ByteDance will separate out its worldwide social media phenomenon TikTok into a stand-alone business unit, as chief executive Liang Rubo’s overhaul of the world’s most valuable technology unicorn into six parts after founder Zhang Yiming decided to take a back-seat role.
Liang will oversee the finance of ByteDance, allowing chief financial officer (CFO) Chew Shou Zi to relinquish his finance role to focus on his job as chief executive of TikTok, the video-based social network service, and expand it into a technological platform, including such businesses as e-commerce, according to a memo to staff obtained by South China Morning Post.
Beijing-based ByteDance, the world’s first and only hectocorn – an unlisted company valued at more than US$100bil (RM414.85bil) – will also delineate its global operations from the myriad businesses in its home country through the separation of TikTok, not least by clearly differentiating the app from its China-only sibling Douyin.
“It looks like a separation of TikTok outside of China in preparation for a separate IPO of the short video app, hence [Chew] is still heading TikTok,” said Jeffrey Towson, a long-time observer of China businesses and visiting professor of the China Europe International Business School.
The overhaul, nearly half a year since Zhang appointed Liang to oversee ByteDance’s daily operations, followed the drop in the company’s valuation in private equity markets from its peak of more than US$400bil (RM1.65 trillion), as its plan for an initial public offer (IPO) are put on hold until at least late 2022, the Post reported last month. Close scrutiny by China’s antitrust, cyberspace and financial regulators have raised the hurdle for a stock sale by ByteDance, whose businesses range from education to social media and games.
The reorganisation is needed “as the company continuously optimises and upgrades its structure,” Liang said in his memo. “The company’s business lines are growing and maturing, and need flexibility to address their own unique challenges.”
The Cyberspace Administration of China (CAC) inserted itself into the application process of Chinese companies seeking to raise funds abroad in July, demanding that any company that holds personal data of more than one million users to obtain its approval before launching an offshore IPO.
At the same time, ByteDance is also facing the squeeze from outside China. TikTok, wildly successful in the United States, was threatened with a ban if its US business were not sold by its Beijing owner, according to an executive order last summer by then president Donald Trump.
US President Joe Biden dropped Trump’s order to ban TikTok in early June. Still, the company’s head of public policy for the Americas Michael Beckerman faced tough questions during the app’s first attendance at a Congressional hearing late last month.
Beckerman reiterated that TikTok does not share information with the Chinese government and that TikTok has “no affiliation” with Beijing ByteDance Technology, a ByteDance subsidiary at which the Chinese government took a stake and a board seat earlier this year.
Liang’s overhaul of ByteDance will create six main divisions. Douyin will sit at the apex of a unit responsible for domestic information services, including the Jinri Toutiao news aggregator, the Xigua video service, Internet search and encyclopaedia applications.
Dali Education will add a vocational education unit that will be responsible for technology-powered learning, continuing education, smart hardware, and campus collaboration.
Lark, also known as Feishu, will focus on building collaboration and management services for enhancing productivity, while BytePlus will build enterprise solutions, products and services including cloud computing services to help companies with their digital transformation. Nuverse will build a global community of games players and developers as it focuses on developing and publishing games. – South China Morning Post
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