digital transformation and artificial intelligence case study 3 report bytedance inc

In 2020, ByteDance''''sDouyin application the Chinese version of the social network TikTok sold $26 billion initems such as cosmetics, clothing, etc.. Lack of funds: In 2020, ByteDance inde

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY UNIVERSITY OF ECONOMICS AND LAW

DIGITAL TRANSFORMATION AND ARTIFICIAL INTELLIGENCE

CASE STUDY 3 REPORT BYTEDANCE INC.

TEAM:

CLASS ID:

LECTURER:

13 225MI5204

VŨ VĂN ĐIỆP

Đoàn Anh Minh K225021971

List of members:

1 OBJECTIVE 3

1.1.Summary 3

1.2 Target 3

2 KEY ISSUES TO TACKLE: 3

2.1 Fierce competition: 3

2.2 Lack of funds: 4

2.3 Management system: 4

2.4 Content recommendation system 5

3 EVALUATE OPTIONS 5

3.1 Monolith system - a powerful AI management tool & "For You" functionality 5

3.2 Implement multiple algorithms to handle fraud and negative information 6

4 Proposal 6

5 Implement: 8

5.1 Timeline: 8

5.2 Source estimation: 9

5.3 Contingencies 9

5.4 Risk mitigation 9

1.1.Summary

ByteDance Co., Ltd is a Chinese multinational internet technology company headquartered

in Beijing Founded by Truong Nhat Minh in 2012 ByteDance is reported to be worth over

$100 billion as of May 2020

ByteDance is the developer of the video sharing social networking service Douyin (Tik Tok) On November 9, 2017, ByteDance purchased social media startup Musical.ly for US$1 billion It later merged with TikTok to become a single global app, keeping the name TikTok

Although just entering the e-commerce industry in 2020, ByteDance has created a new breeze in an industry formerly managed by Alibaba and JD.com In 2020, ByteDance's Douyin application (the Chinese version of the social network TikTok) sold $26 billion in items such as cosmetics, clothing, etc live broadcast shorten the video, which Alibaba's Taobao took 6 years to achieve

1.2 Target

What type of startup is classified as: a growth startup (scalable startup) - from the very beginning, the founder believed he had a vision that could change the world Their goal, aside from profiting, is also concerned with creating fairness within the organization, creating a company of solid value, solid foundation They focus on simple yet powerful concepts, they are always looking for investment to raise capital for their idea Once they have found the right business model, they focus more on expansion and call for investment capital to accelerate progress

ByteDance's SSP (Shared Service Platform) approach has taken shared usage to the next level Everything that is considered a "platform", from technology to people, is "shared" by the entire corporation

SSP's goal is for ByteDance's product development teams to be as lean and user focused as possible, and to apply "market lessons" from one ByteDance product to another

As a result, in 2 years, ByteDance has driven more than 140 apps to market, spanning eleven different sectors They get the product out fast, but they also finish off the ineffective product just as quickly

ByteDance's SSP strategy has been so successful that many other companies are expected to follow suit, but only a few have The reason is that most businesses have not included the organizational tools that help ByteDance overcome misconceptions

2 KEY ISSUES TO TACKLE:

ByteDance faces competition from other technology companies in different areas For example, in the news and information space, ByteDance's Toutiao app competes with companies like Google News and Apple News In the messaging and communication space, ByteDance's messaging app, Feishu, competes with popular platforms like Microsoft Teams and Slack In the entertainment industry, it competes with Bilibili, Youtube and so on

As ByteDance continues to expand its offerings and presence in various market segments, it will inevitably encounter more competition from both established and emerging technology companies However, the company's strong user base and innovative products have allowed

it to stand out in the highly competitive tech industry This has led to concerns about the company's influence and potential anti-competitive practices Regulators and competitors have investigated ByteDance's market position and its potential impact on fair competition

2.2 Lack of funds:

In 2020, ByteDance indefinitely postponed an initial public offering (IPO) in the US or Hong Kong, after the Chinese government asked the company to focus on addressing risks related to user data security In addition, at that time ByteDance did not have a CFO to promote the IPO

According to Bloomberg, ByteDance, TikTok's parent company, has in recent weeks dropped the $300 billion mark, down at least 25% from last year's valuation That is mainly because investors pulled most of their cash out of the social media giant after the IPO cooled down

2.3 Management system:

Despite being one of the most successful startup companies with the development of technology, the content management and review system is still incomplete That led to a lot

of litigation issues about the badly formatted cps app causing many websites to crash

→ Data security and privacy: ByteDance collects a significant amount of user data

through its platforms, and this has raised concerns regarding data security and privacy Questions have been raised about how the company handles and safeguards user data, as well as concerns about potential breaches or unauthorized access to user information Countries like the US and India have banned the use of TikTok due to data security concerns

 The ByteDance-owned company is also accused of defrauding customers by rating the app 12+ on the App Store and Google Play, but children can easily find drug-related content and other sensitive issues

