please read this case, and then write a case study(Use case study format) I need 3 pages.

W19666

TIKTOK’S RISE TO GLOBAL MARKETS1

Mengmeng Wang, Noman Shaheer, Sali Li, Liang Chen, and Jingtao Yi wrote this case solely to provide material for class discussion.
The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization.
To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London

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quality; submit any errata to publishcases@ivey.ca. i1v2e5y5pubs

Copyright © 2019, Ivey Business School Foundation Version: 2019-11-20

TikTok was a short-video sharing app based in China. On November 9, 2017, TikTok’s parent company, the

Chinese tech company Beijing ByteDance Technology Co. (ByteDance), announced a strategic acquisition of

Musical.ly, a popular short-video sharing app based in the United States.2 With more than 100 million3 users and

similar features to TikTok, Musical.ly was a powerful competitor for TikTok’s international expansion into the

North American markets. For ByteDance and TikTok, the closing of the Musical.ly acquisition in August 2018

was not the end goal, as it would create another new challenge. Would it be better to keep Musical.ly as a separate

platform, as Musical.ly had achieved a good reputation and millions of users in the United States? Or should

Musical.ly be replaced to create a global app under the TikTok brand, which was relatively new to the US market?

TIKTOK’S ORIGINS

TikTok was the international version of Douyin, a short-video sharing app launched in China by ByteDance.

The app enabled users to create, share, and view 15-second videos that could include lip-syncing, dancing,

comedy skits, and other physical activities. It had impressive video-editing tools that let users sync their videos

to songs chosen from a massive music library, and it offered some easy-to-use special effects—such as shaking

and shivering with music, hair dyeing, 3D stickers, and props. An example was the stamp filter, which allowed

users to create raindrops in the video background by holding their hand(s) up to the camera.4

The Company

ByteDance was a fast-growing Chinese start-up founded in 2012 by Zhang Yiming in Beijing. It operated

several multimedia platforms powdered by artificial intelligence (AI). 5 With a natural instinct for new

technologies and social trends, Yiming saw an opportunity to combine the power of AI with the growth of

mobile Internet services to revolutionize the way people connected with digital information.6 ByteDance’s use

of AI technologies helped the tech company learn about users’ interests and preferences through their

interactions—what users clicked on, completed, and commented on—and then feed them personalized videos.

According to Bloomberg News, on October 26, 2018, ByteDance was then valued at more than US$75 billion7

after a new $3 billion round of investment from SoftBank Group Corp. This made ByteDance the world’s most

valuable tech start-up.8

For the exclusive use of M. Hu, 2020.

This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

Page 2 9B19M136

The Short-Video Market

When ByteDance launched the Douyin short-video sharing app in China in September 2016,9 the short-video

sharing market was not anything new and was growing. In China, Kuaishou led the short-video market by

reaching 13.3 per cent penetration in January 2017, followed by Meipai at 3.5 per cent.10 Kuaishou was

particularly popular in Chinese lower-tier cities and was dubbed “the app for small-town Chinese,” as over

half of its users lived in Tier 3 and Tier 4 cities.11 Outside China, Musical.ly dominated the developed markets,

such as North America and Europe, but it had yet to expand into China.12

The high penetration of smart phones—exceeding 80 per cent by November 201613—and the rise of a new

generation in China promised to sustain the growing trend of the short-video sharing market. According to an

iResearch report, China’s short-video market exceeded 153 million users in 2016 and would reach 242 million

by 2017, an increase of 58.2 per cent.14 Douyin’s general manager, Wang Xiaowei, said in an interview,

The popularity of large-screen smartphones and the acceleration of network infrastructure make

people, especially the new generation, get used to expressing themselves. We believe the short-video

market driven by user-generated content has great opportunities among the new generation. The

existing short-video apps [in China] are either in favor of tool attributes or less attractive to young

people, and there should be a music-based short-video community for [the] Chinese new generation.15

Douyin’s Growth in China

During the early phases after its launch, Douyin frequently updated its versions to improve the product features

and usage experience by adding new icons, creative special effects, filters, 3D posters, improved video

definition, and video filming optimization (see Exhibit 1 for detailed updates between version 1.0.0 and version

1.4.0). These refinements helped make Douyin easy to use and offered creative tool kits.

Even with improved performance and powerful editing tool kits, Douyin still did not receive great attention

until Yue Yunpeng (a celebrity in China) forwarded a short video with a Douyin watermark in his Weibo

profile on March 12, 2017. Yue’s sharing received 83,175 likes and more than 5,083 forwards. Douyin’s

operations team realized the power of celebrities in attracting users and invited a number of Chinese stars who

had huge fan bases—such as Yang Mi, Lu Han, Kris Wu, and Angelababy—to join its publicity campaigns.16

Promotions and Explosive Growth

From the second quarter of 2017, Douyin started to grow, which could be attributed to its heavy marketing

promotions, including the attraction of stars and celebrities, the sponsorship of TV channels, and various

trending hashtags.17 The refinement of its tool kits along with its ability to push “hot” videos to relevant users,

as powered by its advanced AI techniques, enhanced Douyin’s explosive growth.

