ByteDance denies a reported 60% profit surge as U.S. lawmakers push to force TikTok's divestiture. Taylor Swift re-engages with TikTok ahead of her album release. ByteDance shifts focus to AI and app expansion amid growing scrutiny.
This week, the spotlight shines brightly on ByteDance, the powerhouse behind TikTok, as it navigates turbulent waters amidst profit disputes and political pressures.
Despite reports from Bloomberg News of a purported 60% profit surge in 2023, ByteDance has publicly refuted these figures.
This financial controversy unfolds as the company faces a new level of scrutiny from U.S. lawmakers, highlighted by a significant Senate hearing led by Senator Mike Gallagher.
This hearing aims to sever Chinese interests from TikTok, intensifying the "platform wars" that have put ByteDance at the epicentre of a geopolitical storm.
Simultaneously, the global entertainment landscape is being reshaped by strategic moves from megastar Taylor Swift.
Swift has boldly reinstated a selection of her music on TikTok, counteracting her record label Universal Music Group's earlier decision to mute her tracks due to a royalties dispute.
This action comes just as Swift is gearing up to release her new album "The Tortured Poets Department."
On Wednesday, Bloomberg News reported that ByteDance's profits exceeded US$40 billion in 2023, however, according to Southern China Morning Post, the Chinese popular news platform Jinri Toutiao, the Beijing-based company quickly responded by publicly denying these figures, asserting that the reported financial data "were untrue.”
As a private entity, ByteDance is not required to disclose its financial details, yet these figures are highly valued by investors who see the company's financial health as a key indicator of the Chinese internet sector's overall performance.
The Information indicates a notable revenue surge of 40% for ByteDance, totaling over US$84 billion in the first three quarters of 2023, although the company has yet to confirm these figures.
Recent Senate hearings held in March have amplified the so-called "platform wars," with Senator Mike Gallagher spearheading efforts to sever ByteDance's Chinese interests from TikTok.
This legislative drive aims to mandate ByteDance's divestment of TikTok or face an outright ban, highlighting deep-seated concerns over national security and data privacy.
A bill requiring ByteDance to divest from TikTok within 180 days has swiftly moved through Congress, receiving unanimous support from the House Energy and Commerce Committee—a decisive 50-0 vote—signalling a strong legislative intent against Chinese ownership.
The push for a TikTok ban has sparked a robust debate, pulling in lobbyists and diplomats, and provoking discussions on constitutional and international trade issues.
Michael Beckerman, TikTok's chief lobbyist, voiced substantial concerns about the bill's expedited movement through Congress, labelling it "unprecedented" and laden with "serious constitutional concerns."
This current controversy reflects past tensions, akin to Google's 2010 departure from mainland China when it chose not to censor search results on Google.cn after facing cyber-attacks originating from China.
This historical parallel underscores the intricate balance between enforcing digital policy, maintaining international trade standards, and upholding the principles of free speech, further complicating the business and geopolitical frictions that affect global relations with China.
Like its counterparts in China, ByteDance has been retracting its investments in less profitable ventures in recent months.
The company has eliminated hundreds of positions within its gaming development and enterprise software divisions, areas that have not only weighed down its profitability but also failed to deliver on their initial promises.
In place of these underperforming sectors, ByteDance is now focusing on generative AI technology, developing its own chatbots and large language models to stay competitive.
Simultaneously, TikTok continues to enhance its technological capabilities, particularly in AI, to improve the app’s intuitiveness for end users.
This effort is bolstered by the global buzz surrounding the reinstatement of Taylor Swift’s music on the platform, which marks a significant moment in its content offerings.
ByteDance is also expanding its app portfolio with the development of two new apps aimed at broadening its market reach in Europe and intensifying competition with giants like Meta’s Instagram.
The first app focuses on photo-sharing and poses a direct challenge to Instagram, while the second, known as the "coin app," is designed to engage European users with a model that rewards interaction.
Although specific details about these new apps are limited, TikTok’s official website has teased the upcoming "TikTok Notes" app, albeit with minimal information available and showing a preliminary page with non-functional elements.
Nevertheless, TikTok is beginning to stir interest among its current users with pop-up notifications about upcoming features related to photo posts.
Additionally, ByteDance’s strategy includes leveraging influencer networks to promote new and existing apps like Lemon8, which was launched in 2020 to compete in the photo and video sharing space.
This strategic expansion and innovation come at a time when ByteDance faces increased regulatory scrutiny, particularly in the United States, where TikTok has been a focal point of data privacy and national security debates.
The launch of new applications such as TikTok Notes in the U.S. market might spark further discussions and concerns among policymakers and regulators.
This week, Taylor Swift made headlines by re-introducing a selection of her songs to TikTok, diverging sharply from her record label, Universal Music Group, which had previously muted her tracks on the platform amid a royalties dispute.
Swift's strategic move comes just before her new album release, scheduled for next week, highlighting her significant control over her music catalogue—control she secured through a 2018 copyright agreement with Universal.
The reactivation of her music on TikTok, where her songs had been silent since January 31, emphasises Swift’s influence and autonomy in the industry, especially as she prepares to debut her album "The Tortured Poets Department."
The clash between Universal Music and TikTok began when negotiations broke down over how to compensate for music used on the platform and the treatment of tracks produced using artificial intelligence.
Universal Music, which commands roughly one-third of the global music market, has been silent on Swift’s latest move. The dispute underscores a broader tension between record labels and social media platforms over royalty payments, with TikTok reportedly offering much lower rates compared to industry standards like those of YouTube.
The standoff has not only impacted artists, who rely on platforms like TikTok for promotion, but also the platform's users, who have experienced widespread muting of videos featuring Universal’s music catalogue. Meanwhile, TikTok aims to include AI-generated content in royalty sharing, a proposal that has added another layer of complexity to the negotiations.
Swift’s manoeuvre places her at the centre of this significant industry conflict, highlighting the evolving dynamics of music rights in the age of digital media and AI, and underscoring her position as a pivotal player in the ongoing negotiations between tech giants and major media entities.
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