taobao Live and other well-known streaming platforms. It has more than 50 influencers and has signed more than 10 celebrities, including Wang Zulan and Zhang Bozhi. The company boasts 150 million fans, over 10 billion accumulated video views and more than 2.5 billion monthly exposures. Besides, the company began to monetize its short video content in September 2019 and had achieved CNY 3 million in average daily sales by December. How does YOWANT grow? Founded in November 2010, YOWANT positioned itself as a digital marketing solution provider and has been improvising its business to keep surfing the top of the market wave. From 2013 to 2014, its main business was Internet-based advertising distribution. It served Baidu, Tencent, NetEase and other Internet players, matching different marketing needs to the right resources. In the following two years, it entered into the mobile game market, serving as third-party operator and advertiser, leveraging its advantage in distributing channels. Two years after that, YOWANT established a matrix WeChat official account, covering e-commerce on consumer products, beauty and skincare education and others from 2017 to 2018. The business model of ‘pay for content’ started to come out in revenue. After 2019, the company started to concentrate on social e-commerce and to train Internet influencers though short video platforms and other e-commerce platforms. These rapidly evolving business strategies of YOWANT coincided with the development of the MCNs in China recent year, which is one of the reasons for its current leading position among 6,500 counterparts. How’re YOWANT numbers? In March 2018, A-Share listed company Saturday (002291:SZ) acquired 88.57% of the shares of YOWANT for CNY 1.8 billion (USD 284 million). Saturday paid CNY 474 million in cash and the rest of the CNY 1.314 billion in shares. An announcement from Saturday also showed that the two parties signed an agreement promising that the recurring net profit of YOWANT attributable to shareholders of the parent company in 2018, 2019 and 2020 should be no less than CNY 160 million, CNY 210 million, and CNY 260 million, respectively. In 2018, the recurring net profit of YOWANT exceeded the promised amount of CNY 8.369 million, with a completion rate of 105.23%. Any worries? The rapid development of short video platforms in China has fostered a large number of users who are accustomed to watching live broadcasts and short videos; at the same time, it has incubated thousands of influencers who can turn their Internet traffic into profits. Moreover, due to the competition between giant Internet platforms on live streaming and short video fields, other players in the industry chain can still benefit from the current business model. But risks coexist with opportunities. From the development experiences in other countries, the bargaining power of MCNs – as an agent to connect upstream (the influencers, celebrities) and downstream (brand merchants, e-commerce platforms, UGC/PGC platforms) – is low on both sides. That makes MCNs a weak link in the whole industry chain, especially compared with the Internet content juggernaut as a whole. Therefore, when the competition between the platforms ends, the reshuffle of the MCN industry will accelerate.  More importantly, the capability of generating good content is the core competitiveness of an MCN. The ability to guarantee constant, good quality marketing content will differentiate a winner from the competition. The current MCNs, though they ‘own’ some influencers are also facing the conundrum of a lack of talent, as the top KOLs are a scarce resource for all players. The cost of attracting influencers or training them will also be crucial for an MCN’s future. Last but not least, as the live commerce model is exploding, problems have surfaced, especially in terms of the quality and after-sales service of the goods brought through the live show period. EqualOcean believes that in the future, MCNs with more resources and connections with suppliers and brand merchants will be more advantageous. The MCNs that dig into one or several product verticals, such as apparel, jewelry or cosmetics, will possess more bargaining power and will be more likely to get a profit. Despite all the risks, there will be at least one or two leading companies emerge from the crowd. From the development history of YOWANT, we can surely see the strategic vision of the founding team. In November 2019, the company set up a CNY 5 million fund called ‘Cradle’ (which is homophonic with the company’s Chinese name) to ensure that consumers can buy goods via its live broadcasts. If the products are problematic, the fund will be applied in compensation. In addition, YOWANT also set up a special live broadcast customer service team to ensure a trouble-free after-sales service for consumers. The fund is the first such venture among players in their sector.

Analysis
Jan 15, 2020 · EO Company
Analysis
Jan 15, 2020 · EO Company

The journey of byte bounce

Analysis EO
Nov 17, 2019
report
Analysis EO
Nov 17, 2019

As Chinese Short Video Apps Invade Brazil, TikTok and Kwai Do Battle

The largest country in South America and home to more than 205 million people, Brazil recently became the battlefield between the Chinese Douyin (抖音) short-video app, in its international version TikTok, and similarly oriented Kuaishou (快手), whose global version is called Kwai.  ‘The two giants’  TikTok is a creation of Shanghai-based giant tech company ByteDance (字节跳动). Launched in 2017, it followed shortly after the massively successful Douoyin in 2016. The tech firm has global offices in Los Angeles, New York, London, Paris, Berlin, Dubai, Mumbai, Singapore, Jakarta, Seoul, Tokyo, and São Paulo.  Kuaishou, also known as Kwai in the global market, was founded in 2011. The firm provides the same sorts of services as TikTok, and it is the main competitor in the worldwide market alongside American rival Instagram. It claims to be one of the largest social video sharing platforms in the world, with more than 700 million registered users. The global version Kwai is accessible in Brazil, India, Turkey, South Korea, Russia, and Vietnam. Since its foundation, the company registered user’s growth has skyrocketed, and today it’s evaluation has reached  USD 25 billion. In 2018, Kuaishou received over USD 1 billion in a private equity round led by tech giant Tencent ( 腾讯, 0700:HKSE).  The Catch When giants fight, the market shakes, and the world halts to watch the combat. The rapid growth of internet penetration in the biggest South America economy, Brazil, has attracted the attention of many Chinese short video apps, notably the fast-growing TikTok and Kwai.   The critical question here is why these two giants are targeting Brazil. Several factors might include: Brazil’s heft: a population of 211.6 million 2019, with great growth potential More and more Brazilians have access to the internet, and internet penetration reached 70% with over 149 million internet users, and 66% of Brazilians are mobile internet users Brazilians spend a total of 9h 29 min per day on the internet, above the world average of 6h 42min, ranking the second in the world after the Philippines, and third on hours spent on the internet on mobile devices Brazil is also a member of BRICS, an international organization that includes the other emerging big economies like China, Russia, India, and South Africa. Through the common goals and facilities of market integration the organization can provide, tech enterprises from member states can quickly enter and integrate into each other’s markets. Brazil, the ‘battlefield’ of Chinese giants TikTok entered the Brazilian market after Instagram and Facebook had come to dominate it. The company quickly conquered the Brazilian market and set up an office in São Paulo. After a few months, the app became the most downloaded in the country with over 18 million active users. In recent months, Kwai has experienced rapid growth and opened its own first office in São Paulo. The company achieved a figure of over 7 million daily active users (DAU) in Brazil. The app has been among the four most downloaded in the Brazilian Android store since July 31, according to Sensor Tower ranking.  The two short video app providers have turned Brazil into a fierce battlefield to see who can win the 146 million Internet mobile users’ attention. The filters and tools that make editing easy have become a hallmark of these applications. They also bet big on a common feature: short videos. In Kwai, videos can be up to 11 or 57 seconds long, while in TikTok, they can last between 15 seconds and one minute. However, Kwai has another version of a short video app, VStatus, that permits users to generate and share videos on their WhatsApp statuses. It has more than 120 million users in Brazil, which represents 56% of market penetration.  For videos, Kwai ranked the second after YouTube, with gross revenue of USD 78 million, 99% of which came from China in the second quarter of 2019. While TikTok follows as the next top gross revenue app, it retained the status of the most downloaded apps after the Facebook suite. Before Q2 2019, TikTok was the most downloaded app for five consecutive quarters on the Apple App Store. Although Chinese apps are gaining more popularity in Brazil, they are still far behind American apps like Instagram and Youtube. The American apps are the most downloaded apps in the apple store.  Recently, Instagram announced it would launch its new short video platform under the name ‘Cenas’ (Reels in English), which will compete with TikTok and Kwai in Brazil. ‘Cenas’ will present similar features like the Chinese giants' short video apps, allowing anyone to record a film of up to 15 seconds by performing a choreography or dramatic interpretation of a song.   Note that Kwai is more prevalent in Brazil, while TikTok has already conquered the Indian market. And Instagram’s new app launch will enhance the competitiveness of the small video market. How Brazilians will react to the Instagram move is not clear; however, it has already joined the battle.