 Ms Longfield alleges that ByteDance collected personal information from all children using the TikTok app, and then processed this data without meeting its requirements for confidentiality, transparency, and permission of the guardian, to serve the benefit of 3rd parties as of May 25, 2018

like TikTok, ByteDance has had to deal with concerns regarding the moderation and filtering of inappropriate or harmful content Some of the audio songs as well as background audio clips have been termed inappropriate; unfortunately, TikTok doesn’t censor them Social media critics claim that TikTok’s content allows for crude humor and encourages the use of drugs, violence, nudity, and fantasy This raises critical concerns for TikTok’s use by children among other vulnerable groups

2.4 Content recommendation system

ByteDance wants to develop their FYP (For You Page), they can partner with Google or Amazon to combine users' search needs However, this cooperation may face some problems related to the interests and interests of both parties, so there should be specific negotiations and agreements One potential risk is losing the uniqueness and distinctiveness

of FYP if it is merely a clone of existing search products This may reduce the attractiveness and uniqueness of FYP to users

In addition, cooperating with Google or Amazon may also face problems with intellectual property rights and competing partners These companies may have intellectual property rights to similar technologies or services and may face direct competition from them It also requires negotiating and defining the terms and conditions of the contract Resolving issues related to rights, data sharing and economic interests may encounter difficulties and cause conflicts in the negotiation process

3 EVALUATE OPTIONS

3.1 Monolith system - a powerful AI management tool & "For You" functionality

The biggest reason so many teens and people of all ages are still addicted to TikTok is the

"For You" page or FYP This page acts as the main timeline on the app and is how people find the latest content TikTok is powered by a unique algorithm that uses AI and machine learning to feed FYP the most optimal content to display to a specific user To determine your interests, the app will develop personalized content based on the following 3 factors: user interactions on the app, elements in the video that the user watches (such as audio, hashtag) and user-related context (e.g., what language users tend to choose, in which country, what type of device they are using) For example, if you like, comment, or share clips revolving around the outdoors, then you will see more videos of the outdoors on your feed The algorithm also establishes relationships based on different videos that the same user interacts with This is similar to Amazon's "Frequently bought together" section that generates recommendations based on purchased products

Other platforms also use AI, but the TikTok algorithm is still considered the most superior For example, TikTok's AI algorithm can help users relieve their mood, satisfy users' psychology through just 2 hours of exposure, meanwhile, Facebook requires users to set up profiles and provide personal information to do this, TikTok only needs to use algorithms

+ Advantages: propose content and advertisements to be reached to the right interested users

in the "For you" section

+ Disadvantages: inadvertently proposing a series of videos that are too similar, affecting users' emotions in a negative way based on what they care about, examples include content about loneliness, sadness or pressure to lose weight…

3.2 Implement multiple algorithms to handle fraud and negative information.

Aware of the dangers of bad challenges and hoaxes in the online environment, sharing with VietNamNet, a TikTok media representative said that the social network's product and process team is focusing on designing strategies and techniques to effectively detect potential harm and enforce community standards at a scale

Based on industry standards, TikTok has used string technology to create a separate digital identification code to identify a series of infringing images and videos

Accordingly, when content about child sexual abuse is discovered, the identification code will review and delete similar or related content, and thoroughly prevent similar content from being detected the user initiates the upload

TikTok has clearly demonstrated the effectiveness of this technology when up to 87.5% of the offending videos were removed before any views were available

While technology can help eliminate obvious violations, our moderation team also plays a vital role The role of this audience is to process the reported content

Additional reviews and moderator feedback will be leveraged to improve the machine learning system, thereby quickly grasping current trends and improving content filtering in the future

+ Advantage: quickly detect malicious videos automatically

+ Disadvantage: cannot be thoroughly screened and is still highly dependent on people

4 Proposal

ByteDance is valued at $350 billion against Ant Group's $150 billion Of the 1,058 unicorns globally, China has 301 startups compared to 487 in the US According to Hurun's latest Global Unicorn Ranking, TikTok's owner ByteDance has surpassed Any Group to become the world's largest unicorn And the data shows that US and Chinese startups are still growing even though Chinese companies are subject to restrictive and regulatory policies from both at home and in the US The value of Beijing-based ByteDance has increased by 30% from $270 billion in 2020 to $350 billion

ByteDance owns the social networking platform Tiktok with one billion monthly active users globally and is considered a top competitor to Facebook Therefore, moving forward and developing further, the most important thing is still to create added content to reach users Although it is a new and young company, Bytedance is trying to apply the theory of

"Product Distribution", that is, to create the best product on the market to increase the

number of users drastically and create relationships between the user network, then continue

to launch new products This theory has been successfully applied to other large businesses such as Facebook as the focal point for Messenger and Ig or Google indirectly fueled the birth of Youtube, Email…

It is necessary to avoid abusing other people's content and creations to illegally benefit themselves At the same time, there must be formal agreements and commitments in contracts for cooperation or intellectual use of others Because the management system is not complete, many problems of litigation about the bad format of the app causing many websites to crash Therefore, it should be fixed quickly to become more sustainable With over 1229.9 billion views on hashtags alone, FYP on TikTok is probably the most popular TikTok hashtag you'll come across Because social media creators are constantly looking for ways to grow their social media accounts If you want to develop the FYP hashtag, Bytedance will have to combine the development of users' search needs the way Google or Amazon are still doing, so there will be problems with cooperation Therefore, in order to optimize the risk of cooperation, Bytedance can instead eliminate the search need

of consumers by exporting many different options to users and then using algorithms in the search results Digital Transformation and Artificial Intelligence to highlight videos according to consumer preferences on FYP

