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TikTok owner ByteDance's profit rises 60% in 2023 on worries about a US ban, ET BrandEquity

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ByteDance Ltd.'s profit rose about 60% in 2023, outpacing the growth of online rival Tencent Holdings Ltd. and Alibaba Group Holding Ltd., a sign of the TikTok owner's resilience in the face of an economic downturn.

Earnings before interest, taxes, depreciation and amortization rose to more than $40 billion from about $25 billion in 2022, say people familiar with the matter, who asked not to be named discussing private information. The world's most valuable startup also increased its revenue from $80 billion to nearly $120 billion, the people said.

The results mark the first time ByteDance has overtaken arch-rival Tencent in both revenue and profit, as the company leveraged its popular short-video platforms to expand into international e-commerce and maintain its global popularity. Although ByteDance's internal numbers have not been independently verified, they suggest that the advertising social media giant became one of the fastest-growing tech giants in the world in 2023.

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A ByteDance spokesman did not respond to a request for comment.

The owner of TikTok and its Chinese twin Douyin cemented its position last year as one of China's internet leaders alongside Tencent and Alibaba, both of which have struggled to revive growth at a time of economic uncertainty and consumer confidence in the country.

In the domestic market, Douyin is emerging as an all-in-one platform similar to Tencent's WeChat, with additional features pushing into Alibaba's e-commerce space and competing with Meituan for food delivery orders. Despite the strong results, ByteDance decided in February to overhaul the management of its China operations, with Kelly Zhang stepping down as chief executive with no plans to appoint a successor.

Overseas, the successful launch of TikTok Shop in markets such as the US and Southeast Asia has opened up new revenue streams beyond digital marketing. TikTok plans to increase the size of its US e-commerce business tenfold this year. It has 170 million users in the country.

This is despite TikTok's existential crisis in its most lucrative market. In March, the US House of Representatives passed a bill to ban TikTok in the US unless ByteDance sells its prized asset, although the outcome of the measure in the Senate is less certain. The presidential rematch between Joe Biden and Donald Trump later in the year, along with Beijing's response, could also complicate matters.

Like its Chinese competitors, ByteDance has started making risky bets in recent months. The company cut hundreds of jobs in its game development and enterprise software divisions, hurting profitability and largely failing to deliver on its promises. Instead, the company is trying to keep up with generative AI by developing its own chatbots and a large language model.

ByteDance's long-awaited stock market debut remains a distant possibility as the company struggles with increased scrutiny in the United States. In December, the company offered investors to buy back up to $5 billion in shares worth $268 billion. At its peak, ByteDance was valued at more than $400 billion in some private trades.

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  • Published on April 10, 2024 at 3:40 PM IST

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