In addition to inviting stars from TV and movie studios and other platforms, Douyin invested heavily to

promote its own Internet celebrities and its key opinion leaders (KOLs).18 During a celebration conference in

November 2017, ByteDance invested $300 million to help content creators increase followers and generate

revenues.19 Sponsoring Chinese popular variety shows through title sponsorship or product placement deals,

such as “Hip-Hop in China,” “Happy Camp,” and “Everyday Upward,” also helped Douyin increase its

exposure.20 In order to engage more ordinary users and attract creative content, various trending topics or

themes in the form of hashtags were regularly promoted on Douyin. Some hashtags were particularly popular,

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

Page 3 9B19M136

spreading virally and attracting thousands of videos and millions of views.21 By December 2017, Douyin’s

daily active users (DAUs)22 in China had reached 17.4 million.23

Taking advantage of its fast growth and youth orientation, Douyin co-operated with the corporate sector—

particularly fashion-based companies—for advertising campaigns. In September 2017, Douyin uploaded its

first three advertising campaigns for Airbnb, Harbin Beer, and Chevrolet and attracted tens of thousands of

users.24 On November 15, 2017, Douyin initiated a “City Catwalk” hashtag challenge in partnership with

Michael Kors, a luxury American brand. Yang Mi and Mark Chao, the brand’s Chinese ambassadors, and some

of Douyin’s “in-house” KOLs joined the campaign and shared videos of people performing catwalks dressed

in Michael Kors products. Users were motivated to create their own catwalk videos with Michael Kors

products, which created 30,000 posts and over two billion video streams.25

By the end of October 2018, Douyin’s number of DAUs exceeded 200 million, and monthly active users

(MAUs) reached 400 million in China.26 As Douyin grew into the broader market, its videos not only focused

on music but covered more general and diverse entertainment such as cooking, fashion, and travel. On March

19, 2018, Zhang Nan, the president of Douyin, announced its new and more inclusive slogan: “Record the

good life.”27

Strengthening Supervision to Build the Community

Douyin’s growth and popularity were always accompanied by criticism of its video content as addictive and

vulgar, which were not unfamiliar claims for social-media apps. As The Atlantic’s Taylor Lorenz indicated,

“Watching too many in a row can feel like you’re about to have a brain freeze. They’re incredibly addictive.”28

On April 10, 2018, the State Administration of Press, Publication, Radio, Film, and Television demanded that

ByteDance’s Toutiao, a popular news aggregator, permanently shut down the account of Neihan Duanzi due

to vulgar content.29 A large number of Toutiao’s users then quickly swarmed into Douyin with the same

profiles and provided similar comments on Douyin’s hot videos. So Douyin temporarily removed its live-

stream and comments features that day. Yiming said that he had been bothered by a “guilty conscience” in

that, “Over the past few years, we put more effort and resources toward expanding the business and did not

take enough measures to supervise our platform.” He announced that ByteDance would expand its team for

monitoring content from 6,000 to 10,000.30

On April 10, 2018, Douyin also rolled out the “anti-addiction” system—after 90-minutes of continuous usage,

an alert would pop up to notify users, and after daily usage exceeding two hours, the app would be

automatically locked. However, the app could be unlocked again by entering a password.31 Although it was

difficult to control user-generated content, Douyin tried to build and maintain a healthy environment for its

users, especially after gaining millions of users.

TIKTOK: DOUYIN’S GLOBALIZATION

Overseas expansion was always on ByteDance’s agenda. As Yiming said, “China is home to only one-fifth of

Internet users globally. If we don’t expand on a global scale, we are bound to lose to peers eyeing the four-

fifths. So, going global is a must.”32 In an interview with a Tsinghua University professor, Yiming revealed

that his company’s globalization goal was to have more than half of the company’s users from outside China

within the next three years.33 When Douyin was exploring its growth in China, the short-video sharing app

competition in both China and global markets was becoming increasingly fierce, sharpened by the expansion

of existing competitors and the emergence of new entrants. Douyin’s biggest competitor in China, Kuaishou

(called Kwai overseas), had started its own global expansion.34 Musical.ly, after achieving dominance in the

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

Page 4 9B19M136

United States and Europe, expanded into China to capture that market.35 In view of competition as well as

potential overseas markets, Douyin rebranded as TikTok for the international market on August 2017 while

remaining Douyin in China.36

Globalization Strategy

In an interview, Yiming explained the company’s globalization strategy as “global products + localized

content”37 and conveyed his belief in ByteDance’s advanced AI techniques. He added that the globalization

strategy was consistent with ByteDance’s mission to build global creation and interaction platforms. TikTok

therefore kept very similar traits and features to Douyin’s but introduced distinct characteristics for different

markets. As a user-generated content app, TikTok’s localization strategy was to offer various hashtags around

local festivals, localize its stickers, and effects or filters. “Our localization strategy helps us encourage users to

create relevant and local content along with incorporating global trends in the localized flavour,” said Raj

