Recently, the short video platform TikTok (international version of Douyin) is facing a comprehensive ban in the United States. On the evening of April 23, the U.S. Senate passed a $95 billion foreign aid package, which includes provisions requiring the divestiture or prohibition of TikTok. President Biden has signed it into effect, marking the first legislative regulation against a technology company in the United States in decades.
The legislation demands that TikTok and its Chinese parent company, ByteDance, separate within one year. Failure to sell or divest will result in a complete ban.
TikTok collects a large amount of user data on its platform and uses its designed recommendation algorithm to push personalized content to users. Currently, around 170 million people in the U.S. use this application.
An app from a hostile country, capable of influencing half of the U.S. population through content manipulation, raises serious national security concerns among American lawmakers and think tank experts.
In August 2020, then-President Trump issued an order requiring TikTok to divest its U.S. business from its Chinese parent company within a specific timeframe. However, the ban on TikTok was later ruled to be terminated by the U.S. courts.
For years, both China and the U.S. have been in a tug-of-war over TikTok, with TikTok’s claims of no security issues ultimately being rejected. TikTok claims it will block the implementation of this law by the U.S. courts.
Some commentators believe that while the court can terminate presidential orders, overturning a law is extremely difficult. To file a lawsuit for unconstitutional acts, confirmation of a violation of the Constitution by nine Supreme Court justices is required to nullify congressional legislation. The U.S. Constitution primarily protects the basic rights of American citizens, making it challenging for the judiciary to make decisions on national security issues, often respecting the legislative power of Congress.
The TikTok legislation once again places ByteDance and its founder Zhang Yiming at the center of public opinion.
ByteDance was renamed to Douyin in April 2022.
In the Chinese narrative, ByteDance was born in March 2012. Many media outlets have reported that the international group Hina owned around 15% of ByteDance. In fact, Hina supported Zhang Yiming’s idea of founding ByteDance and invested in and supported Zhang from the very beginning.
Hina Group (SIG) was founded by six American Republicans, including Jeff Yas and Arthur Dantchik. Its mystery lies in its non-disclosure of financial indicators. In 2005, Hina Asia Venture Capital Fund, a subsidiary of Hina International, was established in Shanghai. Hina Asia invested in the portal website Ku6 in 2005, where the then 20-something Zhang Yiming had served as the technical director.
In 2009, the real estate department of Ku6 was spun off into a new independent company called 99 Fang, with Zhang Yiming appointed as CEO. 99 Fang claimed to have a sophisticated search algorithm, and this search technology later appeared in ByteDance. A Hina Asia director once wrote to a colleague stating that the 99 Fang website laid the groundwork for the birth of ByteDance.
In early 2012, after Wang Qiang decided to invest in and support Zhang Yiming’s new project, Hina Asia injected slightly over $2 million into Zhang Yiming’s startup that year, followed by further investments worth hundreds of millions. Wang also introduced other investment institutions to Zhang, helping him secure more funding. Zhang Yiming described the new project as a “sibling company” of 99 Fang.
Wang Qiang’s investment memo revealed that a prototype app developed by Zhang Yiming called “Neihan Duanzi” seemed to be well-received by users. By selecting content users wanted to see, it could trigger viral spread.
The recommendation algorithm of “Neihan Duanzi” was used in Toutiao and some subsequent short video apps developed by ByteDance. This algorithm propelled ByteDance’s rapid growth.
As a news client information platform App that relied on algorithmic feeds, Toutiao rapidly grew amidst fierce competition with internet giants like Tencent, Alibaba, and Baidu.
For a long time before the rise of Douyin, Toutiao was synonymous with ByteDance. By 2016, Toutiao had accumulated 600 million registered users and 140 million daily active users. Until 2018, Zhang Yiming had served as the CEO of Toutiao.
Zhang Yiming aimed to expand into foreign markets and challenge Facebook and Google. He launched an overseas version of Toutiao called News Master in the U.S., Japan, and other countries in 2017, later renamed Top Buzz. However, the overseas version of Toutiao did not rise as successfully as the later international version of Douyin, and it was shut down in June 2020.
The growth of Douyin was initially driven by Zhang Yiming’s successful acquisition of the lip-syncing app Musical.ly. Musical.ly had gained popularity among American teenagers from 2016 to 2017 but struggled to continue growing. Consequently, the founders of Musical.ly began contemplating selling it to Facebook.
