Blocks, viral videos, accusations, and lawsuits: controversies surrounding short video sites in China continue to mount. The protagonists? Toutiao’s Douyin and Tencent’s WeChat.

A post dated May 22 on Douyin’s public WeChat account, “Sorry, Douyin fans”, accused Tencent of discrimination by taking down a lot of individual “healthy” video posts, while simultaneously accusing the company of itself hosting vulgar content. Tencent PR replied sarcastically with: “All bow down to the next drama queen, Douyin.”

Soon after, Douyin CEO Zhang Nan took to WeChat moments to accuse Tencent of being “monopolist and manipulative, exploiting its market position and channels to obstruct users and damage the user experience.” He wrote it was “really beneath them, and has wiped out all the respect I’ve built up for them over the years.”

Since then both companies have taken the spat to court.

Video Sensations

Looking at the big picture, this isn’t the first time WeChat and Douyin have got into scrapes, and it clearly won’t be the last. In just two years, the list of companies with a grievance against Toutiao has gotten extremely long. To give just a few examples:

  • August 10, 2017 – Weibo claimed that a third party platform had directly fetched content from Weibo accounts without the company’s knowledge or authorization. Due to the serious nature of this infraction, Weibo suspended the platform’s interface. This “third-party news platform” was indeed Toutiao.
  • March 8, 2018 – It appeared that WeChat moments were not showing Douyin content, and indeed for a period of time, Douyin content was blocked to other viewers.
  • Evening, March 10, 2018 – some Douyin users found that forwarded Douyin links on WeChat would not appear on their individual pages or news feeds and were only visible to themselves. One user cut to the chase, “Douyin had been blocked on WeChat.”
  • April 11 – On the grounds of “cleaning up” short videos, Tencent instructed QQ and WeChat to stop displaying Toutiao videos.
  • May 14 – A post on Q&A platform Zhihu, “Toutiao and the Trojan Horse,” led to Toutiao suing Zhihu and the post’s author for RMB 1 million in reputational damages. Coming down from the brink, Toutiao accepted an apology and withdrew its claim.
  • May 15 – Weibo penalized Xiaomi, Douyin and other sites for “data skimming” search optimization tactics.
  • Toutiao sued Baidu for its subsidiary Haokan Video’s unauthorized use of the copyrighted program, Yiguohui.
  • May 18 – WeChat officially announced an upgrade to its redirect chain management rules, insisting that partners without audiovisual licenses would not be allowed to post video content to WeChat. According to incomplete data, at least 21 products have been affected. News of the “blocking of Toutiao” spread fast. On May 21, WeChat announced the terms of its “immediate deletion” campaign, and said that the platform and developers would continue to seek a solution to manage the sector better for all.
  • June 1 – Tencent files RMB 1 lawsuit against Bytedance (parent of Toutiao and Douyin) for unfair competition
  • June 2 – Toutiao fires back with RMB 90 million suit for anti-competitive practices.

As Toutiao grows, and Douyin continues to rise, such competition and friction will only increase.

Tencent’s Counterattack

A 3 billion RMB incentive system, a team of celebrity influencers, QQ social sharing and a “Produce 101” music reality show have all drawn in new users. When the whirlwind Tencent makes a move these days, its offensives are massive in terms of both influence and content.

Tencent’s advantage is traffic, and CEO Pony Ma is in the position to hand out slices of the pie. By the time Weishi was launched, Tencent had already opened QQ, QQ Space, WeChat, Tencent News, Kuaibao and other products, all drawing in heavy traffic. Weishi’s official account pushes content to certain QQ users every day. Some say that the young average age of Weishi’s users is due to its success in attracting QQ users.

Despite the power wielded by traffic giant WeChat, Tencent has insisted on fair treatment, but it is hard to imagine Tencent will not give preference to its own offspring. Given recent regulatory hurdles, strictly speaking, Tencent’s shutting down of short video sharing has complied with regulations. But it has also helped Tencent contain its rivals while cultivating its own video platform, Weishi.

Tencent then went one step further, publishing stringent rules for “upgrading its redirect chain management system.” This means WeChat will only permit content that has an official Information and Video Distribution License issued under Information Network law. Many short video platforms are affected by this regulation, including Douyin, Volcano, Xigua, and Miaopai. On the grounds that it is too sweeping and controversial, Tencent withdrew the rules and said it would work with developers on how to manage quality and compliance in video content sharing.

Attention-grabbing techniques have also came into play in the quest for traffic volume. Online idol Huang Zitao became Tencent Weishi’s first celebrity recruit, and on May 20, (China’s online Valentine’s day), Jason Zhang followed suit. Tencent Video then launched its authorized take on Korean reality show “Produce 101”, in which 101 women compete for places in a girl band. This all took place on Weishi with a new hot function – a voting mechanism.

On the content side, Tencent has developed an open source content pool. Its Penguin Platform draws Weishi closer into the Tencent content family, enabling simultaneous posts on multiple platforms, including WeChat official accounts, Weishi, and Kuaibao.

