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ByteDance outspends rivals with US$11 billion investment in AI and tech

ByteDance leads China's tech spending with US$11 billion in AI and infrastructure, outpacing rivals and boosting its AI chatbot Doubao.

TikTok owner ByteDance has emerged as the leader in capital spending among Chinaโ€™s major technology firms in 2024, investing a staggering US$11 billion in areas like artificial intelligence (AI). This figure is nearly equal to the combined spending of its competitors Baidu, Alibaba, and Tencent, who collectively invested around US$13.8 billion, according to a report by Zheshang Securities.

ByteDanceโ€™s AI spending outpaces Chinese competitors

Headquartered in Beijing and founded by entrepreneur Zhang Yiming, ByteDance allocated an estimated 80 billion yuan (US$11 billion) in capital expenditures this year. These funds supported advancements in computing power, infrastructure, and AI technologies. Douyin, the Chinese version of TikTok, provided strong cash flow to fuel these investments.

The company is projected to double its spending to 160 billion yuan (US$22 billion) in 2025, with 90 billion yuan dedicated to computing power alone, as noted in the Zheshang Securities report. By comparison, US tech giant Microsoft outspent ByteDance with US$44.5 billion in 2024.

ByteDanceโ€™s efforts in AI development are paying off. Its chatbot, Doubao, has reached the same level of performance as OpenAIโ€™s GPT-4, excelling in reasoning, coding, and following instructions. Doubaoโ€™s efficiency is also notable, with usage costs at just 0.003 yuan (US$0.00041) per thousand tokensโ€”substantially cheaper than ChatGPTโ€™s 0.0175 yuan per thousand tokens.

ByteDanceโ€™s AI products dominate the market

Since its launch in May, Doubao has quickly gained popularity. By November, it had nearly 60 million monthly active users (MAUs), making it Chinaโ€™s most-used AI chatbot. Globally, based on rankings by Aicpb.com, Doubao is second only to ChatGPT in terms of MAUs.

To drive this growth, ByteDance invested heavily in promoting Doubao, spending 124 million yuan on advertising in the first 10 days of June alone. This is a sharp increase from the 18 million yuan spent across April and May. Offering Doubao for free has helped the company attract a vast user base, providing invaluable training data to enhance its capabilities further.

ByteDanceโ€™s AI portfolio now includes around 20 products, ranging from significant language model-powered chatbots to text-to-video, text-to-image, music generation, and video editing tools. These innovations strengthen the companyโ€™s flagship platforms, Douyin and news app Jinri Toutiao, by improving recommendation algorithms and search features.

Setting the stage for Chinaโ€™s AI industry growth

Zheshang Securities credits ByteDanceโ€™s substantial spending on computing power as a key factor in advancing Chinaโ€™s AI sector. The report highlights the broader impact of ByteDanceโ€™s innovations, reinforcing its existing businesses and positioning the company as a global leader in AI development.

While ByteDanceโ€™s achievements are impressive, they underscore the significant gap between Chinese firms and their US counterparts in tech investments. However, ByteDanceโ€™s forward-thinking approach could help close that gap and set new benchmarks for AI innovation in the future.

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