Analysis EO
Jun 1, 2019
report
Analysis EO
Jun 1, 2019

A Tale of Two Eras: ByteDance from AI to AIoT

On May 29, TikTok's parent company ByteDance confirmed its plan of developing education hardware product. As early as January 2019, ByteDance has acquired a patent portfolio and hired employees from Smartisan/Chuizi Technology (锤子科技), a Chinese technology company specializing in consumer electronic devices. It then registered six trademarks under the name of Zijie Chuizi, literally "byte hammer." At the time, ByteDance had released its plan to explore the education area.  ByteDance has the reputation as an "app factory" by intermittently releasing apps for mobile users, the most famous of which include the short-video platform Douyin (the domestic version of Tik Tok), and news aggregator app Toutiao. As of January 2019, the apps had provided ByteDance with more than 600 million DAUs and upwards of 1 billion MAUs, generating a substantial amount of advertising revenue.  The secret behind the massive traffic flow is the underlying AI algorithms. By tracking user behaviors and feedbacks – browsing history, time spent on each item of  content, time of the day to use the apps, comments, favorites, and dislikes – the apps push interesting contents to target users to retain. Larger user base helps refine the algorithms, resulting in more accurate contents recommendations and more data to the satisfaction of both users and advertisers. Though valued at as high as USD 75 billion, ByteDance has seen an moderation of its growth in the domestic market, where it derives most of its advertising revenue. In 2019, ByteDance takes more measures to find new monetization possibilities and build its competency in the coming IoT era. A history of failures Expansion into education was a key strategy for ByteDance in 2018. In February 2018, ByteDance launched an app called HaoHao XueXi (Good Good Study) (好好学习), which was similar in functionality to pay-for-knowledge apps such as Dedao (得到) and Ximalaya FM (喜马拉雅); in May, ByteDance unveiled one-on-one English tutorial service Gogokid, benchmarking VIPKID and Dada English; in December 2018, it introduced a Neural Network algorithm-based English teaching product called aiKID. None of the moves has succeeded so far but ByteDance is still enthusiastic about the education sector. On May 9th, it launched Dali Ketang (大力课堂), a K12 online education platform, offering courses for students during the upcoming summer vacation. This is another saturated market with established incumbents such as Xueersi (学而思) and Yuanfudao (猿辅导). A move to AIoT It's common for Internet giants to expand to the hardware market. Amazon, Google, Facebook, and Microsoft have all dabbled in the manufacture of smartphones and smart home devices. China' s BATJ (Baidu, Alibaba, Tencent, and JD.com) also have tapped into this market. With the development of 5G and NB-IoT, AIoT opportunities proliferate in the consumer market, and IoT devices become the new traffic entrance and edge data and computing center. According to the recruitment page of ByteDance's website, the company is looking for hardware engineers and experienced smart devices product managers. Educational hardware could well be a starting point and more smart devices are expected. ByteDance could start building its own AIoT infrastructure and ecosystem by rolling out hardware products. And the AI-enabled content recommendation capabilities, coupled with its enormous user communities, will likely be a bridge for it to transition into a new era. 