Moreover, Bytedance should implement an IPO plan to increase capital for the business When participating in an IPO, businesses will:

 Through an IPO, businesses will access an abundant source of capital from most investors in the market Because an IPO helps to raise huge capital This capital is in the equity section, not creating a liability, thereby reducing the financial pressure on the company about principal and interest

 Through an IPO, businesses can improve transparency and standards in corporate governance A business that is eligible to conduct an IPO will demonstrate its financial capacity

 Businesses have the opportunity to increase the value of the company's assets when conducting an IPO If the issued shares attract many investors, in the long term they increase sharply, and the capital of the organization increases accordingly Organizations that perform well during the year have a good reputation; the market will value their shares higher than their book value

 Use an IPO to promote your brand to the market quickly

 Employees' commitment to the company is enhanced after the company's IPO

 The IPO process is considered an important steppingstone for potential mergers/acquisitions of small companies

To conduct the IPO procedure:

 First, the organization must collect opinions given in the general meeting of shareholders together with a detailed IPO implementation plan In which, it is necessary to list exactly the contents including the purpose of raising capital, the specific amount of capital to be mobilized, the quantity and type of securities to be issued, and the subjects to whom the mobilized capital will be distributed

 The organization establishes the Preparatory Committee after reaching consensus in the general meeting on the purpose and issues related to the IPO After that, this Board prepares dossiers of application for permission to issue securities to submit to relevant agencies/units regarding IPO activities, selects underwriters if necessary, and contacts a third party for investment advice Consulting and auditing to develop

an issuance plan - using capital from IPO

 Accurate stock valuation: Although the statutory share par value is VND 10,000, the market price is subject to change The Preparatory Committee cooperates with the consulting and auditing party, the underwriting organization to conduct the securities valuation This is a major step because if the price is high, the offer will be difficult,

if the price is too low, the mobilized capital will not be enough, causing damage to the organization

 The organization validates the financial statements and completes valid records The confirmation of the report is carried out by auditing companies, in parallel with the enterprises themselves who can audit internally After completing all the documents and procedures, they will be submitted to the Securities Commission

 After submitting the application, the enterprise waits for the committee to check and confirm, give an answer to accept or refuse to issue securities

 Announcement of the public offering of securities: After receiving the approval of the committee, the company should announce this news to the mass media with the official prospectus, the time of distribution and other information Related news

 After the issuance, a report on the results is required: The organization will register for storage, payment, and transfer of securities at the VSD depository center with the securities commission, and at the same time register capital with the competent authority

5 Implement:

5.1 Timeline:

Our proposal is in the hope of restoring, developing, and enhancing the high position of ByteDance

First, placing the CFO with a decentralized model by using Big Data applications This is the preparation for investing in IPO

Second, using the combination of Big Data and AI not only to predict customer behavior but also to prevent harmful content by automatic scan mode

Third, using security systems such as Cloud WAF, Multi CDN, AI Load Balancing to keep customers' data private

Last, using the customer network for advertising the new products, new applications,

5.2 Source estimation:

There are three sources: budget, technology, and creative employees.

About budget: The organization must collect opinions given in the general meeting of shareholders together with a detailed IPO implementation plan It is necessary to accurately list the contents including the purpose of capital mobilization, the specific amount of capital

to be mobilized, the quantity and type of securities to be issued, and the subjects to whom the mobilized capital will be distributed Then prepare documents to apply for a license to issue securities to be able to raise capital from large investors

About technology: They're actually not a creator of content platforms, but an artificial intelligence lab that specializes in developing algorithms that can connect users to content, from video and music to news and ecommerce Developing technology to make Tiktok's system in particular and the company's other products in general more stable will not be too difficult But after all, investing in technology is an important and necessary job

About employees: Bytedance should maintain its use of its SSP platform differently than most companies The company's product groups or units do not control their own operational resources Instead, many of the common businesses, technology, and operations (including HR and legal) are centralized and organized into respective groups Teams have the expertise to find the right people and deploy them flexibly as needed for each new business venture The product team remains focused on serving customer needs, but they rely on different SSP teams to accelerate development and growth

5.3 Contingencies

In the near term, we remain focused on the following contingencies:

• Expand customer network through appropriate improvements of TikTok and related software

• Reduce fixed cost structure to improve profitability and overcome current macroeconomic challenges

• Leverage your brand's size, growth, and popularity to temporarily address remaining disruptions and limitations

5.4 Risk mitigation

Investing in technology requires a large amount of money, which ByteDance may not be able to meet, in which case ByteDance may issue shares, bonds, votes, and calls for capital from partners and other companies

Discord, the departure of partners: To avoid this, Gap needs to avoid unexpected conflicts in doing business with companies that cooperate with you

Negotiate to reach a mutually beneficial decision In addition, Gap also needs to find more potential companies to cooperate with in the future