Chinese social media app TikTok’s parent company ByteDance is putting the popular social platform’s AI technology for sale, according to reports by Financial TimesOpens a new window . The Chinese firm quietly set up a new BytePlus division earlier in June to sell TikTok’s tech and features. Besides the AI tech, the recommendation algorithm behind the ForYou feed is also up for sale. A few other features available for potential buyers include the app’s real-time video effects, computer vision tech, and automated translation of text and speech, as well as data analysis and management tools, among others. Once bought, these features and tech can be customized to fit the organization’s needs for its apps and consumers.
According to BytePlus’s website, it has a few early buyers, such as the American fashion apparel app GOATOpens a new window , Indonesian online shopping brand ChilibeliOpens a new window , Singapore-based travel site WeGoOpens a new window , and India-based mobile gaming app GamesAppOpens a new window .
Also read: Top 3 Factors Impacting Audience Growth on TikTok: Insights by Conviva Study
The Recommendation Algorithm Behind TikTok’s Huge Success
TikTok’s recommendation algorithm, which is also up for sale, is the key driver behind the video-sharing app’s massive success. As per a post on ByteDance’s blogOpens a new window last year, TikTok identifies which videos it should recommend on a user’s feed based on their metadata and interaction on the platform. This includes which videos the user creates, likes, comments, and shares, what video captions and hashtags they use in their posts, the type of device they use, location, device, and account settings, language preferences, and more.
This creates a personalized experience that varies wildly for different users. The feed is called ForYouPage (FYP) and has become a meme within itself. For example, users had claimed that the app’s algorithm knew their personality, medical diagnosisOpens a new window , or sexuality even before they did. Further, various blogs and articles Opens a new window have been written about how users can get featured on FYP.
No doubt, ByteDance would want to capitalize on the recommendation algorithm’s huge success.
Has ByteDance Done a U-Turn?
It is interesting to see that ByteDance is now selling TikTok’s algorithm to buyers as just a year ago, the company had refused to sell it. When the company was under severe pressure from the Trump administration last year to either sell TikTok’s U.S operations to an American company or risk getting banned, ByteDance said it would neither sell nor transfer the codeOpens a new window behind the app as part of any deal. So, the question is, why is ByteDance selling the algorithm and AI tech now?
One industry speculationOpens a new window is that this move can help the company compete with giants like Amazon and Microsoft by selling its behind-the-scenes tools to other businesses. It is also speculated that TikTok and its counterpart Douyin may be close to plateauing, and selling their tech could bring in additional revenue for the company.
Whatever the reason behind the decision, the algorithm can potentially change which apps become the top players in the social media arena. Having said that, BytePlus is now entering a marketplace that is already crowded, and its suite of tools may face stiff competition from big players, such as Google, Amazon Web Services (AWS), Microsoft, and IBM. It may also face competition from other Chinese companies, including Alibaba, Tencent, and Baidu. The division is considering registering trademarks in the U.S., although it is not clear whether it has any stateside presence.
Also read: The Battle for TikTok’s Acquisition: What Is in It for Advertisers?
Further, some of the algorithm’s early buyers are companies based in countries where TikTok is banned. For example, India permanently banned TikTok earlier this year citingOpens a new window , the app was “prejudicial to sovereignty and integrity of India, defence of India, security of state and public orderâ€. Even in the U.S., TikTok has received temporary relief as President Biden signed an executive order revoking the bans imposed by Trump. Given that the algorithm and the AI tech’s customers will only be able to customize them according to their requirements; it will be interesting to see if there will be any heightened scrutiny or legal implications for companies using them.
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