Analysis EO
May 7, 2019
report
Analysis EO
May 7, 2019

Chinese Video Streaming Apps Dominate the Overseas Market

The top of the list remains stable and continues to be dominated by Bytedance’s app Tik Tok. Although many applications in the list use pan-popular entertainment as the main content strategy, the latter half of the list shows that the overseas game live broadcast market is receiving more and more attention from Chinese manufacturers. In the TOP20 download list of this issue, there are 5 live game applications, including Nimo TV, Cube TV, StreamCraft, Game.ly Live, and Noonlive. Among them, IGG "StreamCraft" started testing in local markets in early 2018 and began to work in various markets such as Indonesia and Latin America in January of this year. The 20 apps on the list received 414 million downloads in the overseas App Store and Google Play during the Q1 application period, up 103% from the 204 million downloads in the same period last year, 57% of which came from the Indian market, Indonesia and Brazil each accounted for 4.9% and 4.5%. The overseas version of douyin, "Tik Tok" has surpassed USD 11 million in the first quarter, up 135% from USD 4.88 million in the same period last year. The US market contributed 66%, followed by the UK market with 9%. During Q1, BIGO LIVE's overseas income was nearly USD 52 million, accounting for 52% of TOP20's total revenue, up 57% from the previous year's USD 33 million. The main income of BIGO LIVE is still from the Middle East market. Q1 Saudi Arabia contributes 39% of the total revenue and the US market contributes 22%. In the 20 applications on the list, the total revenue of overseas App Store and Google Play exceeded USD 100 million, up 35% from USD 74.7 million in the same period last year, 34% of which came from the US market, and Saudi Arabia, Taiwan and Japan each accounted for 26%, 3.4% and 3.3% respectively. Tik Tok recorded its best first quarter yet for new users over the past three months, adding an estimated 188 million during Q1 according to the same source. This marked a year-over-year increase of 70% from Q1 2018 when 110 million users installed ByteDance’s hit app for the first time. Tik Tok was the third most installed app globally during Q1 across the App Store and Google Play, the same rank it held during the previous quarter. It was ranked behind only Facebook’s WhatsApp and Messenger at No. 1 and No. 2, respectively. According to thenextweb internet users grew by 8.6% during the past 1 year globally, a total of 4.43 billion users including 350 million new users by the start of April 2019. The number of Social media users has also increased by more than 200 million since this time last year to reach almost 3.5 billion.  India Tik Tok’s largest market accounted for the greatest share of growth in internet users in the first quarter of 2019, with data from the Telecom Regulatory Authority of India showing that the country added more than 44 million new internet subscribers in the first three months of the year. With the company already claiming more than 500 million active users and more than a billion downloads it is clear to why so many people believe TikTok is the next big thing in the world of social. On Apr 17, 2019, the Indian government asked Apple and Google to remove Tik Tok because of inappropriate content and a couple of other incidents caused by the app. Soon after a week’s time on Apr 24, 2019, Indian Madras High Court reversed the ban. According to the people in charge of Tik Tok, currently, the company has hired almost 500 employees and is planning to expand the team scale in the future to provide more localized services to the Indians. In Dec 2018, Tik Tok ranked 1st in Indian Play Store and exceeded WhatsApp, which ranked 1st in 2017. Indian users occupied 39% of the Tik Tok's 500 million global users. In a nutshell, India is the largest overseas market of Tik Tok. With the further promotion of the Belt and Road policy, companies such as ByteDance will pay further attention to the overseas market and provide more localized products.

Analysis EO
May 5, 2019
Analysis EO
May 5, 2019

A War Between Two Chinese Internet Giants: Baidu and ByteDance

A war between two Chinese internet giants, Baidu and ByteDance, has been lasted for several years, mainly fighting for copyrights and gaining competition advantages. Recently, an event attracted public attention again. On April 26, The World Intellectual Property Day, Baidu initiated a lawsuit against ByteDance on the grounds that ByteDance had stolen its research result, which was regarded as illicit competition by Baidu. Baidu requested that ByteDance must stop stealing behavior immediately, and asked for compensation in related economic losses and reasonable expenses totaled CNY 90 million (USD 13.37 million) from ByteDance, as well as apologizes on ByteDance’s APP and website homepage for 30 consecutive days. At the same day, Douyin, the short video product of ByteDance, also initiated a lawsuit against Baidu on the grounds that Baidu had stolen quantities of videos from Douyin. And Douyin proposed the same claim on compensation. Before 2018, Baidu and ByteDance don’t seem like the direct competitor with each other. Baidu is the biggest website and search engine in China, while ByteDance is more like a content platform. However, it changed from 2018. Baidu enters the short video market ByteDance has been the champion in the short video market in China for many years, depending on its several short video applications including Douyin, Xigua and Huoshan. Among them, Douyin is definitely the top one with 250 million domestic daily active users (DAU) by the end of January, 2019, according to ZHANG Nan (张楠), the president of Douyin. TikTock, the overseas version of Douyin developed by ByteDance, also had great performance all over the world from launched in the summer of 2017. It has been launched in more than 150 countries with more than 500 million monthly active users (MAU), and ranked download volume first in the local AppStore or Google Play list in Japan, Thailand, Indonesia, Germany, France, Russia, etc., according to ByteDance. However, ByteDance has to compete with many other players. Except from its biggest peer, Kuaishou, which ranks second in MAU followed behind of Douyin, Baidu is another potential strong peer, which launched two short video applications in 2018, namely Haokan (好看视频) and Quanmin (全民小视频). Haokan is a short video app, offering a wide variety of user generated and professionally produced content often in coordination with multiple platform networks. Haokan allows users to upload, view, search, rate, share, favorite, comment, and follow. Video content creators and curators can distribute their content to build a fan base and receive revenue share for their content contribution. Quanmin is a flash video app for users to create and share short videos, usually less than one minute long with the following orientation: musical, dance, comedy, acting and lip-sync, and live videos. Users can shoot or upload flash videos and edit them with built-in special effects, filters and stickers. Contents are distributed in personalized timeline powered by Baidu AI recommendation algorithms. In Dec. 2018, Haokan ranked fifth among short video applications with 75.01 million MAU, while Quanmin ranked ninth with 23.02 million MAU, according to QuestMobile. According to Baidu's financial report, Baidu has increased spending in channel and brand marketing over the last year, to increase awareness and drive traffic growth for the family of Baidu apps, including Baidu App, Haokan and Quanmin. As of Dec. 2018, Baidu App’s DAU increased to 161 million, with a year-on-year increase of 24% and a growth of 6.62%. Thanks to the growth of these three apps, Baidu’s network flow users grew by 112% year-on-year. To promote these three apps, Baidu won the bid for 2019 CCTV Spring Festival Evening Exclusive Interactive Platform, and gained lots of flow. According to Baidu, the amount of global audiences interactions in Baidu App reached 20.8 billion times, and the peak of Baidu App’s DAU exceeded 300 million in 2019 Spring Festival . On every list of apps market, these three apps’ downloads skyrocketed in this period. depending on its research flow and financial resource, Baidu has advantages to realize high-speed development in short video business. Although the user amount of Haokan and Quanmin is far less than Douyin at present, Baidu is possibly a strong competitor of ByteDance in the future. ByteDance launches search function In March of this year, Toutiao, the news and information content app of BtyeDance, launched search function. Users can search the information in Toutiao, which is from Toutiao itself and other sources, including Baidu. That’s why Baidu initiated a lawsuit against ByteDance. Baidu is the largest Chinese search engine all around of world. Many Chinese network companies have ever developed search engines to compete with Baidu, including Youdao, iAsk, Jikesoso, QQ Search, etc, but most of them failed. Sogou is the only one that develops well today, but it’s not strong to compete with Baidu. So how can ByteDance make any difference? Based on the abundant content generated by users these years, Toutiao launched search function in it at first, by which users can search some topics. However, it has to provide the search service from all websites if it wants to satisfy its users’ different search demand. So it realized now. As one of the best media platforms on content personalized recommendation, Toutiao has accumulated more than 200 million users. Based on its users, ByteDance developed other products very fast, such as Douyin, Xigua, Huoshan and Neihanduanzi, among which Douyin’s users amount has surpassed Toutiao from June last year. So will its search function develop as fast as ByteDance’s other products and bring more users and flow to it? Compared with Baidu, Toutiao is better on users loyalty. Most users may take a look and find something interesting in Toutiao, because users regard Toutiao as a content platform which know what they like. But users won’t do it in Baidu, which is only regarded as a search engine by most of its users. In this respect, Toutiao has great opportunity. However, there is some technical problem for search function that ByteDance needs to solve, including semantic analysis, information storage, Precise content matching, etc. One staff from Baidu said that users can find the difference between Baidu and Toutiao if search some specific information about life. Baidu performs better in term of content matching. The war between these two companies is ongoing. Each of them has advantages to develop these new businesses, but they face some difficulties as well. Let’s see who will make it.

