Jake’s Take: Debunking Galloway’s ByteDance Accusations

American digital experts continue to overlook China social commerce success.

Several friends sent me a clip from Scott Galloway’s show this week, where he accused ByteDance of manipulating revenue numbers. Sad.

Galloway was skeptical that TikTok accounted for only 20% of ByteDance’s revenue in Q2. That figure is from a recent report from Juro Osawa at The Information, which found that ByteDance hauled in USD $29 billion in Q2, up 40%.

Galloway alleged, without presenting evidence, that ByteDance may have understated TikTok revenue as part of an effort to steer clear of US regulatory scrutiny and maintain a high valuation.

This allegation reflects how little some American digital leaders know about the current evolution of China social commerce and the enormous value generated by ByteDance’s domestic products. Douyin launched in China in 2016 and currently has 750 million active users. Even more so than little sister TikTok, it has been an advertising powerhouse for local and international brands. Over the last three years Douyin has also become a major e-commerce player in China. The platform posted USD $200 billion in GMV in 2022, up 80% from the year prior. That number for 2023 is going to be even higher. During Singles’ Day, Douyin GMV was up 119% year-on-year.

In short, ByteDance’s primary market continues to be China. Its growth is driven by mammoth Douyin social commerce and advertising revenue, not hidden US ad fees on TikTok, as Galloway implied.

Despite the fact that TikTok Shop is not being pushed heavily in the US and many big brands are dissuaded from investing in a TikTok store due to regulatory risks, global brands should be learning from Douyin and other social commerce successes.

Douyin, PDD, and Little Red Book’s social commerce offerings in China have significantly improved competition and consumer digital shopping experiences in China. Social commerce could bring similar value to US, Canadian and European consumers and provide needed competition for dominant players like Amazon and Walmart.

WPIC has been working with dozens of international brands to master the complexities and opportunities of social commerce in China and explaining how these best practices can be used in other markets. While Scott Galloway is insightful, it’s frustrating to see him lean into tropes like “Chinese companies are shady” to explain why TikTok only accounts for 20% of ByteDance’s revenue. China social commerce is the missing answer. WPIC looks forward to further exploring this inspiring social commerce evolution with leading brands and experts.