Earlier this year, the open-source artificial intelligence (AI) agent OpenClaw surged in popularity, inviting comparisons to the breakout debut of OpenAI’s ChatGPT in late 2022.
Notably, there was only one Chinese messaging platform among those supported by OpenClaw: ByteDance’s workplace collaboration app Feishu—known overseas as Lark.
That integration drove a surge in Feishu’s user base, intensifying pressure on rival platforms from Alibaba Group Holding and Tencent Holdings, which have struggled in recent years to keep pace with ByteDance’s rapid advances, according to an employee at a domestic messaging company.
Over the past three years, ByteDance has become China’s most aggressive investor in AI. Its strategy rests on a capital-intensive formula: build up computing power, hire top talent and rapidly upgrade products, while its high-traffic platforms like Douyin, TikTok’s Chinese twin, ensure a steady stream of users for its AI services.
“ByteDance has bought the most graphics processing units (GPUs) among Chinese companies.”
“ByteDance has bought the most graphics processing units (GPUs)” among Chinese companies, an executive at an international hedge fund told Caixin, referring to the microchips seen as key to developing AI systems.
Combined with the 2025 hiring of veteran Google AI researcher Wu Yonghui and its vast, well-integrated app ecosystem, “ByteDance has already secured its ‘ticket’ to the global AI race—as long as it avoids major strategic missteps.”
That advantage is reflected in valuation. ByteDance is now worth about $550 billion, surpassing all listed Chinese internet firms. OpenAI, by comparison, was valued at $730 billion ahead of a funding round announced on Feb. 27.
The company is still increasing its spending. ByteDance has budgeted nearly 160 billion yuan ($23 billion) for AI in 2026, with more than half earmarked for chip procurement, sources told Caixin.
Roughly 20 billion yuan will go toward upgrading large language models (LLMs) and related applications, while another 5 billion yuan has been set aside for recruiting top AI talent and supporting research and development.
Battling for talent
“We moved early, invested heavily and built a deep pool of talent,” a ByteDance executive told Caixin. In particular, the company’s heavier spending on computing than its competitors has made it a powerful draw for top researchers, the executive said.
The company’s heavier spending on computing than its competitors has made it a powerful draw for top researchers.
In August 2024, Zhou Chang, then technical head of Alibaba’s Qwen LLM team, joined ByteDance. His departure prompted Alibaba to pursue labour arbitration over a non-compete agreement, given his key role. ByteDance insiders said one of Zhou’s main reasons for leaving Alibaba was that he was unable to secure more computing resources to pursue stronger model capabilities.
In February 2025, Wu joined ByteDance to lead foundational research at its LLM team, Seed. A 17-year Google veteran, he was promoted to vice president of research at AI research lab DeepMind in 2023 and contributed to the development of the Gemini model. He now reports directly to ByteDance CEO Liang Rubo.
“ByteDance spares no expense in recruiting AI talent,” said an executive at a domestic LLM company. More importantly, the company knows how to make effective use of that talent. “Wu Yonghui quickly aligned the team and set a clear direction that the entire AI team follows,” the executive said, pointing to ByteDance’s strength in enabling such coordination.
Since joining ByteDance, Wu has pushed the company to maximize its technical capabilities and tackle the most challenging problems, the ByteDance executive said. In February, he delivered his first major breakthrough at ByteDance with the launch of Seedance 2.0, a video generation model. The model has drawn widespread attention for its ability to quickly produce usable video with humanlike characters and cinematic quality, helping drive demand for fully AI-generated short dramas in the domestic market.
ByteDance’s growing talent pool has also drawn attention from rivals. Tencent, OpenAI and Meta Platforms have either offered aggressive compensation packages to compete for researchers or attempted to poach staff, according to people familiar with the matter.
To retain talent, ByteDance rolled out virtual equity incentives, raised salaries and boosted bonuses in late 2025. At a January all-hands meeting, Liang said the company would continue strengthening incentives to keep compensation “at the top tier” globally.
Product-first strategy
Meanwhile, ByteDance is flipping the traditional AI development model. Instead of waiting for technical breakthroughs, it designs products first, then pushes models to catch up.
A person close to ByteDance’s management said the approach reflects a bet on where AI capabilities are headed. ByteDance executive Zhang Nan has championed building products without being constrained by current technical limits, trusting the models will eventually catch up.
