Fast-growing ByteDance, owner of TikTok and Chinese short video platform Douyin, has made great strides into business areas that Tencent keeps expensive – including ads, game , live streaming, social media and office software.
That has led Tencent over the past year to have fewer absentee parents and many more hands with some of the 800 – plus companies it has invested in, sources at Tencent and its portfolio companies told Reuters.
Also Read | India should be concerned about its public debt
It is now helping major companies to upgrade their business models to get away with ByteDance while forcing them to stop competing with each other, the sources said.
To support its core gaming sector, the Shenzhen-based company has also taken steps to advance and develop football games.
“ByteDance is pushing hard so that as a defense strategy, Tencent needs to go ahead with the attack and at the same time influence more portfolio companies to create a line of defense,” a Tencent chief executive said.
The executive team, like other sources for this article, declined to be cited as not having the authority to speak to the media on the issue.
No love lost
In 2018, ByteDance founder Zhang Yiming founded barbs with Tencent founder Pony Ma, accusing Tencent of obstructing and copying Douyin, and the controversy has escalated into a volley of lawsuit ever since. .
That includes a suit from Douyin last week accusing Tencent of monopolistic behavior. Tencent said the claims were false, accused Douyin of illegally obtaining consumer information and vowed to file more suits against ByteDance.
Asked to comment on changes to its strategies and the controversy, Tencent said in a statement to Reuters that ByteDance and related companies have harmed the interests of its partners and the rights of its customers. -use.
“We are committed and will take legal action to protect our healthy ecosystem,” he said.
ByteDance argues that WeChat users should have control over their data and that the data is not owned by Tencent. It said in a statement that it sought to protect the rights and entitlements of consumers and that “better competition for consumers and encouraging innovation”.
Founded in 2012 alone, Beijing-based ByteDance has become a fertile ‘app factory’ valued at around $ 180 billion. Tencent, the 22-year-old, is now the biggest threat to long-term rivals Alibaba Group Holding and Baidu Inc, Tencent sources said.
In 2019, ByteDance became the second largest digital advertising player in China behind Alibaba, jumping Tencent and Baidu in the process. Its share of Chinese app user screen time has also grown, to 15% at the end of September from 12% a year earlier, while Tencent’s share fell to 41% from 45%, according to the analyst firm QuestMobile.
The ability of ByteDance to use Douyin and other apps to drive traffic to new business lines, similar to how Tencent impacted its WeChat and QQ social media products, has pushed Tencent to design new strategies, the sources to it.
Making it difficult for bytedance
Known for more sophisticated silver titles like “Honor of Kings”, Tencent now masters simple leg games that are mostly played on mobile phones – a segment that was once dismissed as it was not very profitable, sources said.
The reason? ByteDance’s growing library of such games, currently over 150, includes well-known tours such as “My Kungfu is Special” and “Rooster Defense”.
Tencent has boosted its money with last year’s investment in French Voodoo, which already had a presence in China. Tencent then acquired the Chinese company Leyou, which was famous for the action game “Warframe”, but which also has many simple leg games.
“Of course these games don’t bring much revenue to Tencent. The only reason is to make it difficult for ByteDance to succeed,” said ByteDance’s chief game officer.
Tencent invested in 30 gaming companies last year compared to its average usage of about 10 a year – a strategy aimed at cracking down on ByteDance, which has been working on more educated games, from getting a bigger grip in the industry, sources said.
Tencent is also in charge of Huya Inc’s game streaming company’s plans to acquire DouYu International Holdings – halting a devastating feud that saw regular poaching of celebrities against each other, sources familiar with the matter said.
It took effect after Douyin and another rival Bilibili began gaining traction in games live streaming services, they said.
In other business areas, ByteDance ‘s development of a search engine was a factor behind Tencent’ s plans to buy the rest of Sogou ‘s search engine for $ 3.5 billion and take it privately, one of the sources said.
For majority-owned Chinese Literature, Tencent appointed one of its top executives to lead the online reading platform and made most of its content free – trend analysts have said in response to the success of a competitive bid launched by ByteDance.
Attempts by Tencent to prevent ByteDance from circulating its territory could, however, be complicated by a recent review by Chinese regulators of internet companies.
The game market is still fragmented and Tencent isn’t as vulnerable to regulatory action there, but WeChat’s huge dominance as a social media forum in China – the foundation for ByteDance’s latest suit – is hard to deny, fans say -law says.
A regulatory license of Huya-DouYu’s contract could come with the condition that other platforms be allowed to stream Tencent-owned games, said You Yunting, a lawyer with Shanghai-based Bund Law Office.
Sources with direct knowledge of the issue have also said that Tencent Sogou’s contract will undergo a thorough review and there is a good chance it will not close as expected.