TikTok’s momentous ascent may be slowing as insiders reveal that revenue grew by 70 per cent year-on-year to around $58bn (£43bn) in 2021, down from its 100 per cent growth rate in 2020.
Whilst still growing, the fall in pace for TikTok owner ByteDance may be attributed to China tightening its grip on big tech firms, as reported by Reuters.
For instance, tech companies like Tencent and Alibaba reported slowing growth following Chinese regulation about the way firms carry out deals and interact with users. This could well be the case with TikTok.
On Wednesday, nine government departments, including the increasingly powerful Cyberspace Administration of China, released “opinions” on the healthy operation of internet platform businesses. This included calls to strengthen regulation on the financial activities of tech companies.
But as one of the world’s largest start-up, ByteDance did not publicly disclose its financial breakdown last year, however, it was widely reported that revenue grew by over 100 per cent to $34.3bn (£25.2bn).
The 2021 figures were revealed to Reuters by a small group of employees, who were presented with the ByteDance financials at an internal meeting this week.
The news comes just a day after ByteDance disbanded its investment department. Following an assessment at the beginning of the year, ByteDance decided to “strengthen the focus of the business, reduce investments with low connection (to the main business) and disperse employees from the strategic investment department to various lines of business,” a spokesperson told CNBC.
Neil Wilson, analyst at markets.com, echoed this point. He said: “ByteDance is certainly caught in this antitrust clampdown. It has disbanded its investment team because it acknowledged it’s going to be tougher to make incremental acquisitions of startups. And new rules are reported to come in, which will require tech giants to seek approval before making investments.”
The regulations are going to make it harder for companies to grow – investing in new tech, buying smaller new players and disruptive entrants into the different tech spaces is a key part of ‘Big Tech’ growth and dominance. The Chinese clampdown makes them less competitive, especially compared to US peers.”
Despite a slowdown, the social media giant retained its second-ranked position in China’s online ad market last year, with a market share of 21 per cent, just behind e-commerce giant Alibaba group, according to a recent report published by researcher Interactive Marketing Lab Zhongguancun.
ByteDance was valued at $140bn, according to CB Insights.
In 2021, users spent approximately $2.3bn (£1.7bn) last year in TikTok and the iOS version of its Chinese version Douyin, a 77 per cent jump year-over-year, according to app tracker Sensor Tower.
Michael Gartenberg, tech analyst and ex Apple director, added: “China’s total control of social media means that anything they do means there’s going to be a huge global ripple effect. That said, outside of China, TikTok continues to grow. Last year it surpassed Google as the most visited site so there’s defitnely still a lot of momentum.”