While it would appear that ByteDance is making its crown jewels available to all and sundry, a look through the offering reveals that in all likelihood, the critical stuff is being kept in-house. This is exactly the same as Google making the nuts and bolts of its AI available but keeping the core IP of its search algorithm under wraps.
ByteDance launched a subsidiary called BytePlus in June which appears to be based in Singapore (BytePlus Pte Ltd) and which is offering three main services. These are BytePlus Effects, BytePlus Translate, and BytePlus Recommend. These are three AI-based toolkits that allow customers to track peoples’ movements in videos to add effects (like Snap), offer machine translation, or create a video recommendation engine.
To understand what BytePlus is offering it is worth recapping how AI is created. One starts with a blank neural network through which one then pumps a huge amount of data in an attempt to train the network to be able to match characteristics of the data to the desired outcome.
Once this has been achieved, the network has been irretrievably altered and is now ready to offer insights or recommendations to real-world data as it occurs in the field for that specific task. It is the altered algorithm and the model weights where the real value lies not in the starting point which is how BytePlus and Google can grant access without giving anything away.
What BytePlus is offering is the starting point of this process and in the case of the recommendation engine, it is also offering to do the training for the client based on the client’s data. This is not ByteDance offering the trained algorithm that it uses to recommend videos on TikTok and anyone that thinks that this is what they are going to end up with will be sorely disappointed.
ByteDance was originally an AI company and so it does make sense that it would seek to capitalise on the systems that it has created in order to help clients quickly create their own algorithms. In effect, this is a tools and services offering where clients can either buy the tools and use them themselves or BytePlus will also help the less experienced or smaller companies create algorithms for their services.
Effectively it gets clients up the learning curve more quickly with tools that have been proven to work very well.
BytePlus has obviously been in stealth mode for a while as it already has a few clients listed on its website such as the travel booking service Wego (based in Singapore), Chilibeli (Indonesia), and Webuy.
Given how effective TikTok is at recommending video to its users (RFM ranks it No. 1 in the world for this), I think that there will be plenty of interest in using BytePlus, particularly from Asian clients.
However, given how tensions between China and the USA are ratcheting up, there is likely to be some caution from Western clients in terms of allowing BytePlus into their mission-critical systems as well as granting access to their data. This would explain why the operation seems to be based in Singapore as this is where it looks like the bulk of the clients are going to come from.
In the grand scheme of things, it will be many years before this makes any impact on ByteDance as its advertising revenues are already very substantial and the company is expected to go public fairly soon.
ByteDance will be one of the biggest IPOs we have seen for some time, but the increased pressure being placed upon data platforms by the Chinese state could temper enthusiasm considerably.
Political risk in China is rising rapidly and valuations will need to be adjusted in order to reflect this. This is already well underway in the public markets.