in 2012, luring China’s top engineers with hefty paychecks. One of the startup’s first apps, Neihan Duanzi -- it means “implied jokes” in English -- used artificial intelligence to tailor a selection of memes to individual tastes. After attracting tens of millions of users and refining its AI algorithms with massive data,
used the same approach to create the news-recommendation app Jinri Toutiao, or “today’s headlines.” It became ByteDance’s first blockbuster hit.
It wasn’t long before Zhang ran afoul of Beijing. In 2018 he apologized to regulators for spreading content not in line with “socialist core values” and shut down the joke app. “We profoundly understand that our rapid development was an opportunity afforded us by this great era.” Zhang wrote in an open letter. “I thank this era. I thank the historic opportunity of economic reform and opening; and I thank the support the government has given for the development of the technology industry.”
The mea culpa is an early example of the hoops Zhang has had to jump through to keep ahead of regulators, first at home and later overseas.
He initially tried to push a Toutiao-style news app in English-speaking countries, but only became a serious rival to Facebook Inc and Alphabet Inc with short videos. In 2017, ByteDance purchased the lip-syncing app Musical.ly that later morphed into TikTok, a deal that has been under the review by the Committee on Foreign Investment in the United States, or CFIUS, for allegedly posing national-security threats.
TikTok soon took off globally, with more than two billion downloads to date, along with its Chinese twin service Douyin. The US is TikTok’s most lucrative market in terms of in-app spending and is grabbing ad revenue that might otherwise go to Facebook’s Instagram and other social-media apps. Today ByteDance is the world’s most valuable startup, with a valuation of as much as $140 billion. Last year, Zhang’s company generated more than $3 billion of net profit on more than $17 billion in revenue, Bloomberg reported in May.
But amid growing concerns about Chinese power, TikTok has become an object of suspicion in several countries. The last thing Zhang wants is an outright ban in the US, where he has built up TikTok’s operations, hired an American chief and reassured regulators that user data won’t be shared outside the country. He has also stepped up lobbying in Washington, pledged to create 10,000 American jobs and created a $200 million fund to support US TikTok stars. But these measures have failed to satisfy the Trump administration.
“Zhang is facing the same dilemma that both Chinese and US tech firms face entering each other’s market space,” said Kendra Schaefer, head of digital research at consultancy Trivium in Beijing. “Chinese platforms, including those run by ByteDance, are walking the same fine line domestically as many foreign tech firms do in China: placating regulators while attempting to innovate and stay profitable.”
The reclusive founder has expressed his frustration with US authorities to ByteDance employees. In an all-hands memo on Monday, Zhang said he disagrees with CFIUS’s demand that he sell TikTok’s US operations. “We’ve repeatedly stressed that we’re a privately run business,” he wrote. One day later, in another letter to China staff, he called the forced sale “unreasonable.” “But this is not their goal, or even what they want,” he said. “Their real objective is to achieve a comprehensive ban.”
Zhang can’t count on the kind of support his countrymen have lavished on Huawei founder Ren Zhengfei, who is locked in his own battle with the Trump administration. Huawei is a bona fide national champion that builds state-of-the-art smartphones and networking gear.
ByteDance makes consumer apps, however popular. Zhang even had to hide his posts on the microblogging site Weibo after his account was flooded with comments slamming him as a “traitor” for even considering selling to an American company.
Still, Beijing seems to have his back -- if only for geopolitical leverage. In a daily press conference on Friday, the Foreign Ministry blasted the US for “using national security as an excuse and using state power to oppress non-American businesses.” State newspaper China Daily had earlier called on ByteDance to defend its rights legally against what it described as a “smash and grab” by Trump.
When asked about privacy concerns brought by Toutiao hoovering up user data in 2015, Zhang told a panel in Shanghai, “Machines and algorithms will grow smarter, but they are always innocent.” When challenged by the moderator that he’s the real boss behind the machine, Zhang replied with a chuckle: “I’m also always innocent.”