Analysis EO
Mar 29, 2019
Analysis EO
Mar 29, 2019

How Could the Byte Dances?

Mar 12, 2019, is the 7th anniversary of ByteDance, one of the largest Internet giants in China. ZHANG Yiming (张一鸣), the founder and CEO of ByteDance, gave a speech at the conference. According to ZHANG, ByteDance is a company that is both pragmatic and romantic. ByteDance is considered to have replaced Baidu as the newest "BAT" member. EqualOcean has been following ByteDance closely. Therefore, we want to provide a thorough analysis of this giant Internet enterprise. ByteDance's History: Instant Fame and Growing Steadily In 2012, ZHANG found that although there are huge resources on the Internet, users cannot find what they are interested in a short time. He believes that the Internet should introduce interesting content to users in a straightforward manner. This determination made him establish ByteDance. The company's flagship product, Toutiao, was established in Aug 2012. At the time, Toutiao was a new app inspired by a personal recommendation system. It could push the news to users based on their likes. Toutiao gained great success after its publication. In the first 3 months, Toutiao gained more than 10 million users and attracted famous investors including Sequoia Capital, DST, SIG, and Sina Weibo. ZHANG Yiming also became famous along with his company. At the very beginning of Toutiao's foundation, ZHANG also published Neihan Duanzi (内涵段子), an app that shared jokes, short videos, and interesting pictures to its users. At the time, it had more than 200 million users. On Apr 10th, 2018, the supervision department shut Duanzi down. However, the failure of Duanzi never stopped ByteDance. In May 2014, Meipai (美拍) was published. Meipai is a UGC short video sharing platform where users could take movies, MVs and even look broadcasts. In Sep 2016, ByteDance published Tik Tok, which is also a short video sharing platform. Tik Tok (抖音) is different from Meipai. The former focuses more on background music, filters, and special effects. Combined with the same recommendation system in Toutiao, people got addicted to Tik Tok, and the app achieved global popularity. On Jul 2018, its monthly active users (MAU) exceeded 500 million. In 2018 Q1, Tik Tok was ranked the number one app in terms of downloads. On Jan 15, 2019, ByteDance published Duoshan (多闪), which aimed to be the competitor of Wechat. Instant fame and the continued use of its customized recommendation system, ByteDance grew rapidly and is now an Internet magnate with a valuation of about USD 75 billion. A pragmatic and romantic company with dream and empathy ZHANG Yiming started his ByteDance in Jinqiu Jiayuan (锦秋家园), a community located in Haidian District, Beijing. Founded in a house instead of an office building, ByteDance grows healthily with a group which is full of dream and empathy. By the end of 2012, ByteDance began to talk about its internationalization and its potential English name. ByteDance was decided at that time. Although most of its employees didn't have the experience of going abroad, they all believe that mobile Internet must have an international opportunity. During that time, ByteDance hoped to accelerate its internationalization process. Now, ByteDance has an international influence with a strong short-video empire. ZHANG Yiming gave an example in his speech. One of his colleagues told him that he would go to India for research and study. Several days later, he was still in Beijing. ZHANG asked him the reason, and his colleague said that he was refused by customs due to his unreasonable certificates. His colleague used an APEC certificate to go to a country which is next to the Indian Ocean because he mistook IDN as India, which should be Indonesia. However, one week later, he went to India and shared short videos on Tik Tok. He did a lot of research and even hired a lot of candidates with poor English level. ZHANG used this example to show his team is one that is full of dreams. According to ZHANG, there’s always limited resources in our lives. The office space is limited and there's a language barrier, but we can still pursue our dreams. ZHANG shared a saying that space is limited while dreams are not. Another important label of ByteDance is empathy. ZHANG said that empathy is the foundation while the imagination is the sky. Logic and tools are located in-between. ByteDance, according to ZHANG, is a company that is both pragmatic and romantic. Having empathy makes up pragmatic while having imagination highlights the company's romantic feature. Productions will not have spirit without empathy and can never meet the user’s needs. However, having empathy would never be enough because imagination could help to make the production perfect. Strategic Growth: How could ByteDance win such a great number of users? ByteDance gained great success with the help of the increasing development of mobile Internet. From 2017-2018, the MAU of the mobile Internet increased from 1024 million to 1131 million and reached a stage that is relatively mature. However, with Toutiao and Tik Tok, ByteDance has already gained lots of users over the last few years. Not only did the number of active devices increased significantly, but the time people spent on mobile Internet apps increased. From Dec 2016 to Dec 2018, the daily time people spent on mobile Internet apps increased from 265.8 minutes to 341.2 minutes. With a larger user base and longer spending time on apps, the mobile Internet industry increased greatly and ByteDance took advantage of the opportunity. Besides the macro environment, ByteDance also tried a lot in other fields and enriched its strategic arrangement. Currently, ByteDance has entered into many other fields such as finance, education, E-commerce, social software, etc. The income of ByteDance became diverse with its huge user base. Therefore, ByteDance is doing well. Case study: How did Tik Tok become a success in such a short time? Let's take Tik Tok as an example. Tik Tok grew rapidly. Currently, the app owns the largest user base in short video. Several reasons should be taken into consideration when analyzing TikTok's rapid growth. To start with, Tik Tok makes good use of Internet celebrities. At the very beginning, it treated Internet Celebrities as its own employees and actively helped them to be famous. In 2017, ByteDance held a celebration