ByteDance, the parent company of TikTok, is quickly becoming a leader in the race to develop generative artificial intelligence (AI) in China. The company has been aggressively hiring top AI talent from rivals like Alibaba, 01.ai, and Zhipu. Over the past few months, it’s expanded its teams dedicated to working on AI and large language models.
ByteDance is investing heavily in AI infrastructure. It has spent billions of dollars to purchase advanced Nvidia graphics processing units (GPUs), which are essential for building cutting-edge AI models. This push is spearheaded by Zhang Yiming, ByteDance’s founder and China’s richest man, at a critical time. The company’s main app in China, Douyin (the local version of TikTok), has reached a point of saturation, and TikTok’s growth has also slowed in key markets. To make matters worse, a US court recently ruled that ByteDance must sell TikTok by January or face a ban in the country.
Despite these challenges, Zhang sees a huge opportunity in AI. He’s betting big on generative AI, believing that large language models (LLMs) could revolutionize industries. “Zhang realized the potential for large language models to change the industry, and he decided to go all in,” said one insider.
ByteDance’s close relationship with Nvidia has played a key role in its AI ambitions. While ByteDance is only allowed to purchase the less powerful H20 GPUs for its Chinese data centers due to US export restrictions, it can still buy the more advanced H100s and Blackwell chips for data centers outside China. This has led ByteDance to increase its computing power in locations like Malaysia, where it has become the anchor tenant for new data centers. ByteDance is now Nvidia’s largest customer in China, and it has become a major player in Nvidia’s sales across Asia.
The success of OpenAI’s chatbot has sparked a wave of competition in China’s tech scene. Major companies like Baidu, Alibaba, and Tencent are all racing to develop their own generative AI models. However, ByteDance is already leading the pack with its AI chatbot, Doubao. Released in August 2023, just five months after Baidu’s Ernie Bot, Doubao has become the most popular AI app in China. By November 2023, it had 60 million monthly active users, far outpacing Baidu’s chatbot, which had around 13 million.
Doubao stands out because it integrates several AI functions into a single app. It offers not just a chatbot, but also search, translation, and image and video generation features. This holistic approach has made it the top choice for many users in China. ByteDance has also released an international version of the chatbot, Cici AI, which is powered by third-party models, including OpenAI’s GPT.
Zhang Yiming, who stepped down as ByteDance’s CEO in 2021, remains very involved in the company’s AI strategy. He has personally overseen the hiring of AI engineers and researchers, including those from rival companies. His ambition goes beyond just building powerful AI models—he wants to achieve artificial general intelligence (AGI), or AI that can perform tasks requiring human-like cognitive abilities.
However, not everyone is convinced by Zhang’s vision. ByteDance has made other big bets on emerging technologies in the past, including gaming, virtual reality, and online education. These investments ended up not working out, with the company shutting down or selling off many of them. One executive from a competing AI company pointed out that this is not the first time Zhang has bet big on the next big thing. “We’ll see how long this bet lasts,” the executive said.
ByteDance is also working on creating its own AI chip, following in the footsteps of companies like Google, which developed its own AI hardware to reduce reliance on Nvidia. ByteDance’s AI chip team has poached top talent from Chinese chip firms, and they are currently developing a specialized AI chip for machine learning, similar to Google’s Tensor Processing Unit. This chip would help ByteDance reduce its dependency on Nvidia’s GPUs for AI training and inference.
In 2017, ByteDance launched an AI lab, bringing in leading researchers from Microsoft Research Asia, which was China’s top research facility at the time. The lab initially worked on developing large language models, but the project was shut down because there was no clear direction for the technology. Since then, ByteDance has worked on model development strategies that comply with both US and Chinese regulations, training separate models for China (Doubao) and for international markets (Cici). Despite using different data sets, both models share the same underlying algorithm.
ByteDance’s approach to AI model development is highly coordinated. Zhu Wenjia, the tech executive who developed the recommendation algorithm behind ByteDance’s first big hit, Toutiao, is now in charge of AI model development. Zhu oversees both the Chinese and overseas teams working on the models. Researchers in the US, Singapore, and Beijing collaborate closely on these projects, and ByteDance’s Beijing team can remotely monitor and control the training of the Cici model outside of China.
Zhang’s focus on AI is clear: he sees it as the next big growth area for ByteDance, especially as growth slows for Douyin and TikTok. One person close to Zhang explained, “He is always thinking about what’s coming in the next five years, and what can extend the company’s future.”
In conclusion, ByteDance is betting big on AI to drive its future growth. It has become a major player in the AI space, both in China and globally, by developing advanced models like Doubao and Cici. The company’s heavy investment in AI infrastructure, talent, and hardware shows its commitment to staying at the forefront of the AI race. While challenges remain, particularly with US regulations and competition from other tech giants, ByteDance’s AI efforts could shape the future of the company and the industry for years to come.