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The Wall Street Publication > Blog > Tech > ByteDance’s Revenue Growth Slowed Last Year Amid China Clampdowns
Tech

ByteDance’s Revenue Growth Slowed Last Year Amid China Clampdowns

Editorial Board Published January 21, 2022
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ByteDance’s Revenue Growth Slowed Last Year Amid China Clampdowns
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Revenue at Chinese social-media giant ByteDance Ltd. rose by about 70% last year to roughly $58 billion, slowing from a year earlier, people familiar with the matter said, as Beijing tightened scrutiny over its internet sector and as an economic slowdown hit advertising sales.

The Beijing-based maker of popular short-video platform TikTok and its mainland Chinese counterpart, Douyin, briefed senior staff members about its financial performance this week, the people said. In 2020, ByteDance’s revenue more than doubled from the previous year to $34.3 billion, The Wall Street Journal has reported.

A ByteDance spokesperson didn’t respond to a request for comment.

Over the past year, Chinese officials have introduced data-collection and antimonopoly rules to curb the influence of the country’s most powerful technology companies. China’s leaders have criticized “the disorderly expansion of capital” and expressed concerns about the cybersecurity and social-stability risks arising from big tech’s control of the data of millions of citizens and their influence over everyday life.

The Communist Party’s top disciplinary agency, in a communiqué published Thursday, vowed to “cut off any collusion between capital and political power.”

Chinese tech juggernauts Tencent Holdings Ltd. , Alibaba Group Holding Ltd. and Baidu Inc. each suffered slowdowns in year-over-year revenue growth in the most recent quarter for which they have reported. The pinch from new regulations and a sluggish economy have prompted companies in the sector to lay off thousands.

ByteDance is one of China’s hottest startups—last valued at $180 billion after a fundraising round in late 2020, counting Sequoia Capital and SoftBank Group Corp. among its investors—and relies on advertising for most of its sales.

The company shot to prominence within China and globally with its viral short-video platforms Douyin and TikTok. TikTok, whose content includes makeup tutorials and catchy dance routines, saw its global monthly users surge past 1 billion in September. The app is widely regarded as China’s most successful social-media export.

The slowdown in the company’s revenue growth last year was earlier reported by Reuters.

A Wall Street Journal investigation found that TikTok only needs one important piece of information to figure out what you want: the amount of time you linger over a piece of content. Every second you hesitate or rewatch, the app is tracking you. Photo illustration: Laura Kammermann/The Wall Street Journal

After years of strong growth, the revenue and user numbers for its two most popular apps within China—Douyin and news aggregator Jinri Toutiao—both appear to have peaked, people familiar with the matter said.

In November, ByteDance told employees that its domestic advertising business had stagnated for several months because of fierce competition and a softer business environment, two of the people said, pointing to tighter regulations in various domestic industries, including education, gaming, e-commerce and real estate.

In recent years, ByteDance itself had expanded into education, gaming and other business areas. But the company has begun to retreat from some of them since the middle of last year as part of a reorganization overseen by newly installed Chairman Liang Rubo to trim costs and streamline operations, two of the people said. ByteDance has since cut thousands of employees, the people added.

ByteDance’s founder, Zhang Yiming, stepped down as the company’s chairman in November to focus on long-term strategy.

On Wednesday, ByteDance said it would dismantle its strategic-investment unit. That came as Chinese regulators prepared to roll out new rules that would require large internet companies to obtain formal approval for investment and fundraising deals.

Staff from the unit, which had served as ByteDance’s corporate venture-capital arm, will be moved to other teams, a company spokesperson said, adding that the decision had been made earlier this month.

With ByteDance facing challenges at home, the company is banking increasingly on TikTok to drive growth.

ByteDance told some employees earlier this month that TikTok’s advertising revenue last year was nearly $4 billion, according to the people familiar with the matter. The company has set ambitious targets for this year and has been expanding global teams, one of the people said.

Still, the company’s overseas expansion may soon face its own headwinds. Last month, TikTok said that it would modify the algorithm on its app to avoid negative reinforcement of certain types of content.

More broadly, policy makers around the world have stepped up investigations into TikTok and its competitors, especially Meta Platform Inc.’s Instagram, over data-privacy concerns and the psychological impact that these platforms may have on younger users.

TikTok lost its head of global marketing, Nick Tran, this month after disagreements between Mr. Tran and management, according to people familiar with the matter. Vanessa Pappas, TikTok’s global chief operating officer, will take over Mr. Tran’s responsibilities until the service finds a replacement, one of the people said.

Mr. Tran’s departure was earlier reported by The Information. TikTok and Mr. Tran didn’t immediately respond to requests for comment.

—Raffaele Huang and Salvador Rodriguez contributed to this article.

Write to Liza Lin at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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