ByteDance Leads China's Big Tech Sector in Capital Spending with US$11 Billion for 2024
ByteDance, the parent company of TikTok, emerged as the top investor in technology, particularly artificial intelligence (AI), in China for the year 2024. The company, founded by Chinese entrepreneur Zhang Yiming, allocated an estimated 80 billion yuan (equivalent to US$11 billion) for capital expenditure, nearly matching the combined spending of its competitors Baidu, Alibaba Group Holding, and Tencent Holdings. This information was revealed in a research note by analysts from Zheshang Securities, namely Liu Wenshu, Tong Fei, and Ye Guangliang.
ByteDance's significant investment in technology, driven by the success of its Chinese counterpart Douyin, is projected to double in 2025 to 160 billion yuan. The allocation includes 90 billion yuan for computing power and the remainder for infrastructure like internet data centres. Although the exact amount spent on AI was not specified, the company's focus on enhancing its AI capabilities is evident.
Despite the substantial capital expenditure by Chinese tech giants on AI, they still lag behind their well-funded US counterparts. ByteDance's $11 billion in capital expenditure falls short of the US$44.5 billion spent by Microsoft alone, as per the research note. However, ByteDance's investment appears to be yielding positive outcomes, with its AI chatbot Doubao being compared favourably to OpenAI's GPT-4o in terms of various performance indicators.
The introduction of a new model for Doubao, which offers cost-effective token uses compared to other AI models like ChatGPT, showcases ByteDance's commitment to advancing AI technology. The company's heavy investment in computing power is expected to propel progress in China's AI industry, as highlighted in the report by Zheshang Securities.
ByteDance's strategic focus on promoting its AI products is evident through a surge in advertising spending for Doubao, indicating a strong push towards enhancing user engagement and training data. This move is anticipated to strengthen ByteDance's core businesses, including the Douyin short-video platform and the Jinri Toutiao news app, by improving recommendation and search algorithms.
Since its launch, Doubao has rapidly gained popularity, becoming the most widely used AI chatbot in China with nearly 60 million monthly active users by November. Globally, it ranks as the second most popular AI product in terms of monthly active users, following OpenAI's ChatGPT. ByteDance's AI portfolio now encompasses approximately 20 AI products, offering a range of AI-powered solutions from chatbots to video editing tools.
ByteDance leads China's Big Tech sector in capital spending for 2024 with US$11 billion investment in technology, including AI.
The company's focus on enhancing AI capabilities through significant capital expenditure is expected to drive progress in China's AI industry.
ByteDance's AI chatbot Doubao gains popularity, becoming the most popular AI chatbot in China with nearly 60 million monthly active users by November.
Source: SCMP