ByteDance is swallowing the internet—in China and beyond

Can anything stop its stunning rise?

This article has been kindly reproduced with permission from The Economist and was published on 23 March 2026.

Since it was founded in 2012, ByteDance has grown to become the world’s premier application factory. The Chinese giant, which began as a news aggregator, is these days best known as the company behind TikTok and its domestic equivalent, Douyin, which together are used monthly by close to 3bn people around the world. The company churns out so many other mobile apps that its employees struggle to keep track. Its portfolio now spans everything from video editing and workplace collaboration to chatbots.

A deal consummated in January to sell 80% of the American division of TikTok to Oracle, a software giant, and other investors friendly with President Donald Trump has ended a distracting saga for ByteDance, which secured a surprisingly advantageous arrangement (it is reportedly leasing its algorithm to the new business in return for 20% of its revenue, and continues to operate TikTok Shop, the accompanying e-commerce unit, in America).

Since then, investors have become even more bullish about its prospects. In November the unlisted firm was valued in a secondary transaction at $480bn; in February the figure reached $550bn. Among private companies only OpenAI, the world’s leading artificial-intelligence lab, and SpaceX, Elon Musk’s rockets-to-chatbots conglomerate, are worth more. Its vast user base makes it the world’s second-biggest social-media company, behind only Meta, owner of Facebook and Instagram. It is also fast becoming an e-commerce powerhouse and one of China’s top AI companies. Its continued ascent is making rivals at home and abroad increasingly nervous. Can anything stop its rise?

Start with ByteDance’s business in China, which is believed to have accounted for around three-quarters of its estimated $155bn in revenue in 2024. Its “content-to-cart” business model, which blends entertainment and shopping, has made it the country’s third-largest e-commerce firm, with 4trn yuan ($580bn) of goods sold through its platforms last year. Douyin has evolved into a thriving marketplace. Posts about products are interspersed among cat videos; beloved influencers peddle wares during live shopping events. Hongguo, ByteDance’s micro-drama app, likewise encourages users to buy items that feature in the two-minute soap-opera episodes.

ByteDance has ventured into other businesses, too. Its food-delivery service is growing quickly, eating into the sales of Meituan and other incumbents. An app launched last month offering coupons for in-person consumption, called Dou Sheng Sheng, quickly shot to the top of local charts. ByteDance’s breadth of apps, and the reams of data it gathers on users, have reportedly now made it the country’s largest digital advertiser, displacing Alibaba, the e-commerce colossus that had held the position since the mid-2010s.

AI is further fuelling ByteDance’s rise. Doubao, its chatbot, is the most popular in China, with 315m monthly users as of February. Offering access to the models that power it has helped ByteDance lure yet more enterprises to its cloud platform, which has also been rapidly expanding.

ByteDance’s AI ambitions are lofty. It hopes to turn Doubao into an intelligent super-app that can perform all manner of digital transactions with a simple instruction from a user, a goal also being pursued by rivals such as Alibaba. In December ByteDance teamed up with ZTE, a struggling device-maker, to launch a smartphone pre-loaded with an AI assistant able to read what is on its screen and perform various tasks, including making purchases on a user’s behalf.

The experimental gadget, of which just 30,000 were made, sold out in days. But it quickly ran into snags. When the AI assistant attempted to use applications developed by rivals, it was blocked. Handling payments also proved problematic. ByteDance has its own payments system, but it has not been widely adopted, and its apps rely on those of Alibaba and Tencent, the company behind WeChat.

That points to one of the brakes on ByteDance’s expansion. Its established competitors have spent years building infrastructure such as payment systems and logistics networks, notes Poe Zhao, a technology analyst and author of the Hello China Tech newsletter. ByteDance has so far skimped on such investments.

An even bigger problem is its poor relations with China’s government. Zhang Yiming, ByteDance’s founder, resigned as chief executive and then chairman in 2021 amid a campaign by authorities to rein in tech moguls. But insiders say the government is still not at ease with the company’s influence. Consider the high-profile meeting last year between President Xi Jinping and a group of Chinese entrepreneurs, which was widely viewed as signalling a thaw in relations with the tech industry. Jack Ma, Alibaba’s founder, who was also caught up in the crackdown, was present. Mr Zhang was not. The government has become more comfortable with strong e-commerce firms, but it does not want a social-media company to become too powerful. China’s rulers jealously guard their control over public opinion.

Frosty relations with the government may also complicate ByteDance’s continued expansion abroad. The company is rare among China’s internet giants for the success it has had overseas in both poor countries and rich ones. ByteDance, which claims not to have a headquarters, has achieved that in part by setting up large foreign operations.

The Chinese government, however, is uneasy about the number of domestic companies shifting all or part of their activity to places such as Singapore (where TikTok is largely based). It has barred two co-founders of Manus, an AI company that relocated from China to the city-state last year, from leaving the mainland as it scrutinises a proposal by Meta to buy it. The government does not want China’s technology to flow freely overseas, and would prefer jobs and profits remain at home.

That could trip up ByteDance’s plans for a public listing. The only venue that could satisfy both China’s government and the company’s foreign investors, which include a number of American venture-capital firms, is Hong Kong. But Chinese regulators are starting to demand that domestic companies which list their shares in the city be incorporated there or on the mainland. That will be a challenge for ByteDance, whose complex holding structure is incorporated in the Cayman Islands to attract investors from across the world.

Sensitivity over the sharing of technology is also beginning to strain collaboration between ByteDance’s China and overseas divisions, notes a former employee. Diverging rules for AI will only complicate matters further. Seedance 2.0, an AI video-editing app that ByteDance released in China in February, has been wildly popular at home. Before it could be released abroad, however, the company received complaints of alleged copyright violations from foreign media businesses, including Disney and Paramount. The app’s global launch has reportedly been suspended. So far, ByteDance has succeeded in straddling the divide between China’s internet and that of the West. That, however, will only grow more difficult.