Mishra, the business head of TikTok India.38 As of 2018, TikTok had more than 500 million MAUs globally

in over 150 markets and 75 languages.39

TIKTOK IN SOUTHEAST ASIA

The Market and Competitors

With more than 641 million Internet users, 51 per cent of whom were MAUs, the Internet economy of

Southeast Asia—including Indonesia, Vietnam, Thailand, Philippines, and Malaysia—reached $50 billion by

the end of 2017, exceeding the expectations of Google and Temasek by 35 per cent.40 People spent a lot of time

on social media and were eager to express themselves and share with family and friends.41 According to an
estimation by the United Nations, the median age of the population in Southeast Asia was 28.8 years.42 With

a vast number of connected and tech-savvy youth, Southeast Asia presented a lucrative market for technology

companies. TikTok’s head of marketing, Viv Gong, said, “As Indonesia has the sixth largest population of

Internet users in the world, we see a huge market opportunity for our app.”43

Despite attractive market prospects, there were no dominant short-video sharing apps in most Southeast Asian

countries in 2017. Kwai entered Southeast Asian countries in later 2016, and, according to data on Google

Play, although Kwai was in the top-100 list in Vietnam, its ranking was below 400 in other major markets in

Southeast Asia.44

Localizing Campaigns and Promotions

ByteDance expanded into Southeast Asian markets by establishing a local office in Indonesia in August 2017.

In order to inspire the first generation of creators and celebrate the expansion, TikTok held an offline launch

party in Jakarta, the capital of Indonesia, on September 13, 2017. Over 100 local stars and Internet celebrities

attended the party, including Indonesian actress Salshabilla Adriani and Thai actress and singer Suppanad

Jittaleela, who had more than 1.08 million and 1.29 million followers on Twitter, respectively. In Thailand,

TikTok invited famous young actor and singer Leeratanakajorn Thanapob and rising actress and model

Ungsumalynn Sirapatsakmetha to record videos for the promotion.45

The “Internet celebrity economy” through YouTube and Instagram had been well developed in Southeast Asian

countries, and some Internet celebrities had accumulated millions of followers.46 ByteDance’s operations team

in Southeast Asia also took advantage of the powerful appeal of local Internet celebrities. “We are looking for

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

Page 5 9B19M136

and attracting some good content creators from social-media platforms like Instagram,” said a manager of

TikTok.47 A number of Internet celebrities created videos and shared them to other social-media platforms like

YouTube. In order to bond with content creators, TikTok periodically organized offline gatherings. “These

gatherings offer a platform for the content creators to share their experiences. More importantly, they evoke a

sense of belonging and loyalty among content creators,” said an influential content creator on TikTok.48

To cater to local customs, the operations team added new stickers and promoted related campaigns based on

each specific market. During Thailand’s traditional Water Festival, TikTok rolled out three festival-specific

stickers to increase its visibility and garnered more than 40,000 users in three weeks.49 During the 2018

ASEAN Football Federation Championship in Vietnam, TikTok received more than 120,000 videos about the

event and attracted 54.8 million views.50 As most Southeast Asians were fond of and good at dancing and

singing, TikTok sponsored a variety of hashtags around dancing and singing to encourage user participation.

The #tiktokramerame challenge in Indonesia attracted more than 53 million views.51

According to Google Trend, TikTok had achieved a high rank among Southeast Asian countries in 2018,

especially in the Video Player category, as TikTok was almost the number one app—except in the Philippines,

where it was number three—in March 2018.52 In Thailand, TikTok garnered over 10 million downloads, almost

one-sixth of the total population.53

TIKTOK IN JAPAN

For a long time, the short-video sharing market in Japan was largely carved up by Internet giants such as

Facebook, Snapchat, and YouTube. Expanding to Japan meant TikTok had to compete directly with these

giants. On the other hand, this represented an opportunity for TikTok, as the big companies were not

concentrating on the short-video sharing market.

As a content-focused product, going global was never easy for TikTok, especially in the Japanese market,

which had a distinct culture and an often biased view of Chinese companies.54 The Japanese market had always

been harsh to beginners. As the director of TikTok Japan said, “Most of the time, they would not give you the

opportunity for communication with the excuse of busy schedules, or there have been cases where the

conversation went well but was ultimately dismissed by top managers.”55

Breaking the Ice

In August 2017, TikTok rented two rooms and set up the founding team in Shibuya, a district of Tokyo, to start

its expansion into Japan. The founding team of TikTok Japan consisted of seven members who were familiar

with Japanese culture. The director of this team had fully blended into the Japanese society, studying and working

in Japan for 17 years. The other team members were either Japanese or people who had studied in Japan.56

