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 CITYUNIVERSITY OF ECONOMICS AND LAW

DIGITAL TRANSFORMATION AND ARTIFICIAL INTELLIGENCE

CASE STUDY 3 REPORTBYTEDANCE INC.

TEAM:

CLASS ID:LECTURER:

13 225MI5204VŨ VĂN ĐIỆP

Đoàn Anh Minh K225021971

List of members:

1.1.Summary

ByteDance Co., Ltd is a Chinese multinational internet technology company headquarteredin 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 (TikTok) On November 9, 2017, ByteDance purchased social media startup Musical.ly forUS$1 billion It later merged with TikTok to become a single global app, keeping the nameTikTok

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

1.2 Target

What type of startup is classified as: a growth startup (scalable startup) - from the verybeginning, 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 powerfulconcepts, they are always looking for investment to raise capital for their idea Once theyhave found the right business model, they focus more on expansion and call for investmentcapital to accelerate progress

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

SSP's goal is for ByteDance's product development teams to be as lean and user focused aspossible, 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, spanningeleven different sectors They get the product out fast, but they also finish off the ineffectiveproduct just as quickly

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

2 KEY ISSUES TO TACKLE:

ByteDance faces competition from other technology companies in different areas Forexample, in the news and information space, ByteDance's Toutiao app competes withcompanies like Google News and Apple News In the messaging and communication space,ByteDance's messaging app, Feishu, competes with popular platforms like Microsoft Teamsand 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, itwill inevitably encounter more competition from both established and emerging technologycompanies However, the company's strong user base and innovative products have allowedit to stand out in the highly competitive tech industry This has led to concerns about thecompany's influence and potential anti-competitive practices Regulators and competitorshave 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 orHong Kong, after the Chinese government asked the company to focus on addressing risksrelated to user data security In addition, at that time ByteDance did not have a CFO topromote the IPO

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

2.3 Management system:

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

 The ByteDance-owned company is also accused of defrauding customers by ratingthe 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 allchildren using the TikTok app, and then processed this data without meeting itsrequirements for confidentiality, transparency, and permission of the guardian, toserve the benefit of 3rd parties as of May 25, 2018

like TikTok, ByteDance has had to deal with concerns regarding the moderation andfiltering of inappropriate or harmful content Some of the audio songs as well as backgroundaudio 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 theuse of drugs, violence, nudity, and fantasy This raises critical concerns for TikTok’s use bychildren among other vulnerable groups.

2.4 Content recommendation system

ByteDance wants to develop their FYP (For You Page), they can partner with Google orAmazon to combine users' search needs However, this cooperation may face someproblems related to the interests and interests of both parties, so there should be specificnegotiations and agreements One potential risk is losing the uniqueness and distinctivenessof FYP if it is merely a clone of existing search products This may reduce the attractivenessand uniqueness of FYP to users

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

3 EVALUATE OPTIONS3.1 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 peoplefind the latest content TikTok is powered by a unique algorithm that uses AI and machinelearning to feed FYP the most optimal content to display to a specific user To determineyour 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 whichcountry, what type of device they are using) For example, if you like, comment, or shareclips revolving around the outdoors, then you will see more videos of the outdoors on yourfeed The algorithm also establishes relationships based on different videos that the sameuser interacts with This is similar to Amazon's "Frequently bought together" section thatgenerates 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 upprofiles 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 usersin the "For you" section.

