This analysis was first published in SvD Näringsliv, in Swedish, on July 11th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
TikTok’s owner Zhang Yiming wanted to build a Chinese Google, inspired by Silicon Valley. His success has now placed the parent company ByteDance at the center of a geopolitical conflict.
He doesn’t like to be called “the boss,” even though that is the custom in major Chinese corporations.
Zhang Yiming — the founder of the tech conglomerate ByteDance — prefers to liken his business empire to American peers like Google and Meta.
On ByteDance’s website, the company’s stated values are listed, and first among them is “Always Day 1” — a phrase that could come from any Silicon Valley company. It refers to the entrepreneurial mindset of constantly staying open to new ideas and not getting stuck in what has come before.
This is something Yiming appears to have taken to heart. He has, in many ways, built something as unusual as a Chinese company that has made a significant mark far beyond its home market. And because of that, he has also ended up squarely in the middle of a geopolitical conflict between the US and China.
Zhang Yiming began his career at various Chinese tech companies in different technical roles. In 2008 he moved to Microsoft, but found the big-company rules too rigid. He therefore chose to resign and return to the startup world.
His first breakthrough came in 2012, when he spotted an opportunity to create a news service that aggregated different sources and let AI help with the selection and presentation of content. The result was the service Toutiao, which went on to become one of China’s most popular internet services.
But the ambition went further than that, which explains the model with ByteDance as a parent company. The structure needed to be able to accommodate more businesses.
Where the inspiration came from is easy to see. ByteDance’s offices featured posters, including one displaying the book cover of “How Google Works” by then-CEO Eric Schmidt. Google has a similar corporate model with its parent company, Alphabet.
The success of Toutiao allowed Yiming to attract venture capital from well-known names around the world. Sequoia Capital — one of the world’s most famous venture capital firms — became the largest new shareholders in the company when they invested $100 million in ByteDance in 2014.
Since then, investors including SoftBank, General Atlantic, and the giant KKR have become co-owners. In 2021, ByteDance’s valuation was rumored to be around $250 billion — roughly a staggering 2,600 billion kronor.
That is approximately one third of Meta’s valuation of around $730 billion, or eight times larger than Spotify’s $31 billion.
ByteDance now has a range of different operations in many countries. But it is one single holding that has accounted for by far the largest increase in value, and that has put both Yiming and his company on the map.
In September 2016, the app Douyin was launched — a service where you can watch videos in vertical format. Douyin was, and still is, only available in China. Since users of the service could upload their own videos, oversight of what was said had to be strict to avoid trouble with Chinese authorities.
At the same time, a similar service — also from China — existed but with a focus on the US market. It was called Musical.ly, and was acquired by ByteDance for what was rumored to be around $1 billion. The app was renamed and relaunched globally as TikTok. The rest is history.
While many other Chinese tech companies like Baidu and Tencent have had China as their primary market, Zhang Yiming has created a genuinely international tech conglomerate. But the company’s geographic home has now put it in turbulent waters.
For an app that initially focused on lip-syncing and dancing, TikTok’s impact on the world has become remarkably large. In autumn 2020, the US Department of Justice called Zhang Yiming a “mouthpiece” for the Chinese Communist Party. A few months later, he stepped down as CEO, handing over to co-founder Rubo Liang.
As recently as this spring, TikTok’s CEO Shou Zi Chew was questioned by the US Congress amid suspicions that the app posed a threat to national security. There are proposals to force TikTok to separate American users’ data, but no decisions have been made yet.
While the debate continues, another ByteDance app — CapCut — is racing up the charts around the world. Geopolitics and technology move at two different speeds.
Yiming managed to break out of his China and achieve what few Chinese entrepreneurs have managed. He has an internationally successful tech company, with users all around the world.
But the company must now come to terms with standing in the shadow of the Chinese regime. If you let ByteDance into your country, are you simultaneously letting in the Chinese Communist Party? That is the question Yiming — now as a major shareholder — needs to answer.
Yiming can change many things. But the company’s origins are something he cannot change.