In order to break into the Japanese market, TikTok went after the most popular Internet influencers and stars

to build up its initial content pool. In the first six months, everyone on its operations team was tasked with

engaging celebrities.57 The TikTok Japan team put in great effort and time to collaborate with its first star,

Kinoshita Yukina, who installed TikTok out of her own interest. The operation team grasped this opportunity

to break the ice. The director of TikTok Japan said, “It took around six or seven rounds of discussions to finally

seal the deal. The star studios in Japan are particularly prudent, so we needed to talk to them time and again to

familiarize them with our product and show our sincerity for cooperation.”58

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

Page 6 9B19M136

After the initial success in signing Kinoshita Yukina, the road to convince other star studios in Japan became

increasingly less bumpy for TikTok, which soon got several popular stars and Internet influencers on board in

Japan, including Kyary Pamyu, E-girls, and Fichers. By March 2018, videos with the TikTok watermark started

becoming popular on Japan’s social networks.59

Localizing Campaigns and Promotions

In addition to attracting local celebrities, TikTok customized various features and content in Japan. “Japan has

a strong campus culture. Therefore, we designed contests that allowed students to participate in groups, like

cheerleaders,” the director said.60 To cater to Japan’s “respect for similarity,” TikTok launched various hashtag

campaigns that allowed users to play in groups. On TikTok Japan, some dance movements were also simplified

to help overcome the shyness of Japanese users. During the period between February 14 and March 9, 2018,

TikTok promoted the “TikToker Battle” campaign, including fashion, dance, amuse, talent, and technology

hashtags. The most popular videos were shown on four large advertising screens at Shibuya’s busiest

intersection. This campaign attracted more than 68,000 videos and received 300 million views. In terms of the

TV channel promotions, and considering the undesirability of product placement in Japan, the operations team

offered TV producers interesting and report-worthy stories on TikTok that would appeal to Japanese TV

producers, which helped TikTok co-operate with the TV channels.61

According to AppBi, a leading data analytics consulting agency in China, TikTok stood out as number seven

in the top-10 list, with more than 2.5 million downloads in the first quarter of 2018.62 The Japanese TV network

Nippon TV was also attracted by TikTok’s popularity and taped 15 minutes of street polling to feature TikTok

in its morning show, “Sukkiri!”63

TIKTOK IN NORTH AMERICA

The Competitor: Musical.ly

Before TikTok began its entry into North America, Musical.ly had become the most popular short-video sharing

app. Early in May 2016, Musicaly.ly ranked number one on Apple’s App Store in 19 different countries,64

amassing 70 million registered users and hitting the mark of 10 million DAUs in the United States.65

Debuted in April 2014 and officially launched in August 2014 by Chinese entrepreneurs Alex Zhu and Luyu

Yang in Shanghai, China, Musical.ly let its users create 15- to 60-second lip-syncing videos set to various

music.66 At the beginning, Musical.ly was launched in both the Chinese and US markets. However, compared

to the Chinese market’s tepid reaction, Musical.ly had been particularly popular in the American teenager

market. Due to its small team size, Musical.ly decided to concentrate on the US market. In Zhu’s mind,

Musical.ly was built to be the next social network for sharing videos and was not just a lip-syncing video app.

“Today the very proposition of the app is not about creating music videos. It’s not about lip-syncing. It’s about

a social network,” Zhu said. “It’s a community. People want to stay because there are other people.”67

Musical.ly allowed users to make a duet only when they were BFFs, or “Best Fans Forever”, rather than simply

followers. Since its launch, Musical.ly spawned a number of its own digital stars and a passionate creator

community of “Musers” (Musical.ly users). Having become a sensation among teenagers in North America

and Europe, Musical.ly tried to broaden its reach by entering into Asian markets, with the name “Muse,” on

June 6, 2017. 68 However, Musical.ly did not succeed in the market due to intense competition and its

impenetrable product style.69

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This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

Page 7 9B19M136

The Merger with Musical.ly

ByteDance acquired Musical.ly as a way to tap into the US market—with Musical.ly already boasting a

considerable American audience. Reportedly, the acquisition closed in November 2017 at $1 billion. Upon

closing the acquisition, ByteDance allowed Musical.ly to operate as an independent platform.70

CHALLENGES

Leveraging the strategy of localizing content in each specific market, TikTok had globally achieved some

exciting numbers in users and rankings. However, the local focus also brought a challenge, as it was therefore

difficult for TikTok to take advantage of its user base for global expansion. In the meantime, TikTok had

always been surrounded by skeptics and competitors during its expansion. Faced with these challenges, could

TikTok sustain its position and competitive advantages? How could TikTok make profits after spending a

billion dollars in the global markets?

The major challenges that TikTok faced in sustaining its position in global markets were as follows.

Intense Competition

The popularity and success of TikTok had aroused attention and concern from many other tech companies,

pushing them to release copycats or create similar features targeted at teens. In November 2018, Facebook

quietly launched a new short-video sharing app called Lasso that had very similar features to TikTok.

