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Analysis

Jinritoutiao’s Tiktok To Walk Alone As Talks of It and Alibaba Getting Cosy Do The Rounds

Jul 20, 2018 by A. Alfaro
Jinritoutiao’s Tiktok To Walk Alone As Talks of It and Alibaba Getting Cosy Do The Rounds

News media outlet Jinritoutiao is planning to allow its short video app Tiktok (Douyin in Chinese) to separate from itself and thrive independently, sources in the organization say.

Tiktok, founded as a subsidiary of Jinritoutiao, experienced a dramatic global growth and became the most downloaded app on Apple Store last May.

The split is expected to take place during Jinritoutiao's ongoing investment.

The same sources add that Yunfeng Capital, an investment fund backed by Alibaba and co-founded by Jack Ma, will invest in Jinritoutiao and the Alibaba Group will directly invest in the new independent Tiktok.

These Jinritoutiao insiders and the Chinese portal 36ke add that Yunfeng Capital and Alibaba will not enter Jinritoutiao's or Tiktok's boards.

Despite all the buzz, Jinritoutiao, far from confirming such developments, has been severely dismissive about them.

While Zhang Yiming, Jinritoutiao’s founder and CEO, refused to comment on these rumors, his organization described these as "fake news."

What’s cooking?

In April this year, the reputation of Jinritoutiao, Tiktok and other media outlets such as Kuaishou took a serious beating after Chinese regulatory bodies flagged much of their content as vulgar.

This could be one of the reasons why Jinritoutiao decided to change its name and attempt a rebranding.

Jinritoutiao is now called Bytedance (Zijietiaodong in Chinese).

Rumors around Bytedance's financing have been circulating since the beginning of the year, even since its Jinritoutiao days.

Bytedance has not received funding from any of the Chinese Internet giants, at least officially.

Following Tiktok's dramatic growth, talks about its separation from the group began to appear.

On June 21, the news portal Jiemian reported that Tiktok would seek financing on its own.

Currently, Tiktok has an estimated market value of USD 9 billion.

Excluding Tiktok's value, Bytedance's market value is estimated at USD 30 billion.

During Bytedance’s current investment round, Yunfeng Capital and the US venture capital firm KKR are learnt to have reached out to Bytedance and are negotiating.

Bytedance declared to 36ke that it is willing to cooperate with Tencent, Alibaba and other tech tycoons to provide better services to its users but made no further comments.

Alibaba and Yunfeng Capital also denied the rumors.

On April 26, 36ke reported that Bytedance was planning to get closer to Alibaba Group.

The Hangzhou-based group was willing to invest in Bytedance during its next investment round.

Alibaba also accepted Bytedance's strict condition of not entering its board.

But Wang Shuai, Alibaba's CMO, stopped this agreement.

"Alibaba does not want to enter this industry, we do not have the media DNA, we will not perform well in this industry", he declared.

But the real motivation that seems to be bringing these two companies closer might be rooted in the principle of “the enemy of my enemy is my friend.”

Both companies fight against Tencent in many different fields.

According to 36ke's report, Jack Ma is paying close attention to Weishi's Tencent's video app’s development.

Weishi is being managed directly by Tencent's general director Liu Chiping.

Not only that, Tencent is investing heavily in Kuaishou, one of Tiktok's rivals.

Despite official denials, Alibaba and Tiktok cooperating with each other is an ill-kept secret. Tiktok now features a button linked to Toabao, Alibaba's ecommerce platform, so that users can directly buy what they are watching on Tiktok.

This serves Alibaba well too, considering Tiktok's almost 150 million daily users, according to QuestMobile.

Not only is Tiktok's traffic valuable for Alibaba, even its international penetration is a boon for the company.

According to Tiktok's own data, the app recently reached 500 million monthly users.

All these factors lead to a very high market valuation.

However, during a recent press conference, Li Liang, Bytedance's vice chairman, declared: "Zhang Yiming (Bytedance's founder and CEO) insists on becoming a company that follows its own path, independent from A and independent from B."

A. Alfaro

A. Alfaro is a Beijing-based freelance reporter. He focuses on China's politics, culture and society. He can be reached at varofaro@gmail.com. 

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