Internet & Tech

A long shadow

Bytedance and Tencent accuse each other of smear campaigns


ByteDance’s Toutiao: challenging WeChat’s social media dominance

The notion of “dark public relations” gained prominence following Edward Snowden’s revelations about the global surveillance programmes used by the US government in 2013. It describes the tactics used to “destroy, deny, degrade [and] disrupt” enemies through organised discreditation. One method is “pushing stories” on social media or orchestrating so-called “false flag” operations, in which agents carry out online activity designed to look like it is performed by their adversaries.

Cloak-and-dagger manoeuvres are not limited to the world of espionage. Lately they are thought to have become the major weaponry in a clash between two Chinese social media titans.

We reported last month that Tencent and Bytedance, which operates the immensely popular news aggregator Jinri Toutiao and short-video platform Douyin (similar to its sister lip-synching app, have taken each other to court (see WiC411). Tensions have risen as Bytedance’s challenge to Tencent’s dominance in Chinese social media has grown stronger.

The legal wrangle began when Tencent filed a lawsuit on June 1, accusing Toutiao of changing the headline of a commentary first published by XinhuaNet and making it seem like the official news agency had singled out Tencent for failing to prevent gaming addiction among young people.

Tencent was seeking token compensation of Rmb1, but Bytedance fought back by filing a lawsuit against Tencent on the same day to the same court, accusing the internet giant of defamation and anti-competitive behaviour. Seeking Rmb90 million ($13 million) in compensation plus an apology that would be posted online for 100 days, Bytedance also complained that its Douyin videos had been unfairly blocked on WeChat.

The feud escalated on June 20, when Tencent’s chairman Pony Ma fired another salvo on his WeChat account, suggesting that many people did not recognise how far-reaching “dark PR” tricks have become in local social media, adding that “it is time to dig into the root of the issue”.

Ma’s remarks were a prelude to a bigger campaign to defend Tencent’s reputation. In a statement the Shenzhen-based tech firm said it had been suffering from “constant, intensive, and abnormal” attacks from rumour-mongering online, adding that it had already reported the alleged defamation to the state’s public security department.

Although the suspected culprit was not named, many believed Tencent was pointing the finger at Bytedance.

And shadowing Tencent’s move, Bytedance published a riposte on its own WeChat account, claiming that Toutiao itself had been vilified by no less than 12,000 articles making the rounds on the internet in the last two months.

“We have evidence that this is an organised effort to manipulate discourse on social media with the aim to disgrace rivals,” said Bytedance, alleging that some articles were rapidly distributed via more than 1,000 accounts on WeChat, the flagship messaging platform run by Tencent.

The condemnation came with screenshots of various online exchanges between PR firms and online bloggers who were supposedly trying to initiate negative articles about Toutiao and Douyin.

One of the communications agencies is alleged to count Tencent Video and its affiliate Sogou (a search engine in which Tencent has a 45% stake) among its clients. Similar to Tencent, Bytedance said it had enlisted the support of the police while offering a bounty of up to Rmb5 million ($751,315) to those who helped uncover the facilitators of any ‘dark PR’ against it.

“The conflict between them is unanticipated yet was doomed to happen,” wrote the Economic Observer, a newspaper, noting that Toutiao and Douyin have successfully grabbed customers from key Tencent products, such as its online games, internet literature and livestreaming video.

The average user spends 20.5 minutes per day on Douyin, according to market research firm Jiguang Data. That means they may watch as many as 80 videos per day – given each video on the platform lasts around 15 seconds.

Usage is boosted by Douyin’s aggressive traffic acquisition strategy, spending as much as Rmb20 million a day since April to poach talented ‘hosts’ from art and music schools (for our first mention of the Douyin media phenomenon see WiC405). It has worked too with multi-channel talent agencies that specialise in propelling ordinary people to internet stardom. Dance, pranks and stunts are among the most popular genres.

The videos often become talking points. For instance, a “Douyin Dish” at Haidilao, a local hot pot chain, was born after a video on the site went viral showing a creative food item made by a customer at the restaurant (the DIY dish is made by stuffing a raw egg and shrimp paste into a tofu ball, then boiling them together).

Similarly a drink called “Douyin Milk Tea” can now be ordered at local chain CoCo: it is ‘caramel milk tea with barley pudding, zero sugar, no ice’.

The video portal boasted about 150 million daily active users as of mid-June, more than doubling February’s number, KrASIA reported. Apart from making tens of millions of yuan from advertising every day, Douyin has been making waves in e-commerce. The Financial Times last week flagged this as a growing revenue stream thanks to the prominence of so-called influencers or key opinion leaders (KOLs) who recommend products via their Douyin streams.

“[Douyin] is the biggest in social media right now and one of the few major platforms that’s not owned or partially owned by Tencent or Alibaba,” Ron Cao, a partner at venture capital firm Sky9 Capital and an investor in Bytedance, told the newspaper.

The FT described the company as “the rare start-up with a shot at challenging the country’s biggest tech companies” and said its valuation is $20 billion.

In an article entitled “Will Douyin challenge Tencent and Alibaba?” the Global Times took a more negative view. “Douyin can complement the relevant businesses of Alibaba and Tencent, but it won’t be able to replace them in those sectors,”the state-backed newspaper predicted, noting that Bytedance has yet to create a holistic ecosystem. “The heat of short video apps in China can be a ‘flash in the pan’ and their popularity might dwindle starting from next year,” it further suggested.

It might be too late for Bytedance to topple Alibaba or Tencent at home in China but it has also ventured overseas and launched hit products (see WiC394).

Take TikTok, the international version of Douyin. It was the most downloaded iPhone app worldwide in the first quarter, seeing 45.8 million smartphone installations. For perspective, that topped Facebook, YouTube and Instagram, according to US research company Sensor Tower.

Douyin’s meteoric rise prompted Tencent to revive its own short-video site Weishi last May, and to offer subsidies worth as much as Rmb3 billion in a four-month campaign to poach influencers from Douyin, KrAsia reported.

The fast-growing company has not only upset Tencent – it has also been in the cross hairs of Chinese regulators more often than it wished. The latest case saw Douyin, along with four other internet firms, ordered by the country’s Cyberspace Administration to conduct a “thorough self-inspection” of their content and remove offending material about national heroes (in this case content mocking a Chinese military ‘martyr’ from the Korean War). At one point Bytedance’s services were briefly banned by the authorities from app stores.

TikTok is running into a regulatory wall in other markets. Indonesian authorities said on Wednesday they had banned the app until the Chinese firm had scrubbed “pornography, inappropriate content and blasphemy” from its platform.

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