According to a report by TechCrunch, Snapchat had recently rolled out a new feature called “Lens Challenge”

to increase user engagement by letting users post short-form videos themed to a particular song, dance, event,

and more.71

In China, TikTok’s main competitor, Kuaishou, had been boosted by Chinese tech giants Tencent, Alibaba

Group Holding, and Baidu Inc. to join the overseas market, particularly in Southeast Asia. Tencent also

invested almost $478 million to promote its own short-video sharing app, Weishi, thereby locking horns with

TikTok.72 Academics Michael Wade and Jialu Shan said in The Conversation that “ByteDance cannot rest on

its laurels; however, if it wants TikTok to build on its position as the first globally successful ‘made in China’

app, TikTok will need to massively expand from its base, while staving off attacks from well-funded and

ambitious Chinese and global competitors.”73

Quality and Content of Videos

Although TikTok racked up millions of users, many increasingly complained about the videos as “cringe” and

“creepy.” According to The Atlantic, “It’s [TikTok’s] so painful and embarrassing that a viewer can’t help but

laugh.”74 One example was a video of a woman standing in front of a bathroom mirror doing thumb movements

to a Yo Gotti and Nicki Minaj song, and the video pans up to show that she was filming by holding the phone

in her mouth.75

Since the merger with Musical.ly, which was mostly popular among youth, there was an increasing notion that

parents were worried about content on TikTok, such as the video that depicted a teen dancing—and then cut

to the dead body of the teen’s relative.76 The perceived addiction also annoyed users—“The only time she [her

10-year-old cousin] interacted with us was when she asked us to be in her TikTok video,” Maulydia Yusliwan,

from Indonesia, complained.77

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

Page 8 9B19M136

Government Regulation

TikTok had already sparked concern from local governments. On July 3, 2018, the Indonesia Communications

and Information Ministry temporarily blocked TikTok after learning that it contained “pornography,

inappropriate content, and blasphemy.”78 This ban was overturned a few days later after TikTok agreed to clear

the “negative content,” increase security mechanisms, and enforce restrictions on users between the ages of 14

and 18. It also agreed to open an office in Indonesia to liaise with the government over content.

Monetization

In China, Douyin started exploring opportunities for monetization in early 2017 when it ran three advertising

campaigns for Airbnb, Harbin Beer, and Chevrolet.79 Those three advertisements proved successful and

showed Douyin’s potential for monetization. Taking advantage of hashtags in Douyin, brands could post their

own hashtag campaigns to create engagement, such as Michael Kors’ “City Catwalk” campaign. Douyin also

co-operated with Chinese e-commerce platforms, such as Tmall, TaoBao, and JD.com, to enable users to sell

products in their videos and via links on their profiles.80

In overseas markets, TikTok was still in the “burn money” stage for market growth and penetration and had

yet to start generating revenues. As explained by a director of TikTok’s international markets, “There have

been brands that have approached us regarding advertising but we do not intend to monetize our service at the

present time and are waiting for the market to mature.”81 ByteDance was always generous with spending when

it promoted TikTok globally. However, despite heavy promotion and a massive user base, TikTok only had a

29 per cent engagement rate, whereas Facebook’s engagement rate was 96 per cent, Instagram’s was 95 per

cent, Snapchat’s was 95 per cent, and YouTube’s was 95 per cent.82 Facing a low engagement rate and

differences across markets, TikTok’s monetization in global markets still had a long way to go.

THE ROAD AHEAD

Given the distinct user bases of TikTok and Musical.ly, both in content type and geographic regions,

maintaining two different platforms to target distinct user groups appeared to be a good idea. However,

combining both platforms might deteriorate the unique positioning of each platform and also risk a drop in the

number of users due to possible annoyance. How much growth could the niche market of Musical.ly offer? If

TikTok and Musical.ly did not benefit from each other’s unique networks, then quite possibly no synergies

would arise from the high-ticket acquisition. Could the combined user bases of Musical.ly and TikTok help

the growth of a combined platform via global network effects? Could they also provide stronger defences

against more diversified competitors with larger user bases? The acquisition decision would determine the

future of ByteDance in the global market.

This teaching case is partly funded by grants from the CIBER University of South Carolina

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

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from Jan 2020 to May 2020.