summit for its Internet celebrities and announced its USD 300 million spent to help them attract more fans. According to ByteDance, they aimed to create 1000 Internet celebrities with more than 1 million fans in 2018. The Internet Celebrities helped Tik Tok to attract lots of users and grow into a giant player in the short video industry in such a short time. On the other hand, Tik Tok pays attention to stimulate anyone's creativity. Lots of people share popular restaurants, game videos, cooking guidance, etc. Now, everybody knows the popular menu of Haidilao (海底捞), a hot pot restaurant which became more popular with Tik Tok. In addition, Tik Tok would publish lots of video labels and start different kinds of activities. For example, Xiaomi started its challenges on Tik Tok to look for its “Battle Angel”. The video label attracted lots of users and upload more short videos. Tik Tok also provided lots of tools. Therefore, a user can easily make a short video with a smartphone. Thousands of popular background music and special effects are inside Tik Tok, and it would never be difficult for users to make their short video. Users could also check interesting reviews while looking at the video, which saves a lot of time. ByteDance, with thousands of engineers and its own AI lab, has core competitiveness that it could recommend the favorite resources to its users. Being different from Instagram, which you can only see what’s shared by someone you follow, Tik Tok offers its users opportunities to see the production of other creators. Meanwhile, artificial intelligence could analyze what you like and introduce the related videos to you specifically. Lastly, commercial opportunities attract lots of users to Tik Tok. This platform allows users to put the link of their productions into the short video, which offers them the chance of commercialization of their video productions. For example, an Internet celebrity named “Yeshi Guy” (野食小哥), who eat delicious foods in the field, began to sell food in his video, and thus make a lot of money. With new money-making opportunities, more and more users begin to join Tik Tok. Tik Tok is just one of the examples that show how ByteDance can reach success. ByteDance’s Future: Not only the new BAT but new business opportunities By the end of 2018, Reuters reported that the ByteDance's valuation had reached USD 75 billion, which is larger than Baidu's USD 65 billion. Reuters assumed that in 2019, ByteDance may merge with Baidu, and makeup to the new “B” of “BAT”, which refers to the top 3 Internet companies of China: Baidu, Alibaba, and Tencent. In China, the online advertisement Industry is a red-ocean market. According to i-Research, 10 companies including Tencent and Sina occupied the most market share of the USD 73 billion market. However, the combination of Baidu and ByteDance has an attracting future. Their combination could not only cut down costs but also help each other. Baidu could help ByteDance to gain more business customers, and its strong AI could help ByteDance to better its service. With Baidu’s help, ByteDance may have a higher valuation to be listed in the public market. Many ways can be helpful for ByteDance to make more money in the future. First of all, ByteDance’s AI technology could help with other fields such as IoT. It's becoming a norm for artificial intelligence to work as a strong tool in the IoT industry. Although most of ByteDance’s businesses are based on software, it is possible that this company could have cooperation with hardware manufacturers and better their service. Rokid (若琪), for example, is an AI smart speaker manufacturer. With a simple order “Ruoqi”, one could open it and give it orders to play music, radio, or online stories. With ByteDance’s AI technology, Rokid could push more interesting resources which is more precise than before. Games are almost the fastest way for a data-centred company to transfer its huge data flow into money. In Mar 2019, ByteDance acquired Shanghai Mokun Company (上海墨崐), a professional game manufacturer. Although ByteDance has billions of users all over the world, the company's game making ability is relatively weak. When Mokun joined, ByteDance may publish online games and create more channels to make money. With the existing advertisement platform, Toutiao and Tik Tok, once ByteDance publishes its own game, a better cash flow statement is foreseeable for sure. E-commerce is another interesting story. Taobao (淘宝), Tmall (天猫), PDD and many other E-commerce platforms are competing with each other. ByteDance, however, offers another ecologic system for E-commerce. Similar to the Internet celebrity story mentioned earlier, ByteDance could naturally transfer its Internet Celebrities’ fans into customers of its E-stores. Fans are willing to pay for their idols regardless if they are a video maker, news writer, broadcast anchor, etc. In this way, ByteDance may have the possibility to play as an E-commerce platform in the future. More and more families (especially young families) are able to have another child due to China's elimination of its one-child policy. With the violent competition among children, parents are willing to pay for extra-school education, ranging from kindergarten to K12. Graduates do not want to lose their competitiveness in work and wish to learn more. The online education market would be enlarged in the next decade. ByteDance has already tried to enter into this market. Gogokid, an online English teaching app, has attracted lots of users especially in tier 1 or tier 2 cities. According to 36Kr's recent news, ByteDance is preparing its own K12 online school with a planned release date this summer. The online education could definitely become one of the ways for ByteDance to make more money. However, it depends on the quality and operation of its education apps. Whether ByteDance is regarded as the new “BAT” member, it has already won global attention with its USD 75 billion valuations. More than 150 countries allowed Tik Tok to enter their market. Some even regard Tik Tok as the next Alibaba in the short video industry. The internalization is a long way that's full of interests and risks, but we have already seen how the ByteDance dances with its ideals of having a dream, empathy, pragmatic spirits and its romanticism. ByteDance could keep on dancing and continue to enrich our lives.

