Machine error

Looking for answers

Turf wars among tech firms are nothing new. Apple was engaged in a seven year-long legal battle with Samsung over smartphone patents. More recently, Waymo, Alphabet’s autonomous car unit, sued Uber for appropriation of trade secrets and patent infringement in the race for driverless vehicles.

So it should hardly come as a surprise that one of China’s newest unicorns Bytedance is now involved in multiple lawsuits. In June, the Beijing-based company behind the hugely popular news app Jinri Toutiao and short video app Douyin sued Tencent for anti-competitive behaviour after the tech giant accused it of defamation. Later that month, Bytedance filed another lawsuit, this time against Baidu for copyright infringement, accusing the search giant of streaming a talk show produced by Jinri Toutiao without its authorisation.

Baidu struck back this month by suing Bytedance over illegally streaming the TV drama The Story of Yanxi Palace. This content was being streamed by Baidu-backed channel iQiyi (see previous article).

With all the legal disputes, it is easy to miss an important development at the company: Bytedance has merged two of its offerings – Wukong Q&A and Wei Toutiao (a social media network similar to Sina Weibo) – in an effort to “bring synergies across the different platforms and enhance user satisfaction,” the company wrote in a statement.

Merging the two businesses suggests that not all is well with Wukong, a Quora-like knowledge sharing service. In fact, it is reported that two senior executives at Wukong have resigned because the platform hasn’t been performing.

Founded two years ago, Wukong was designed to take on Zhihu, the biggest Q&A platform in China (see WiC421 for more on Zhihu’s recent fundraising). Zhihu has become hugely popular thanks to algorithms that identify spamming and offensive posts. This allows moderators to quickly delete undesirable content and keep results useful and relevant. The site now claims to have over 180 million users and is valued at $2.4 billion.

Having to play catch-up, Bytedance announced amid much fanfare last year that it had earmarked Rmb1 billion ($150 million) to lure hundreds of popular and knowledgeable commentators to post on Wukong instead of Zhihu. Reportedly the company had spent over Rmb10 million a month to lure influencers to post answers and generate higher quality debate.

After an initial spike in user traffic, however, usage then collapsed. According to QuestMobile, a data provider, from April to July 2018, monthly active users on Wukong averaged around 800,000. By July, the number had dropped sharply to 170,000. Meanwhile Zhihu has been within the top 10 most downloaded apps on the iOS Chinese app store for the past three months. Wukong was ranked below 150th position.

So what’s gone wrong, particularly given the success Bytedance has had elsewhere in its AI-driven businesses – such as its personalised news aggregator (Toutiao) and short video service (Douyin). Both of these have experienced such heady growth that they have unsettled tech giant Tencent (which worries that its rival’s services are luring its customers away from WeChat and its paid online games; see WiC421).

Part of the reason that Wukong may have stumbled, by comparison, is that it uses Toutiao’s AI programme to recommend answers. And instead of putting more emphasis on the quality of the response, its algorithm chooses answers that it believes are most useful to the individual user. So what tends to happen, as one influencer admits, is that shorter and simpler answers are the most recommended, while more controversial, thought-provoking responses are not.

That is also reflected in Wukong’s user demographic. Compared with Zhihu, whose users are generally better educated and tech-savvy, the vast majority of Wukong customers are middle-aged men from smaller cities, says Sina Tech. That renders Wukong less attractive to advertisers, which sponsor posts and run adverts on the site.

Wukong marks a rare setback for Bytedance after an otherwise dizzying ascent in recent years. It also comes at a time when the tech firm has been trying to justify its $75 billion valuation in it latest fundraising round.

Chinese Entrepreneur, a magazine, reckons that Wukong’s difficulties suggest that Bytedance still has some way to go to perfect its AI-driven model across its business lines.

For rivals like Tencent and Baidu there will be some relief that Bytedance’s rapid progress is hitting the occasional roadblock. And for shareholders in Zhihu, Wukong’s strategic retreat should make its own path to an IPO a little smoother. n

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