Page 10 9B19M136

ENDNOTES

1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented
in this case are not necessary those of Beijing ByteDance Technology Co. or any of its employees.
2 “ByteDance and musical.ly Announce Agreement to Merge,” November 9, 2017, accessed July 3, 2019,
www.bytedance.com/en/news/3.
3 Daniel Sanchez, “Uh-Oh: Musical.ly’s Numbers Are Crashing — Just Like Vine, Dubsmash & Snapchat Before It,” Digital Music
News, November 10, 2017, accessed April 16, 2019, www.digitalmusicnews.com/2017/11/10/musical-ly-userbase-crash/.
4 “Dance With Rain Drop Challenge | Rain Drop Effect | Tik Tok Musically Compilation,” YouTube Video, 1:15, August 13, 2018,
accessed April 11, 2019, www.youtube.com/watch?v=mhmUZxg9W7Y.
5 “About ByteDance,” ByteDance, accessed July 3, 2019, www.bytedance.com/en/about#overview.
6 “ByteDance Overview,” ByteDance, accessed March 31, 2019, www.bytedance.com/#about.
7 All dollar amounts are in US$ unless otherwise specified.
8 “ByteDance Is Said to Secure Funding at Record $75 Billion Value,” Bloomberg News, October 26, 2018, accessed March 31,
2019, www.bloomberg.com/news/articles/2018-10-26/bytedance-is-said-to-secure-funding-at-record-75-billion-value.
9 “About ByteDance,” op. cit.
10 “The Three Development Stages of Douyin” [in Chinese], Shenzhen Julichuangxiang Technology Co., April 17, 2018, accessed
March 20, 2019, www.woshipm.com/evaluating/994454.html.
11 “China’s Tech Giants Are Following Users Back to Their Small City Hometowns,” Technode, August 16, 2017, accessed April
2, 2019, https://technode.com/2017/08/16/tech-giants-reverse-migration/.
12 “The Three Development Stages of Douyin” [in Chinese], op. cit.
13 “Analysis of the Status Quo of China’s Smartphone Market in 2017 and Industry Development Trend” [in Chinese], Beijing
Zhongjing Xianlue Investment Consulting Center, March 22, 2017, accessed April 22, 2019, www.chinaidr.com/news/2017-
03/111486.html.
14 “iiMedia Research Report | 2016–2017 China’s Short Video Industry Report” [In Chinese], iiMedia, April 21, 2017, accessed
March 31, 2019, www.iimedia.cn/51028.html.
15 “How Douyin Pried up Young People’s Desire to Express Themselves” [in Chinese], 36Kr, May 4, 2017, accessed March 22,
2019, https://36kr.com/p/5073530.html.
16 Thomas Graziani, “How Douyin Became China’s Top Short-Video App in 500 Days,” Walk the Chat, July 30, 2018, accessed
March 31, 2019, https://walkthechat.com/douyin-became-chinas-top-short-video-app-500-days/.
17 “The Three Development Stages of Douyin” [in Chinese], op. cit.
18 A key opinion leader (KOL), also known as an influencer, was a person who has expert product knowledge and influence in a
respective field. They were trusted by relevant interest groups and had significant effects on consumer behaviour.
19 “8 Lessons from the Rise of Douyin (Tik Tok),” KrASIA, June 15, 2018, accessed April 3, 2019, https://kr-asia.com/8-lessons-
from-the-rise-of-douyin-tik-tok.
20 Graziani, op. cit.
21 Wiktoria Marszalek, “How to Use Short-Video App, Douyin, for Your China Marketing,” Nanjing Marketing Group, June 13, 2018,
accessed April 3, 2019, www.nanjingmarketinggroup.com/blog/How-To-Use-Douyin-For-China-Marketing.
22 Daily active users (DAU), a performance metric for the stickiness and growth of an Internet product, measured how many users
acted within an Internet product on a daily basis. Correspondingly, monthly active users (MAU) measured how many users acted
within an Internet product on a monthly basis.
23 Graziani, op. cit.
24 “Why Did Airbnb, Chevrolet, Harbin Beer, and Lenovo Advertise on Douyin?” [in Chinese], Beijing WISE Technology Co., Ltd.,
September 30, 2017, accessed April 5, 2019, https://zhuanlan.zhihu.com/p/29809252.
25 “MICHAEL KORS Teams Up with Douyin to Start Localized Innovation Marketing” [in Chinese], December 11, 2017, accessed
March 25, 2019, https://socialbeta.com/t/case-of-douyin-MICHAEL-KORS-20171211.
26 Binlian Liu, “Douyin’s Daily Active Users Exceeds 250 Million and Monthly Active Users Exceeds 500 Million” [in Chinese],
wallstreetcn.com, January 15, 2019, accessed March 20, 2019, https://wallstreetcn.com/articles/3469699.
27 “The Speech of Douyin’s General Manager Zhang Nan” [in Chinese], Science China Online, March 20, 2018, accessed March
22, 2019, http://science.china.com.cn/2018-03/20/content_40258131.htm.
28 Taylor Lorenz, “TikTok Is Cringey and That’s Fine,” The Atlantic, October 25, 2018, accessed March 25, 2019,
www.theatlantic.com/technology/archive/2018/10/what-tiktok-is-cringey-and-thats-fine/573871/.
29 “Chinese Media Regulator Clamps Down on Toutiao News Site for Posting Vulgar Content” [in Chinese], Souhu Tech, April 10,
2018, accessed April 12, 2019, www.sohu.com/a/227820497_115565.
30 Meng Jing, “Chinese Media Regulator Clamps Down on Toutiao News Site for Posting Vulgar Content,” South China Morning
Post, April 10, 2018, accessed March 25, 2019, www.scmp.com/tech/article/2141124/chinese-media-regulator-clamps-down-
toutiao-news-site-posting-vulgar-content.
31 Nicole Jao, “Douyin Temporarily Removed Live-Stream and Comment Feature,” Technode, April 11, 2018, accessed March 25,
2019, https://technode.com/2018/04/11/douyin-removes-comments/.
32 “Zhang Yiming Discusses the Globalization in the Internet Conference: Oversea Expansion Is the Core Strategy of Jinri Toutiao
in 2017” [in Chinese], First Finance, November 18, 2016, accessed April 12, 2019, www.yicai.com/news/5161385.html.
33 Xiaoqian Gao, “Zhang Yiming Sets the Globalization Goal of Jinri Toutiao to Have More than Half of Its Users from Overseas
within the Next Three Years” [in Chinese], March 26, 2018, accessed March 25, 2019,
https://36kr.com/p/5125610?ktm_source=feed.