Analysis EO
Feb 9, 2019
Analysis EO
Feb 9, 2019

Meet Science and Technology Innovation Board, China’s Nasdaq

The China Securities Regulatory Commission(CSRC), known as China’s securities watchdog, published recently a rule on the implementation of the Science and Technology Innovation Board (STIB) at the Shanghai Stock Exchange. STIB, which is widely regarded as the China’s Nasdaq, was initially announced by President Xi Jinping in his keynote speech at the opening of the first China International Import Expo in Shanghai on November 2018, that the Shanghai Stock Exchange will launch a new board to experiment with a registration-based system for listed companies, reported China Daily.  The CSRC has now issued a statement saying that the STIB will focus on companies in high-tech and strategically emerging sectors such as new generation information technology, advanced equipment, new energy, new materials and biomedicine. Eligible companies are allowed to be listed by filing required documents under the pilot registration system, while the current new shares of the A-share market (A股市场) have to gain approval from the securities watchdog. The new regulation formula gives the Shanghai Stock Exchange greater freedom to attract potential technology startups, amid growing competition from rival exchange including the Hong Kong Stock Exchange and Nasdaq. “Establishing the sci-tech innovation board and piloting the registration system is a key reform initiative for the capital market to enhance the capability to serve sci-tech innovation enterprises, raise market inclusiveness and strengthen market functions,” the Shanghai Stoch Exchange says in a statement at its website.  “Through new mechanisms of issuance, trading, delisting, investor suitability and capital restriction for securities companies, through introducing medium-and long-term capitals and other supporting measures, the pilot program will be carried out in an incremental way, and new capitals will be introduced in accordance with the progress of the pilot program, thus aiming for a balance between investing and financing, between the primary and secondary markets, and between the interest of old and new shareholders in listed companies, facilitating positive market expectations,” says the statement. The key points of the rules issued by the CSRC include: Registration-based IPO The new board will make it the first time that a Chinese stock exchange adopts a registration-based initial public offerings (IPO) mechanism to startups fundraising. Under the registration-based IPO system, regulators will review applicants’ earning potential, rather than requiring them to meet the requirements of being consistently profitable for 5 years, such as the A-share market. The A-share includes the only two Chinese stock exchanges, the Shanghai Stock Exchange and the Shenzhen Stock Exchange. A-shares are shares of mainland China-based companies, and these shares were historically only available for purchase by mainland citizens because China restricts foreign investment. Since 2003, select foreign institutions can purchase them through the Qualified Foreign Institutional Investor system. Market-oriented pricing principle The Science and Technology Innovation Board uses a market-oriented pricing principle to the institutional investors. The registration system will bring about a stronger market-based regulation mechanism, which highlights "foot voting" of risk-savvy investors and the responsibility of securities intermediary institutions. "It will have a profound influence on the future rollout of the registration system in the main board, the SME board and the ChiNext board," reported Xinhua News Agency, citing Dong Dengxin, head of the research institute of finance and securities with Wuhan University of Science and Technology. Stringent delisting regulations  The STIB provides a new financing channel for Chinese technology-based enterprises, and also provides an exit channel for VC/PE investments; the registration system helps the venture capital market form a real closed cycle. But the problem is also expected that many worthless enterprises, also known as “zombies”, will enter the new board under the relatively flexible access policy. The new rule also provides stringent information disclosure and delisting terms to protect the interests of investors, which is conducive to the optimization of stocks in the capital market and the realization of the transformation from empty economy to entity economy. Investors protection The regulator has set up an investors access management section in order to protect the potential investors. The rules require investors to have at least 2 years experience on stock market trading and CNY 500 thousand for investment. The regulation rules also require the issuer, sponsors, securities trading service institutions, and the stock exchanges to take responsibilities to disclose relative information. The registration system relies heavily on information disclosure. At present, the level of information disclosure of domestic enterprises needs to be improved, and the protection mechanism of investors’ rights needs to be further improved. It is worth noting that the design of the trading system and mechanism of STIB challenges the wisdom of supervision that needs to be a balance between the regulatory appropriateness and market liquidity. The potential STIB enterprises There is no doubt that the STIB will attract lots of Chinese technology unicorns for their IPO, and we have picked the following potential enterprises that are most likely to go public on the STIB from EqualOcean’s EO 500 portfolio. SenseTime (商汤科技) SenseTime is an artificial intelligence company that focuses on innovative computer vision and deep learning technologies. It has raised USD 2.89 billion from investors home and aboard. DJI (大疆) DJI Innovations is a Chinese company that produces commercial and recreational unmanned aerial systems. Bytedance (字节跳动) Bytedance is a recommendation system product based on data mining that recommends valuable, personalized information to users in China. Souche (大搜车) Alibaba-backed Souche, a leading automotive new retail platform in China, is founded by Mr. Yao Junhong. About the EO 500 portfolio: EqualOcean reports and researches companies with potential from the investor's perspective, and is covering an increasing number of outstanding startups in EO 500 portfolio. The portfolio comprises innovative companies, which are highly valued (mainly unicorns) with new technologies, solid teams, growth potential, and huge market demand, etc.

Analysis EO
Feb 5, 2019
Analysis EO
Feb 5, 2019

Du Xiaoman, Bytedance, Alipay, Who Will Be the Winner of New Hongbao War?