+ Disadvantages: inadvertently proposing a series of videos that are too similar, affectingusers' emotions in a negative way based on what they care about, examples include contentabout 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 withVietNamNet, a TikTok media representative said that the social network's product andprocess team is focusing on designing strategies and techniques to effectively detectpotential harm and enforce community standards at a scale

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

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

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

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

Additional reviews and moderator feedback will be leveraged to improve the machinelearning system, thereby quickly grasping current trends and improving content filtering inthe 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 unicornsglobally, China has 301 startups compared to 487 in the US According to Hurun's latestGlobal Unicorn Ranking, TikTok's owner ByteDance has surpassed Any Group to becomethe world's largest unicorn And the data shows that US and Chinese startups are stillgrowing even though Chinese companies are subject to restrictive and regulatory policiesfrom both at home and in the US The value of Beijing-based ByteDance has increased by30% from $270 billion in 2020 to $350 billion

ByteDance owns the social networking platform Tiktok with one billion monthly activeusers globally and is considered a top competitor to Facebook Therefore, moving forwardand developing further, the most important thing is still to create added content to reachusers 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 continueto launch new products This theory has been successfully applied to other large businessessuch as Facebook as the focal point for Messenger and Ig or Google indirectly fueled thebirth of Youtube, Email…

It is necessary to avoid abusing other people's content and creations to illegally benefitthemselves At the same time, there must be formal agreements and commitments incontracts for cooperation or intellectual use of others Because the management system isnot complete, many problems of litigation about the bad format of the app causing manywebsites 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 mostpopular TikTok hashtag you'll come across Because social media creators are constantlylooking for ways to grow their social media accounts If you want to develop the FYPhashtag, Bytedance will have to combine the development of users' search needs the wayGoogle or Amazon are still doing, so there will be problems with cooperation Therefore, inorder to optimize the risk of cooperation, Bytedance can instead eliminate the search needof consumers by exporting many different options to users and then using algorithms in thesearch results Digital Transformation and Artificial Intelligence to highlight videosaccording 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 frommost investors in the market Because an IPO helps to raise huge capital Thiscapital is in the equity section, not creating a liability, thereby reducing thefinancial pressure on the company about principal and interest

 Through an IPO, businesses can improve transparency and standards incorporate governance A business that is eligible to conduct an IPO willdemonstrate its financial capacity

 Businesses have the opportunity to increase the value of the company's assetswhen conducting an IPO If the issued shares attract many investors, in thelong term they increase sharply, and the capital of the organization increasesaccordingly Organizations that perform well during the year have a goodreputation; 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 potentialmergers/acquisitions of small companies

To conduct the IPO procedure:

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

 The organization establishes the Preparatory Committee after reaching consensus inthe general meeting on the purpose and issues related to the IPO After that, thisBoard prepares dossiers of application for permission to issue securities to submit torelevant agencies/units regarding IPO activities, selects underwriters if necessary,and contacts a third party for investment advice Consulting and auditing to developan issuance plan - using capital from IPO.

 Accurate stock valuation: Although the statutory share par value is VND 10,000, themarket price is subject to change The Preparatory Committee cooperates with theconsulting and auditing party, the underwriting organization to conduct the securitiesvaluation 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 tothe organization

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

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

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

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

5 Implement:5.1.Timeline:

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

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

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

Third, using security systems such as Cloud WAF, Multi CDN, AI Load Balancing tokeep 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 ofshareholders together with a detailed IPO implementation plan It is necessary to accuratelylist the contents including the purpose of capital mobilization, the specific amount of capitalto be mobilized, the quantity and type of securities to be issued, and the subjects to whomthe mobilized capital will be distributed Then prepare documents to apply for a license toissue securities to be able to raise capital from large investors.

About technology: They're actually not a creator of content platforms, but an artificialintelligence 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'ssystem in particular and the company's other products in general more stable will not be toodifficult But after all, investing in technology is an important and necessary job

About employees: Bytedance should maintain its use of its SSP platform differently thanmost companies The company's product groups or units do not control their ownoperational resources Instead, many of the common businesses, technology, and operations(including HR and legal) are centralized and organized into respective groups Teams havethe expertise to find the right people and deploy them flexibly as needed for each newbusiness venture The product team remains focused on serving customer needs, but theyrely 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 relatedsoftware

• Reduce fixed cost structure to improve profitability and overcome current macroeconomicchallenges

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

5.4.Risk mitigation

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

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

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