Zhang Yiming | Ticking clock for China’s tech giants

The resignation of ByteDance’s billionaire CEO and the brain behind TikTok is only the latest in a booming tech sector now being reinedin by the Chinese government

“The truth is I lack some of the skills that make an ideal manager,” he wrote on May 20, announcing he was stepping down as CEO in an email to the employees of ByteDance, the extraordinarily successful $180 billion tech giant — its short video app Douyin, known as TikTok outside of China, has become a global phenomenon — he founded in Beijing in 2012.

The news came as a shock both to his company and to China’s tech community. But in one sense, it was not entirely surprising. His stepping down comes amid what is perhaps the most difficult period for China’s Internet giants after a decade of relentless growth and expansion.

Companies including ByteDance, Alibaba and Tencent are now embroiled in a battle with regulators over issues ranging from anti-trust investigations to control over users’ data. The tussle, to put it simply, is about cutting them down to size and giving the ruling Communist Party, which is incidentally set to mark its 100-year anniversary in July, a greater say in regulating a tech space that has so far been dominated by a handful of tech behemoths and their billionaire founders.

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The most famous of them, Alibaba’s Jack Ma, 56, has vanished from the headlines and media attention he usually craves since November when regulators showed who was in charge by putting a stop, at the very last minute, to what would have been a world-record breaking $35 billion IPO for the Ant Group, Alibaba’s financial payments arm. In April, Alibaba was hit with a record $2.8 billion fine for violating anti-monopoly laws. An apparently chastened Mr. Ma still continues to maintain a low profile, seemingly licking his wounds.

That same month, Colin Huang, 41, China’s third richest man with a $55 billion fortune — he is one place ahead of the $48 billion-worth Mr. Ma on China’s rich list, according to Forbes — who is behind the hugely popular group buying app Pinduoduo announced he would step down. Mr. Zhang, 38, of ByteDance, which is facing its own regulatory problems over both control over data and content, happens to be seventh on the same rich list with a $35.6 billion fortune, and the third big tech titan to now retreat from the limelight.

Rise to the top

Mr. Zhang was born in Longyan, a small town in the southern coastal province of Fujian known for its Hakka culture. He headed north to Tianjin to attend university and to pursue his dreams of becoming a software engineer. A student by day, he helped classmates fix their computers on the side by night (which was how he ended up meeting his wife, according to a profile in the South China Morning Post).

He was more interested in becoming an entrepreneur than joining an established player. His particular interest was in information and content, and finding the most efficient way to use technology to get people in China to read, listen and watch what they exactly wanted.

The end result of that journey was a news aggregator app called Jinri Toutiao (“today’s headlines”), which uses AI to tailor content for individual users. The app launched ByteDance as a major player in 2012. Nine years later, it is still among the most widely used news apps in China with some 200 million users. Besides the AI powered curation, Jinri Toutiao grew in popularity among young Chinese for its appealing and punchy presentation of news, a world away from the still staid ways of many official media outlets.

The biggest success of ByteDance was, of course, TikTok, which introduced the company to the world. The company had launched a short videos app in China called Douyin, which became a cultural phenomenon with 600 million users. Its international version, TikTok, would take the world by storm, perhaps the first truly global success of any Chinese Internet firm, something that even Alibaba and Tencent could not accomplish.

TikTok, incidentally, is not available in China while Douyin cannot be used outside the country, an unfortunate consequence of China’s “great firewall” of restrictions, thanks to which you now have an entire domestic tech ecosystem essentially entirely cut off from the rest of the world — WeChat instead of WhatsApp, Youku and not YouTube, Baidu and not Google. Facebook, Instagram and Twitter too are all banned in China.

Tech troubles

If the e-commerce and digital payments space was being dominated by Alibaba and Tencent, ByteDance established itself in the content space. Another early success was an app called Neihan Duanzi, which became possibly China’s first Reddit-like space where users would share jokes and memes, sometimes bordering on what would be unacceptable in China’s heavily regulated media space where Communist Party censors maintain a tight grip.

That app too grew rapidly, amassing around 200 million users, before it was suddenly shut down in 2018 by the regulators for “vulgar” content. That same year, Jinri Toutiao also received a rap on the knuckles and its app was temporarily removed. It was restored after Mr. Zhang had to make a grovelling public apology, promising to uphold “socialist core values”. Neihan Duanzi was not allowed to return.

The troubles of 2018 were a prelude to even greater scrutiny that many of China’s tech firms would come under. After the anti-trust probe targeting Alibaba, its great rival Tencent, which is behind WeChat, faced similar investigations. The Cyberspace Administration of China said this month it found 105 apps had violated laws over privacy and individual users’ data. ByteDance was among them. The South China Morning Post reported this month that ByteDance “has been called in by authorities every few weeks.” Last month, the company was among 34 tech firms that made public pledges to follow anti-monopoly laws. Douyin, meanwhile, is facing unrelenting scrutiny for allegedly “improper” content.

As Mr. Zhang steps down, he will stay on as Chairman as he hands over daily duties — and, no doubt, the demands of continued compliance expected from regulators — to his college roommate and long-time partner Liang Rubo. Unlike Alibaba’s Jack Ma, the low-key ByteDance founder, a practicing Buddhist, has generally preferred to stay out of the headlines. In his resignation letter on Thursday, he said he wanted to have less of the day-to-day responsibilities of a CEO and instead spend his time thinking long-term and “exploring new initiatives in education, brain disease research, and digitizing ancient books.”

“I’m not very social,” explained the creator of some of China’s biggest social media platforms, saying that he, instead, preferred “solitary activities like being online, reading, listening to music, and daydreaming about what may be possible”.

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