In Chinese society, people usually give friends or families monetary gifts that are called Hongbao (红包 or red envelope) during holidays or special occasions such as weddings or the birth of a baby. Since the Lunar New Year is the most important for Chinese people, the most amount of Hongbao will be given during the celebration of new year festival. The traditional Hongbao were usually given with the form of a red color envelope filled with banknotes which symbolizes good luck. While in recent years, technology companies have “digitalized” the way people give Hongbao. During the Lunar New Year of 2014, WeChat, the most used social media app in China, introduced a digital way of sending and receiving Hongbao by using WeChat’s payment feature. At the Lunar New Year Eve of 2014, there were 8 million people used WeChat’s digital hongbao and sent or received over 40 million Hongbao. As users have to register WeChat Pay with their bank cards, the viral marketing campaign brought over 10 million new mobile payment users for the company. In the Lunar New Year of 2015, digital Hongbao had already a fashion trend for Chinese people. At that year, people have sent and received over 1 billion Hongbao on WeChat, as WeChat became the largest sponsor of the CCTV Spring Festival Gala, the most popular TV program in China ever. The way WeChat did in 2014 has waked up other technology giants. Baidu and Alipay (Ant Financial backed by Alibaba) joined the war of giving Hongbao in 2015. People called it a “Hongbao war”. In fact, the Hongbao war between Alipay and WeChat is the slowdown in China ’s increasingly competitive third-party mobile payment market. The virtual hongbao services provided by WeChat and Alipay, which took advantage of social networking and mobile payment technologies, turned out to be a major success during the 2015 Lunar New Year festival. At its peak, Alipay’s mobile payment service, Wallet, received 880 million Hongbao requests per minute, while a similar service by WeChat was used 810 million times per minute. According to Alipay, in the 24 hours starting from 1 a.m. on Feb. 18 (the date of Lunar New Year Eve of 2015), 683 million users participated in Hongbao games via Alipay Wallet; during the period, a total of 240 million Hongbao worth CNY 4 billion (USD 639.93 million) were given out. Alipay’s service peaked at 8 p.m., Feb. 18, when a game attracted as many as 883 million hits in a minute. Alibaba Chairman Jack Ma also attracted 30 million users to a cash giveaway activity, giving out a total 999,999 red envelopes. On the same day, WeChat and the Spring Festival Gala also jointly launched a Hongbao activity. Users can participate in the game or check the latest updates on the show by using WeChat’s “shake” feature. According to WeChat, 14.3 billion messages were sent via WeChat on the Lunar New Year’s Eve and the “shake” feature was used for more than 11 billion times. The war continues to now, and more players are coming in, including Du Xiaoman, the fintech arm of Chinese search engine giant Baidu, and Bytedance, the parent company of Tik Tok and Toutiao. As EqualOcean reported before, Du Xiaoman has become the exclusive hongbao sponsor for CCTV’s Spring Festival Gala 2019. And all Baidu-backed apps will be included in this campaign. Hongbao can be obtained through various Baidu apps such as Du Xiaoman, Baidu Map, Baidu Tieba, and Baidu Cloud Drive etc.. During this campaign, money received from hongbao will be stored in Du Xiaoman Wallet (度小满钱包), formerly known as Baidu Wallet. This whole campaign will last 8 days and Hongbao will be distributed in four sessions. Baidu says this year AI technology will be used in the spring festival’s Hongbao campaign, more details will be disclosed later. And also, Bytedance’s widely used apps such as Toutiao, Tik Tok (Chinese edition), and Xigua Video will launch Hongbao feature for users. The company will invest over CNY 500 million (USD 74 million) into the Hongbao Campaign. The company’s most popular app Tik Tok will also invest another CNY 500 million into its Hongbao campaign. Users will be awarded digital Hongbao by inviting friends to the app, uploading phone address book into the app, and binding up their phone numbers. In this years campaign, WeChat adds a new feature into its Wallet, making enterprises able to set sinks for their red envelope, which will certainly become a new way of branding. And you can even add network emotion into the Hongbao that you send, making it more fun to do so. It’s obvious that the main reason for technology giants to invest millions of money into Hongbao Campaign is to seek more users. In the meantime, people’s way of sending Hongbao has been deeply changed. Maybe its time when people get tired of the technology giants’ war. The Hongbao war, which has lasted for 5 years, has also changed the way people blessing each other. The traditional Hongbao comes with face to face greeting and language communication. But the essence of digital red envelope is more like what’s inside the envelope: people would like to give and receive it, while always tend to cover it.

Analysis EO
Jan 28, 2019
Analysis EO
Jan 28, 2019

ByteDance Banned By WeChat During The Competition War

Jan 27, 2019 /EqualOcean/ - WeChat Official Account published its official notice of The Treatment of Induction of Violation and Hostile Confrontation to WeChat Regulation Rules on Jan 25, 2019. WeChat pointed out ByteDance's several apps that have violated the rules: Toutiao (今日头条), Huoshan Videos (火山视频) and Xigua Videos (西瓜视频). WeChat claimed that the ByteDance's products violated rule as induction of traffic, to be more specific, these products use text links or picture QR Code for the users to communicate and spread the contents from ByteDance. WeChat claimed that it has the right to ban the communication of the link, ban the IP address, and ban the account connection in these platforms to these violated companies. This seems to be a fair conducting method, but it needs to be concerned that can a company ban the connecting link and set the rules only by itself? According to Sina.com, Since Jan 22, Tik Tok's new users cannot use the Wechat login link "Log in through WeChat". The login page provided from WeChat shows "this application has not acquired the authority of login from WeChat", the same situation happens to Tik Tok's QQ login link as well. After click on the "confirm" button, Tik Tok gives the notice as "There exist issues for WeChat Login Service, only the users that have logged in with WeChat can use the WeChat login link. Tik Tok is contacting with WeChat to solve this issue, we suggest you to use the phone number to log in Tik Tok". The battle happens since January 15, when Tik Tok's Parent Company Launches Social App Duoshan, and the public sees it as the action to against WeChat.  Duoshan's login link is banned by WeChat on the first day of issue. The banned reason given by Tencent is "This page has been reported multiple times as it contains insecure contents. To keep WeChat safe for all members, this page cannot be accessed now". Now, Duoshan took the WeChat login link off, and users can only login through their Tik Tok account or create a new account through phone numbers. There are several articles that are widely spread on the internet pointing out that Tik Tok is stealing the relationship circle from the users' WeChat Account. Many Internet users are furious on the data leakage, and then the WeChat Notice is published right today. LI Liang (李亮), the vice president of ByteDance, responded on this battle of his Toutiao account, saying that "The abuse of market dominant position will harm the users' right, and it will hurt the healthy development of the industry. It is reasonable to ban the app under competition,  but spread the rumors, and pretend to be kind-hearted publicly is really ridiculous". The interesting point is if what LI Liang say is the truth, why Tencent didn't ban the login link to against ByteDance before? My personal opinion is the history of two companies matters. Tencent is the top internet company in China, the company runs its internet empire based on its 1 billion WeChat users. According to the Statistical Reports on Internet Development in China published by China Internet Network Information Center (CNNIC), there are 802 million internet users in China by June 2018. This shows WeChat is the must use application that needs to be installed on the mobile phones in China. Also, the WeChat users number is greater than the Chinese internet users shows in two reasons: there are many oversea internet users have installed WeChat and communicate with WeChat; some Chinese people have two WeChat accounts, one WeChat account is for life, the other is for work. Based on the traffic the social network brought from WeChat, Tencent furthermore builds its games, news, email and other functions in its empire. Founded in September 2016, Tik Tok was first not being noticed by the public. Up to December 2016, WeChat has more than 889 million monthly active users, announced by Tencent's official report: 2017 WeChat Users & Ecological Study Report. The situation in 2016 was, WeChat, the giant in Social Network was growing rapidly in China. However, at that time, WeChat didn't see Tik Tok as its competitor. Tik Tok is recognized as the competitor of Kuaishou (快手), and these companies are merely regarded as music short video platform, nothing to be worried about. The question should be asked, "What is innovation then? Is it the situation that a better-trained horse win the case, or the first car that Ford manufactured and brought to the world will win the case?" The answer is obvious, the innovation always came from the competitor what people thought that belongs to the other industry previously. November 2017, the parent company of Tik Tok, ByteDance, acquired Musical.ly, the favorable music content application that has more than 20 million global daily active users (DAUs) and 6 million DAUs in North America. Musical.ly has created many innovative methods to attract the users, like the challenge which is called feature. Ordinary people can attract other users’ attention by providing fancy content, and the background of the ordinary people can connect better with the users. After this acquisition, Tik Tok adds many interactive activities and events that were originally very successful in Musical.ly, and Tik Tok is providing its specific music background and the music is widely spread after the 2017 CCTV Spring Festival Gala. Tik Tok increased its DAU from 40 million to 70 million and gradually upgrade its position from a pure content platform of music short videos to a social platform. Nowadays, Tencent sees clearly that ByteDance could be its competitor, and this company has the possibility to hurt the stable WeChat empire. Tik Tok, the flagship product of ByteDance focuses on the strangers' socialization. That is a different market WeChat focuses in, as WeChat builds on the real-life relationship. This time, ByteDance debuted its close friend socialization app Duoshan, which could really have a chance to attract the users' attention. Tencent dislikes the new competitor, and choose to ban the link to the competitor. However, it is a perfect time for Tencent to innovate its own product and brings a better user experience, isn't it? If a company dislikes the fair competition environment, the question that whether this company can keep being a leading innovative company is doubted.