Tencent is also working to attract high-quality, talented content producers, using generous cash incentives as a lure. This has involved a strict offline screening mechanism and collaboration on content with original short video producers and MCN sites worldwide. Content developers and groups have been offered attractive bonuses.

Media reports about the RMB 3 billion incentive plan suggest Tencent will hand out large rewards to Weishi premium content producers between April and August this year. Three levels of bonuses will be on offer: S-class at RMB 1,500/post, A-class at RMB 500/post, and B-class at RMB 140/post.

For many short video entrepreneurs, this kind of bonus hits the spot, and there is the feeling that now is the time to get on board. Many Douyin idols on Star TV have opened Weishi accounts. Live-streamers have also begun shifting to Weishi. These incentives have been enough for many to achieve profitability. Weishi is still looking out for commercial partners and agents, to bring in even more hot personalities and trends.

What about user-generated content (UGC)?

Tencent’s inspiration here comes from WeChat Moments. On May 21, WeChat on Android pushed a 6.6.7 beta version to users. One new feature was WeChat authorized users who were logged into Weishi would be able to post videos automatically, and WeChat videos would be shown directly on their Weishi account. WeChat later said it had not intended to go public with this function just yet.

Behind Tencent’s big maneuvers has been the increasingly important position of Weishi inside Tencent – not just its short video products but more importantly its role as a content matrix distributed by Tencent. In Tencent’s 2018 Q1 financial report, Weishi was specifically mentioned, along with user content and Tencent’s digital data library. Weishi content can also be distributed through vertical information streams such as mobile QQ browsers.

Tencent’s President Liu Chiping said during a conference call that the company would invest heavily in Weishi and had full confidence in its prospects.

In just over a month, applications for Weishi public and group accounts have rocketed.

According to the app download ranking by Qimai, April and May 2018 saw a leap in Weishi app downloads. In the short video download list, it ranked second after Douyin. Weishi was used on 3.37 million unique devices in April, according to iResearch. Currently ranked 16th in short video, prospects are good, with a clear upward trend. Kuaishou and Douyin are however still racing far ahead.

A Storm of Giants

As Tencent races on, other giants are rounding the bend. First, we had Weishi’s talent subsidies. Then Nani micro video, a project of Baidu Tieba’s incubator, used a combination of Baidu-driven traffic and enticing incentives to set off a subsidy war. With salaries and bonuses similar to those of Douyin and Weishi, super users who post six or more top picks receive an “S-class” base salary of RMB 5,500. On May 11, Taobao Short Video held an internal press conference, announcing the launch of a short video app called Social Beta, understood to benchmark Douyin. Weibo announced an RMB 500 million investment, and an ambitious aim of creating a user base of 1,000 users with over a million fans, further enriching the short video content ecology.

Nani micro video was only born in December 2017. It supports short videos of up to 15 seconds long and includes stickers and beautification features. The style is very similar to Musical.ly, Douyin, and Weishi. Nani is said to be welcoming “strategic” support from within the Baidu system. It is reported that Baidu will not use Nani as a strategic product at least for now, and internal sources said that in June other apps will be launched in a similar vein to Douyin.

Also in the exploratory phase is Alibaba. Taobao’s short video press conference aside, where it has announced the launch of its own short video app, “Social Beta,” benchmarking Douyin, in March, Tudou.com announced it would spend RMB 2 billion transitioning to short video, ploughing further money into the sector.

When it isn’t busy blocking Douyin links, Weibo is also investing in short video. RMB 500 million has been put into its “million fan stories”, while it also quietly develops short video site Yixia. Faced with the Douyin offensive, the star who once controlled the short video field appears to be treading water. In April last year, Huangka, its music short video platform, launched as a stand-alone app. However, soon after, Huangka was shuttered as an independent app, leaving the scene on tiptoes. Yixia staff revealed to Technode the not inconsiderable pressure Yixia was facing. It is currently in testing mode, and more will come out with new products in June or July.

As you can see, given this storm of interest, no one wants to lag behind. According to statistics, high levels of investment and financing were still going into China’s short video industry in 2017, with a total of 91 targets and a total spend of RMB 5.4 billion. The China Internet Copyright Industry Development Report (2018) published by the National Copyright Administration’s Network Copyright Industry Research Base on April 23 shows that in 2017, live streaming was worth nearly RMB 40 billion. Short video grew rapidly to more than 410 million users, an increase of 115% YoY. The outflow of user traffic and advertising value in the short video market is expected to reach RMB 35 billion by 2020.

However, in this fiercely competitive market, even if the user scale has expanded rapidly, the industry needs to shake down some more. We may recall the boom in live/short video platforms two or three years ago. Hundreds of live-streaming apps came in with the tide of capital, only to later retreat. Content duplication and worryingly poor quality outputs are still major weak points in the industry. The more lively the market, the more obvious this becomes. This trend will continue in the near future as more and more similar short video apps appear on the horizon, right up until there is a wave of consolidation.

—Translated by Heather Mowbray