TikTok owner ByteDance has emerged as the leader in capital spending among Chinaโs 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.
ByteDanceโs 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.
ByteDanceโs efforts in AI development are paying off. Its chatbot, Doubao, has reached the same level of performance as OpenAIโs GPT-4, excelling in reasoning, coding, and following instructions. Doubaoโs efficiency is also notable, with usage costs at just 0.003 yuan (US$0.00041) per thousand tokensโsubstantially cheaper than ChatGPTโs 0.0175 yuan per thousand tokens.
ByteDanceโs 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 Chinaโs 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.
ByteDanceโs 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 companyโs flagship platforms, Douyin and news app Jinri Toutiao, by improving recommendation algorithms and search features.
Setting the stage for Chinaโs AI industry growth
Zheshang Securities credits ByteDanceโs substantial spending on computing power as a key factor in advancing Chinaโs AI sector. The report highlights the broader impact of ByteDanceโs innovations, reinforcing its existing businesses and positioning the company as a global leader in AI development.
While ByteDanceโs achievements are impressive, they underscore the significant gap between Chinese firms and their US counterparts in tech investments. However, ByteDanceโs forward-thinking approach could help close that gap and set new benchmarks for AI innovation in the future.
