China tech giant ByteDance has announced the closure of its strategic investment unit. The move, the latest in an ongoing restructuring for the owner of globally popular social app TikTok and its Chinese equivalent Douyin, is another result of Beijing’s campaign to bring the Chinese tech industry to heel.
ByteDance says the decision is part of its plan to “strengthen the focus of the business, reduce investments with low connection (to the main business) and disperse employees from the strategic investment department to various lines of business,” according to a public statement translated by CNBC.
The closure of the investment unit, however, is likely to be seen as an attempt by ByteDance to appease Beijing after several high-profile deals it made last year. August saw the company acquire VR start-up Pico Interactive in a deal estimated by GlobalData to be worth close to 5 billion yuan ($772m).
Further moves into the gaming industry saw ByteDance purchase mobile game makers C4 Games and Moonton in the spring.
Wednesday’s news though means that fewer ByteDance investments and acquisitions are likely to take place in 2022, as the company reassigns around a hundred employees from the strategic investment unit. Some staff are likely to be laid off, according to a South China Morning Post report.
ByteDance slows its steps in China
ByteDance began to slow down its expansion last summer during a year defined, in Chinese tech, by heavy crackdowns from the Chinese state. 2021 saw Chinese authorities clamp down on online fan clubs, bitcoin mining, the power of big online tech companies and more.
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ByteDance then announced it was suspending its IPO plans. The company is the world’s only hectacorn – a private company valued at more than US$100bn – and the world’s largest startup, valued at $140bn according to CB Insights. Any plans to take the company public were suspended in October until at least late 2022.
November saw ByteDance founder Zhang Yiming relinquish his position as company chairman half a year after stepping down as CEO. Zhang’s total exit from the company came as ByteDance split into six business units, focusing on the areas of domestic media, vocational training, enterprise solutions, work collaboration technology, gaming and overseas services.
“ByteDance – the world’s most valuable unlisted company – is simply taking pre-emptive action, with China’s all powerful Cyberspace Administration regulator drafting new rules that mean any Chinese platform with over 100m users or $1.6bn revenues will have to get permission before making any investment however small, either at home or abroad,” says Michael Orme, senior analyst at GlobalData and China specialist.
ByteDance is currently ranked as the number one company worldwide on GlobalData’s social media thematic scorecard.