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from Jan 2020 to May 2020.

Page 11 9B19M136

34 Kuang Liu, “The Overseas War between Douyin and Kuaishou Becomes More Intense [in Chinese],” LanjingTMT, December
10, 2018, accessed July 4, 2019, www.lanjinger.com/news/detail?id=98049.
35 “What Did Musical.ly Miss during the Year?” [in Chinese], November 11, 2017, accessed July 4, 2019,
www.sohu.com/a/203644165_109401.
36 “About ByteDance,” op. cit.
37 Gao, op. cit.
38 How Tik Tok Has Succeeded In Localized Marketing,” Digital Crew, February 15, 2019, accessed March 26, 2019,
https://medium.com/@marketing_36322/how-tik-tok-has-succeeded-in-localized-marketing-1623b93490d2.
39 Mansoor Iqbal, “TikTok Revenue and Usage Statistics (2019),” Business of Apps, February 27, 2019, accessed April 12, 2019,
www.businessofapps.com/data/tik-tok-statistics/.
40 Rayna Hollander, “Southeast Asia Could Be a Leader in Mobile Internet Usage Next Year,” Business Insider, December 13,
2017, accessed March 27, 2019, www.businessinsider.com/southeast-asia-could-be-a-leader-in-mobile-internet-usage-next-
year-2017-12.
41 Simon Kemp, “Digital in 2018: World’s Internet Users Pass the 4 Billion Mark,” We Are Social, January 30, 2018, accessed April
22, 2019, https://wearesocial.com/blog/2018/01/global-digital-report-2018.
42 Juha Sompinmäki, “Key Data You Need to Know about Southeast Asia’s Casual Gamers,” Tech in Asia, October 7, 2015,
accessed March 27, 2019, www.techinasia.com/talk/key-data-southeast-asias-casual-gamers.
43 “Tik Tok, a Global Music Video Platform and Social Network, Launches in Indonesia,” PR Newswire, September 13, 2017,
accessed March 27, 2019,
https://en.prnasia.com/releases/apac/Tik_Tok_a_Global_Music_Video_Platform_and_Social_Network_Launches_in_Indonesia-
187963.shtml.
44 Annie Liu, “Douyin Got Popular in Southeast Asia [in Chinese],” Momentum Works, March 14, 2018, accessed April 3, 2019,
www.baijingapp.com/article/15220.
45 “Tik Tok, a Global Music Video Platform and Social Network, Launches in Indonesia,” op. cit.
46 Liu, op. cit.
47 “Without Subsidies and Commercialization, Why TikTok Got Successful Overseas [in Chinese],” Sohu, June 13, 2018, accessed
April 3, 2019, www.sohu.com/a/235450902_403354.
48 “A Closer Look at Tik Tok’s Expansion Overseas,” KrASIA, June 27, 2018, accessed March 27, 2019, https://kr-asia.com/a-
closer-look-at-tik-toks-expansion-overseas/.
49 Ibid.
50 Vien Thong, “YouTube Competitor TikTok Plans to Get Ticking in Vietnam,” VnExpress International, December 19, 2018,
accessed April 3, 2019, https://e.vnexpress.net/news/business/companies/youtube-competitor-tiktok-plans-to-get-ticking-in-
vietnam-3856505.html.
51 Liu Yi, “How Does TikTok Become Popular in Oversea Markets [in Chinese],” TMTPOST, July 11, 2018, accessed April 2, 2019,
www.tmtpost.com/3324980.html.
52 Will Wu, “Why Toutiao’s Tik Tok Is So Popular in Southeast Asia,” Momentum Works, March 14, 2018, accessed April 22, 2019,
https://thelowdown.momentum.asia/toutiaos-tik-tok-popular-southeast-asia/.
53 “A Closer Look at Tik Tok’s Expansion Overseas,” op. cit.
54 Jie Yao Zheng, “Douyin’s Internationalization in Japan: How Does TikTok Become Popular in Six Months” [in Chinese],
Jiemian News, June 20, 2018, accessed March 27, 2019, www.jiemian.com/article/2241255.html
55 Ibid.
56 Ibid.
57 China Securities, What Does It Mean When Leading Enterprises Start to Deploy Emerging Overseas Markets? [in Chinese],
69, December 11, 2018, accessed July 4, 2019, http://pg.jrj.com.cn/acc/Res/CN_RES/INVEST/2018/12/11/2f04ac34-1efb-4309-
b03c-ac7fdd2373d9 .
58 “A Closer Look at Tik Tok’s Expansion Overseas,” op. cit.
59 Zheng, op. cit.
60 “A Closer Look at Tik Tok’s Expansion Overseas,” op. cit.
61 Zheng, op. cit.
62 “Douyin/Tik Tok Dominates Japan’s App Market with Search Ads,” AppBi, September 17, 2018, accessed April 3, 2019,
https://medium.com/apple-search-ads/douyin-tik-tok-dominates-japans-app-market-with-search-ads-60614486b1d.
63 “Japanese Popular TV Station Features TikTok to Explain Its Popularity” [in Chinese], Guang Ming Online, April 27, 2018,
accessed April 10, 2019, http://media.people.com.cn/n1/2018/0427/c14677-29953125.html.
64 Dan Rys, “Fresh off a Big Funding Round, Musical.ly Signs Its First Major Label Deal with Warner Music,” Billboard, June 29,
2016, accessed April 4, 2019, www.billboard.com/articles/business/7423281/warner-music-group-deal-musical-ly.
65 Biz Carson, “How a Failed Education Startup Turned into Musical.ly, the Most Popular App You’ve Probably Never Heard Of,”
Business Insider, May 28, 2016, accessed April 28, 2019, www.businessinsider.com/what-is-musically-2016-5.
66 Ibid.
67 Ibid.
68 “What Did Musical.ly Miss during the Year?” [in Chinese], op. cit.
69 Ibid.
70 Liza Lin and Rolfe Winkler, “Social-Media App Musical.ly Is Acquired for as Much as $1 Billion,” The Wall Street Journal,
November 9, 2017, accessed April 11, 2019, www.wsj.com/articles/lip-syncing-app-musical-ly-is-acquired-for-as-much-as-1-
billion-1510278123.