Zhang led efforts to release ByteDance’s AI video generation app Jimeng, or Dreamina, to the public before the more advanced Seedance 2.0 model was launched and integrated across the company’s products to drive user growth.
The foundational Doubao model followed a similar path. Launched in May 2024 — more than a year after ChatGPT ignited the generative AI boom — it gained users due to its competitive pricing and solid performance. The model was updated four times in 2025 alone, supported by the company’s expanding infrastructure.
To sustain that pace, ByteDance plans to invest another 50 billion yuan in 2026 to build and expand data centres and server clusters both in China and overseas, Caixin has learned.
App advantage
ByteDance’s edge in the AI race lies not only in its models and talent, but also in its tightly integrated ecosystem of apps, from its Doubao chatbot to short video and short drama platforms.
ByteDance’s edge in the AI race lies not only in its models and talent, but also in its tightly integrated ecosystem of apps
At the centre is Douyin, the Chinese counterpart to TikTok and one of the world’s largest traffic funnels. ByteDance leverages that scale to channel users into its AI products at lower cost and with greater efficiency than rivals.
In 2025, Tencent’s Yuanbao, along with Alibaba’s Ant Afu and Qwen, ranked as China’s top three AI apps by share of advertising spending, according to QuestMobile, with Doubao trailing behind.
Yet Doubao led in user numbers. By December, its monthly active users had reached 227 million, far exceeding rivals, while its retention rate was about 15 percentage points higher, according to QuestMobile.
As of that month, Doubao’s daily active users across multiple platforms had also surpassed 100 million at its peak, Caixin has learned. This is “a meaningful milestone because it signals that general-purpose chat interaction has crossed a ‘good-enough’ threshold for mass-market usage and that distribution-scale platforms can now push AI into habitual consumer behavior,” JPMorgan Chase & Co. said in a research report on Jan. 30.
Doubao’s rise was not inevitable. In 2024, its daily active user target was just 16 million. Its breakout moment came in 2025, driven in part by the launch of AI video and voice features that appealed to users seeking more natural, humanlike interaction. ByteDance later refined the model to support dialects and more lifelike engagement, further differentiating it from competitors.
The person close to ByteDance’s management said Doubao’s advantage stems from its underlying model capabilities. “Features such as dialect speech and video calling are enabled by strong voice and vision models,” the person said. “In some cases, Doubao has even defined new product formats.”
The development of Doubao remains a top priority this year for ByteDance
The development of Doubao remains a top priority this year for ByteDance, which plans to roll out advanced capabilities such as image and video generation on the app first, Caixin has learned.
Feeling the pressure, Alibaba, Tencent and Baidu Inc. collectively spent 4.5 billion yuan on cash subsidies to boost their AI apps during their 2026 Lunar New Year campaigns.
ByteDance took a different approach. It spent about 1 billion yuan to become the exclusive AI cloud partner for the nationally televised Spring Festival Gala, distributing more than 10,000 tech products including robots, 3D printers and projectors integrated with the Doubao LLM during the Feb. 16 broadcast.
Doubao serves as the umbrella identity for ByteDance’s AI offerings. It includes products for both businesses and consumers, a source at a leading Chinese cloud provider told Caixin.
That consistency comes with trade-offs. “If something doesn’t work well, it reflects on Doubao as a whole,” the source said. “There is no room to shift blame.”
Rising scrutiny
ByteDance’s ambition requires establishing trust with the public globally, according to Liang. To that end, nearly all of the company’s flagship applications now have international variants. For example, Dola, the overseas version of Doubao, is expanding rapidly, with downloads nearly doubling in the fourth quarter of 2025 from the previous quarter, according to Sensor Tower.
But global expansion is bringing scrutiny. The latest flashpoint came in February with the debut of Seedance 2.0, which sparked backlash in Hollywood after users generated videos featuring copyrighted intellectual property, including recognizable characters.
Later that month, Douyin Vice President Li Liang said the company would temporarily suspend features allowing real-person facial references and the generation of recognizable IP, including content tied to Walt Disney Co. “The team’s top priority recently has been to strengthen safeguards against potential copyright infringement,” he said.
Amid the controversy, ByteDance has halted the global rollout of Seedance 2.0, a person close to the company told Caixin on Monday.
