ByteDance eyes big data push with Terark acquisition

SC Yeung April 30, 2019 12:35

ByteDance, one of China's leading mobile internet companies and parent of TikTok and Toutiao apps, has acquired Beijing-based big data firm Terark for an undisclosed sum, allowing it to broaden its customer base to market leaders such as Alibaba Group.

A Chinese shareholding monitoring website reported on Monday that ByteDance founder and chief executive Zhang Yiming now holds a 98.81 percent stake in Qijian Software, the parent company of Terark.

A subsidiary of ByteDance has become the biggest shareholder of Qijian from April 22, and Zhang Lidong, senior vice president of Toutiao, is now the executive manager and legal representative of Qijian, the report said.

Founded in 2015, Terark focuses on data storage and searching. Terark Database is the company's flagship product, which is said to have exceeded similar products of Facebook and Google. It can compress data into much a smaller space, and has a faster search speed. This could boost the performance of big data applications by 10 times.

As Terak solutions can boost the data storage capability of enterprises, the company is now considered a key player in the big data space.

Terark’s team includes engineers from established enterprises such as Yahoo, Google, Microsoft, and Baidu. About 85 percent of its employees are working on research and development. Given its strong R&D arm, it is not surprising that Terark now owns six patents in research technology, storage engine, and database.

As such, the Terak acquisition is expected to significantly boost ByteDance, which has yet to make a formal announcement of the deal.

Terark has developed algorithms that allow databases to run up to 200 times faster by compressing their data further. On top of that, enterprises could read the data without having to decompress it.  This means a single server running TerarkDB can do the job of five servers running industry standard database engines. That spells huge saving for enterprises.

ByteDance, which has a huge user base from its mobile applications, generates a lot of data which requires to be compressed in order to be managed well. With the acquisition of Terark, ByteDance will gain a strong partner in managing its huge data and thus be able to offer a higher quality of service to users in China and overseas.

In fact, Terark is a key data supplier for Alibaba Cloud Computing service and JD.com Optical character recognition. In view of the acquisition, ByteDance's two main peers in the Chinese internet sector will become its customers, help build awareness of the brand, which should be useful when it decides on further fundraising activities in the future.

Terark is the first enterprise market investment of ByteDance. Prior to the purchase, ByteDance has been mainly invested in the consumer segment. One recent acquisition was Smartisan, a small-scale smartphone maker.

The company is also a player in the corporate and educational fields. ByteDance has invested in an online documentation platform, a cloud platform and an online calendar developer.

ByteDance is currently privately owned. It had a market value of around US$75 billion when it closed its pre-IPO fundraising last year. Such a high valuation is supported by the fast growth in the number of active users of its three key mobile apps. 

Toutiao, which is China's most popular news content aggregation platform, has more than 260 million monthly active users. Douyin, a first mover in the short video segment, has around 400 million monthly active users. TikTok, the overseas version of Douyin, also has around 500 million monthly active users around the world.

The consumer side of the internet sector is getting crowded and full of political uncertainties. Internet giants are beginning to tap the enterprise market for fast and stable growth.

As ByteDance continues to seek growth, it is inevitable for the company to shift to the enterprise segment, which may contribute much to achieving its revenue goal of 100 billion yuan (US$14.84 billion) this year.

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SC Yeung

EJ Insight writer