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.

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71 Sarah Perez, “Snapchat Takes On TikTok with Launch of Lens Challenges,” Tech Crunch, December 19, 2018, accessed April
3, 2019, https://techcrunch.com/2018/12/19/snapchat-takes-on-tiktok-with-launch-of-lens-challenges/.
72 Zhao Xiaochun, “Tencent Bets on Its Revived Weishi App to Take On Toutiao’s Tik Tok in Short Video Streaming,” KrASIA,
April 11, 2018, accessed April 2, 2019, https://kr-asia.com/tencent-bets-on-its-revived-weishi-app-to-take-on-toutiaos-tik-tok-in-
short-video-streaming.
73 Michael Wade and Jialu Shan, “TikTok: The World’s Most Valuable Startup That You’ve Never Heard Of,” The Conversation,
January 7, 2019, accessed March 29, 2019, https://theconversation.com/tiktok-the-worlds-most-valuable-startup-that-youve-
never-heard-of-109302.
74 Lorenz, op. cit.
75 Ibid.
76 “bikin video tiktok dengan jenazah kakek,” YouTube video, 0:14, posted by “Tribunnews Bogor,” March 12, 2018, accessed
March 29, 2019, www.youtube.com/watch?v=ar_QWToy12Q.
77 Dyaning Pangestika, “What Is Tik Tok? A Popular App Blocked In Indonesia,” The Jakarta Post/Asia News Network, July 7,
2018, accessed April 10, 2019, www.asiaone.com/asia/what-tik-tok-popular-app-blocked-indonesia.
78 “Indonesia Overturns Ban on Tik Tok after Video Streaming Service Agrees to Increase Security Controls,” South China Morning
Post, July 11, 2018, accessed March 29, 2019, www.scmp.com/tech/article/2154788/indonesia-overturns-ban-tik-tok-after-video-
streaming-service-agrees-increase.
79 “Why Did Airbnb, Chevrolet, Harbin Beer, and Lenovo Advertise on Douyin?” [in Chinese], op. cit.
80 “8 Lessons from the Rise of Douyin (Tik Tok),” op. cit.
81 Thong, op. cit.
82 Sarah Perez, “TikTok Surpassed Facebook, Instagram, Snapchat & YouTube in Downloads Last Month,” Tech Crunch,
November 2, 2018, accessed March 29, 2019, https://techcrunch.com/2018/11/02/tiktok-surpassed-facebook-instagram-
snapchat-youtube-in-downloads-last-month/.

For the exclusive use of M. Hu, 2020.
This document is authorized for use only by Meiyi Hu in International Business Strategy Winter Semester 2020 taught by ERIC HUTCHINS, California State Polytechnic University – Pomona
from Jan 2020 to May 2020.