China’s ByteDance may be forced to sell TikTok to the U.S., but its quiet lead in AI will help it survive

“I found my TikTok life when I became a single parent…I had to find ways to support my son,” Ryssi Avila, a Filipino singer who became popular on TikTok, told delegates. “TikTok makes everything easier…it’s been a lifeline.”

However, the real action involving TikTok is taking place 50 miles south in Busan, where US President Donald Trump and Chinese President Xi Jinping are discussing the future of US-China trade and the fate of TikTok’s US operations.

U.S. officials have warned for years that Chinese ownership of TikTok gives Beijing access to U.S. user data and the power to interfere in U.S. affairs by tweaking the social media platform’s algorithms. Such concerns led Congress last year to pass the so-called “stripper ban” law, which threatened to remove TikTok from U.S. app stores unless its owner, ByteDance, sold the app.

In September, U.S. officials announced that a consortium of U.S. investors would take over TikTok’s U.S. unit in a bid to save the app’s U.S. operations. Shortly after the meeting between Xi and Trump, Treasury Secretary Scott Bessant said China had endorsed the plan. (Beijing responded more modestly, saying it would work with Washington to “properly resolve” issues related to the app.)

The Trump administration touted the TikTok deal as Zhang Yiming and his friend Liang Rubo rented an apartment in Beijing’s high-tech neighborhood of Zhongguancun and launched the popular news aggregation site Toutiao. But ByteDance launched short-video platform Douyin in 2016 and Douyin’s international sister app TikTok a year later, becoming the global tech giant it is today.

TikTok currently has more than 1.5 billion monthly active users worldwide. ByteDance’s wealth has also expanded, with a valuation reaching US$400 billion, once becoming the most valuable startup company in the world.

Now ByteDance is considering its next big strategy: artificial intelligence. It first launched the Doubao chatbot in August 2023. It was launched 10 months after ChatGPT, and like OpenAI’s main product, it can answer questions, conduct searches, and generate images and videos. (ByteDance provides other businesses with access to its AI models through its Volcano Engine platform.) Doubao has 157 million monthly active users and is the most used AI app in China. In October, a Bytedance executive said average application and enterprise adoption of AI. ” said Tony Peng, who writes about China’s artificial intelligence industry.

If all parties approve the sale of TikTok in the United States, a U.S. joint venture will take over TikTok’s U.S. operations, likely before the January 23 deadline. ByteDance will maintain no more than 20% of the new company; the remaining shares will reportedly be split between ByteDance’s current U.S. investors (such as venture capital firm General Atlantic) and new entrants (such as Oracle and Silver Lake Management.

Vice President JD Vance claimed that TikTok’s algorithm will be “run by the United States” and that the US unit of the app will be sold for a relatively paltry $14 billion. But recent media reports indicate that the algorithm will still be owned by ByteDance, and the new TikTok US will likely pay the Chinese company a hefty licensing fee—perhaps equal to half of TikTok’s U.S. profits.

ByteDance does not disclose its financial results and declined to comment for this article, but media reports have reported revenue of $155 billion, nearly $40 billion of which came from outside China. ByteDance’s U.S. revenue estimates hover around $15 billion. According to reports, ByteDance’s overall profit last year was US$33 billion.

ByteDance could use the proceeds from the sale of TikTok US to maintain its artificial intelligence advantage.

The company’s large-scale language model is not necessarily the most powerful in China’s AI ecosystem—an honor usually reserved for models released by AI startups like DeepSeek, Alibaba, or Moonshot AI. “ByteDance’s advantage is not in traditional textual LL.M.; it’s in their images and visual materials,” noted Grace Shao, a Chinese artificial intelligence industry analyst. The company is integrating generative AI services into TikTok and its video editing app CapCut, allowing users to use the technology for content. (ByteDance researchers won the Outstanding Paper Award at NeurIPS in 2024, sometimes referred to asOlympic Games AI”, looking for a way to generate images more efficiently.)

Yi Lin—Bloomberg/Getty Images

Shao said this means ByteDance’s direct competitors aren’t just DeepSeek or Alibaba; there are others. This is a live streaming giant quick workerwhose Kling image and video generation services are sometimes the best in the world.

In order to maintain its advantage in the artificial intelligence race, ByteDance needs to obtain powerful artificial intelligence chips. Media reports say ByteDance is the largest buyer NVIDIA Chips are produced in China, and it has explored designing its own processors. It is also investing in data centers in regions such as Latin America and Southeast Asia.

All these initiatives add up. In January, Reuters reported that ByteDance had set aside more than $20 billion in capital expenditures for 2025. (The company called the report “incorrect.”) ByteDance rival Alibaba has pledged to invest more than $50 billion in artificial intelligence over the next three years. (U.S. capital spending dwarfs even this, letter Expected spending in 2025 alone is as high as $93 billion. )

Meanwhile, ByteDance is offering its models at extremely low prices to undercut competitors. ByteDance’s basic model customers pay 2.6 yuan (37 cents) per million tokens. On the other hand, access to DeepSeek costs approximately 42 cents per million tokens.

Unlike large tech companies Alibaba and Tencent, ByteDance’s private status means it cannot tap public markets for capital. The TikTok U.S. deal, if finalized, could have the added benefit of unlocking ByteDance’s long-awaited but long-delayed IPO.

ByteDance was slow to join China’s AI race, but a later entrant – DeepSeek – set fire to all contenders in January because its model, built in a small research lab using far fewer resources, matched ChatGPT’s capabilities.

“DeepSeek is a wake-up call not only to the West, but also to China,” Shao said. China’s big tech companies have become complacent, “sitting on top of a mountain in business, social media, or other fields, just cruising.”

Now, companies like Alibaba, Baidu, and Moonshot AI are upping their game, releasing more powerful models that are often open source, allowing developers to experiment with the models themselves.

Whatever ByteDance decides to do with AI, it’s likely to happen under the radar, at least initially. “ByteDance is not a company that starts out by hyping itself up,” Shao said. “They do wait until the product is mature enough before launching it.”

As artificial intelligence transforms China’s tech industry, ByteDance needs money and attention. Solving the TikTok US problem could be a win-win for both of them.

This article was published in December 2025/January 2026: Asia Magazine wealth The title is “ByteDance without Tiktok.”