Analysis EO
Jan 15, 2019
Analysis EO
Jan 15, 2019

Tik Tok’s Parent Company Launches Social App Against WeChat

January 15th, 2019 / EqualOcean/ - Bytedance held a press conference for its first-ever social network product launch and the slogan of the press is “So Young (这是年轻的时代)” indicating that this is the era of the young. It has been rumored since the end of last year that the new product would still base on the short-video form but emphasize the social network feature comparing to its most popular app Tik Tok (Douyin in China). The newly released social network product is called Duoshan (多闪), a short-video based social network app within close relationship circles. According to other media, Bytedance has registered the domain name “flipchat.com”, and hence the product name released outside of China will be Flip Chat with a great chance.  The Vice President, ZHANG Nan (张楠) claimed that the product is closely related to Tik Tok and is hatched by Tik Tok as well. Duoshan is defined as “short video + instance chat” for the 5G time and includes six functional modules: snap video, instant message, video red packet, stickers, a special module named Wo You Dian Xiang Ni (我有点想你) meaning “I am kind of missing you”, and World. The special module can be activated by sending a heart emoji to the person you want to reach, then all chat history will be recalled within app and user can re-connect with the person by starting a new conversation. The World module allows users to watch more video contents and provides a scenario for users to interact with old friends. During the press, CEO of Toutiao CHEN Lin (陈林) stated that Duoshan is not aiming to compete with Wechat, the most-used social network app in China. In his opinion, Duoshan is not going to compete in a red ocean of social network but instead, it wants to discover a different social network. Line, WhatsApp, and Messenger might be competing for the same market, but Twitter, Instagram, and WhatsApp can co-exist peacefully with each other. Duoshan should be treated as in the latter case. However, Wechat has disabled Duoshan’s link sharing by the time this article published. The restriction is probably caused by a sudden and giant flow rush into a specific webpage and then automatically triggered flow-regulation mechanism of Wechat. The error page when accessing duoshanapp.com. Photo: Yingwei Fu for EqualOcean. Tik Tok as an interest-orient social network product is different from instant message apps. However, the communication need generated and accumulated during the usage of Tik Tok has concerned Tik Tok's CEO and the team for a considerable long time. Tik Tok allows users to have private talks within each other, but the bond between users is hard to last long as Tik Tok is not designed for communication but as a community for video sharing. Similar to Twitter and Instagram, people use them to share views, news, and nice photographs, and inter-users communication is not a focus for both and similar products. But the communication need suppressed in Tik Tok should find a place to be satisfied. Thus, the Tik Tok team hatched today-released product Duoshan to solve the communication need generated within the Tik Tok community. Duoshan inherits some properties and features from Tik Tok - both are interest-oriented networking and in Bytedance ecosystem. It is said in the press that Duoshan would be separated from Tik Tok structure in the future and operated as an independent product. Bytedance, as commonly known as Toutiao (the used name of the company) by the west, is a Chinese unicorn company valued at USD 75 billion. Its latest financing, series F, was co-led by SoftBank China, Primavera Capital, and KKR with a total amount of USD 4 billion. Bytedance’s most popular products are news-orient app Toutiao (今日头条) and Tik Tok. Tik Tok, as one of the most popular short-video based social network apps, current MAU (monthly active user) is between 400 and 500 million outside of China, while China’s MAU was more than 400 million and DAU (daily active user) excessed 200 million dated November 2018.  The Tik Tok Chinees user image has shifted in 2018 comparing to the data in 2017 from top-tier cities to lower-tier cities. The increase of users resulted in enlarged portion of lower-tier cities signals that Tik Tok has made progress in market sinking – from top to bottom (or urban to rural). According to SensorTower, around 42% of Tik Tok’s revenue in Apple Store, nearly USD 1.5 million, was generated in the U.S., which increased 144% year-over-year(YOY) from October 2017. Chinese users contributed approximately 39% of the total, or USD 1.4 million. Tik Tok’s YOY revenue collected from global Apple Store surpassed USD 3.57 million.  Another star product of Bytedance is the news-oriented app Toutiao. Toutiao's current MAU is approximately 260 million. The new push is generated according to Toutiao users’ reading behavior and interest. The customized push content is the core competency of Toutiao, which helps Toutiao to retain and gain active users. The algorithm embedded in Bytedance’ products are based on big data and deep learning - the more data accumulated, the more accurate the pushed content. Whether in Tik Tok or Toutiao, the customer stickiness is ranked top in app stores and thanks to Bytedance’ massive data accumulation and data-cultured algorithms and furthered optimizations.

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