ByteDance, the giant Chinese company behind social media phenomenon TikTok, has just unveiled its new automotive cloud business. The web giant has reportedly entered talks with car manufacturers regarding cloud services for their smart vehicle units. ByteDance said it aimed to surpass its Chinese rival Tencent by 2025.

The Beijing-based company has reportedly recruited experts from cloud giant AWS and Chinese ecommerce behemoth for its own cloud unit, Chinese news outlet 36Kr reported. In addition, the company is also making plans to team up with an automotive startup and autonomous freight service to provide cloud service projects.

According to the report, ByteDance is making plans to provide services in three major sectors: Infrastructure as a Service (IaaS), which will include public cloud access, Platform as a Service (PaaS), which will consist of data annotation, image rendering, data unpacking and other capabilities, and Software as a Service (SaaS), which entails service management, vehicle management and post-sale data analysis, among other services.

In June of last year, Chinese news source LatePost reported that ByteDance had launched its IaaS cloud unit. According to that report, the company’s cloud strategy is divided into two phases.

Between 2021 and 2022, the social media giant intends to expand its overall cloud service portfolio, including vehicle to everything (V2X) cloud services, autonomous vehicle cloud services and the commercialization of add-on cloud services. In the second phase, from 2023 to 2025, the company set a target of matching Tencent’s overall revenue.

Additionally, in September of last year, ByteDance established a V2X division as its first move into the automotive cloud industry. At the time, it said that it had approximately 50 people in its R&D team in Beijing and Shanghai.

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By GlobalData

V2X refers to a vehicular communication system that supports information transfers from a car to other devices, either moving parts of the traffic system such as other vehicles or stationary devices such as traffic lights and road signs.

The main purpose of V2X technology is to improve road safety, save energy and increase traffic efficiency on the roads.

The same team is also in charge of rolling out ByteDance’s “Volcano Auto Entertainment” system, an application that provides in-vehicle entertainment. According to 36Kr’s report, the app integrates most of the products offered by ByteDance, including Douyin (the Chinese equivalent of TikTok), Xigua Video, a video sharing platform and Toutiao, a news app.

The application has already been installed on vehicles offered by several Chinese car manufacturers, including Geely and Chang’an. Sources told 36Kr that the application had been included on more than 100,000 products at present, but it only has a few thousand active daily users.

In addition to ByteDance’s cloud business plans, the company reportedly also toyed with the idea of building its own cars. However, when the rumour was leaked in June, former CEO Zhang Yiming said that ByteDance was “not making cars”.

ByteDance is not the first or only tech company trying to leap into China’s automotive sector. The country’s booming car industry and its appetite for new energy vehicles and smart cars have led to many tech CEO’s eyeing the market.

Internet giants such as Tencent and Alibaba have launched similar smart cockpit services for the automotive industry. Tencent has recently launched its Tencent Auto Intelligence (TAI) platform, an in-vehicle infotainment system that provides smartphone capabilities for cars. Similarly, Alibaba established its Zebra Network system in 2015, which is also an integrated application for smart vehicles.

This enthusiasm for self-driving cars could underpin a new need for cloud services. Auto brains – especially those involved in fully autonomous vehicles – need access to a vast amount of data. Some of these datasets include real-time transmission of data from sensors, cameras and radar systems to enable safe navigation. Cloud access and low latency are thus essential prerequisites for self-driving cars.

Although not quite as dominant as the US cloud giants AWS, Microsoft and Google, Chinese tech companies are gradually establishing their position in the cloud industry. According to GlobalData’s sector scorecard, ecommerce behemoth Alibaba currently ranks sixth in the global cloud industry, closely followed by Tencent.

Many Chinese tech companies seem to be betting that the automotive industry will be the next area for innovation and big business.

Various smartphone and consumer hardware makers such as Xiaomi, Huawei, Oppo and Vivo have also announced plans to enter the automotive industry.