In 2016, Zhang Yiming launched the Douyin app, which essentially replicated Musical.ly. By May 2017, Douyin had surpassed 1 million daily active users. To achieve globalization, Zhang Yiming convinced the founders of Musical.ly to sell it to ByteDance.
The 400-member team at Musical.ly subsequently integrated with Douyin under ByteDance’s algorithm and was fully integrated in 2018. Zhang Yiming named the international version of Douyin TikTok.
TikTok was swiftly introduced to Japan, South Korea, Southeast Asia, India, and notably, the U.S., which became a crucial battleground for TikTok. “You have America, you have the world,” said one of TikTok’s early founders.
Following the integration, TikTok embarked on a frenzy of advertising spending, with Facebook as its primary investment channel. At one point, the promotional budget grew by over 100% every quarter.
Zhang Yiming poached a group of managers from Facebook with high salaries, enabling them to bring out data from Facebook, such as the number of daily active users in each country and potential revenue. This information was then used to determine how much investment was needed for advertising.
By 2018, ByteDance had become one of the highest-valued unlisted tech companies globally. In the same year, Zhang Yiming changed the company’s signboard from “Toutiao” to “ByteDance”.
As the COVID-19 pandemic erupted globally in 2020, Zhang Yiming decided to launch Douyin e-commerce, experiencing explosive growth when traffic and income were fused together.
Following the success of Douyin e-commerce in China, ByteDance rolled out TikTok Shop in the U.S., capitalizing on American high consumer spending habits, which stimulated rapid growth in TikTok’s traffic and business performance. Hina International reaped substantial returns from this venture.
One of the founders of Hina International, Arthur Dantchik, currently serves as a board member of ByteDance, replacing the position initially held by Wang Qiang.
With the rise of the internet economy, the Chinese Communist Party (CCP) has been steadily tightening control over private enterprises and the online space. ByteDance’s red genes are becoming increasingly prominent.
In October 2016, the CCP’s Nineteenth National Congress emphasized the need for private enterprises to establish party branches. In October 2017, the Central Cyberspace Administration held an on-site meeting in Beijing for internet companies to strengthen party building work.
From 2017 to 2018, private enterprises, including the entire internet sector, rapidly established party branches to avoid being rectified by the authorities.
At the end of 2017 to 2018, Toutiao faced crackdowns from the CCP’s Cyberspace Administration, with its social channels closed down. Thirty-six self-media accounts were blocked for “suspected violations,” and 1065 accounts were forbidden to post. The application Neihan Duanzi was permanently shut down by the CCP General Administration of Press and Publication for “allegedly violating regulations.”
In China, “illegal and irregular information” often refers to alternative expressions or different political views that do not align with the CCP.
Shortly after a severe crackdown, Toutiao publicly recruited 2000 content review editors, giving priority to CCP members. Some insiders have revealed that compared to other internet companies, ByteDance has more CCP members and party organizations, making it more “red.”
The CCP’s regulatory agencies have consistently tightened control over tech companies under the guise of protecting data privacy, consumer rights, and anti-monopoly measures.
At the end of 2020, the CCP introduced new laws requiring nearly all companies conducting IPOs outside China to undergo the CCP’s so-called network security review.
In August 2021, the CCP’s internet regulatory department released new regulatory measures, aiming to enhance the management of internet information service algorithms, claiming that they must “promote socialist core values and actively spread positive energy.”
In 2024, reports indicate that CCTV, controlled by the CCP, has acquired a 1% stake in Douyin, gaining a veto power known as a “golden share.”
According to U.S. legislation, for TikTok to survive in the U.S., it must be sold off and separated from its parent company, ByteDance.
However, approval from the CCP is required for the divestiture sale, and the algorithm technology involved is subject to export controls by the CCP. The CCP has previously expressed opposition to forced sales.
Technology industry analyst Richard Windsor stated that the TikTok ban will mark the end of ByteDance’s global expansion, as it signals that the CCP values algorithm security over ByteDance’s economic prosperity and global expansion.
Political commentator Ting Jingyuan, while speaking to a Chinese-language publication, suggested that it is the CCP’s control over ByteDance that has turned TikTok into a security risk for the U.S., leading to its inevitable fate today. Whether TikTok is sold off or banned, ByteDance will lose the U.S. market and subsequently halt its globalization process. As long as the CCP exists, the overseas expansion of Chinese companies, not just TikTok, will be restricted.