According to Financial Times, ByteDance, owner of the social media platform TikTok, has expanded its corporate cloud offering, Volcano Engine, in the Chinese enterprise market, leveraging AI advancements and competitive pricing. The move positions ByteDance to challenge established cloud providers like Alibaba, Tencent, and Huawei.
Volcano Engine has become China’s second-largest provider of AI infrastructure and software, behind Alibaba, according to IDC. ByteDance garnered nearly 13% of China’s AI cloud services revenue, totaling $390 million, in the first half of 2025. Alibaba held 23% during the same period. ByteDance’s overall cloud market share in China is approximately 3%.
Company employees, customers, and competitors reported that ByteDance has increased its sales team and offered discounts to attract corporate clients. The company pitches products that utilize its data reserves and computing infrastructure, including bespoke AI agents built with proprietary models.
Charlie Dai, vice-president and principal analyst at Forrester, said ByteDance’s growth trajectory and AI-led strategy suggest it could become a dominant player as AI demand accelerates. Dai noted that ByteDance has leveraged its data and GPU infrastructure to develop AI tools for customers, combined with aggressive pricing and integration with its consumer ecosystem.
ByteDance’s revenues, which were $50 billion in the third quarter of 2025, primarily stem from consumer technology products such as TikTok, Douyin, CapCut, and Toutiao. Previous enterprise software initiatives, including its product Lark, did not generate large business lines. The current AI growth strategy could support a potential future initial public offering.
ByteDance has commercialized its AI capabilities through Volcano Engine, focusing on its flagship HiAgent offering, which creates custom AI agents for corporate customers. This strategy is supported by significant investment in computing power. ByteDance was Nvidia’s largest customer in China in 2024 and has budgeted Rmb85 billion for AI processors this year, with plans to purchase Nvidia’s H200 chips pending Chinese regulatory approval.
Edison Lee, head of China tech analysis at Jefferies, said ByteDance possesses strong software capabilities and hardware resources but lacks deep industry expertise and experience serving enterprise customers. Lee added that ByteDance is gaining market share from Tencent and Huawei.
Tencent has prioritized its GPU resources for internal use over expanding external cloud services. Huawei has scaled back its AI cloud ambitions, focusing on direct sales of its Ascend chips. Both companies experienced slight declines in their AI cloud market shares in the first half of 2025, according to IDC.
While rivals like DeepSeek and Alibaba have launched “open” models and published research on training methods, ByteDance has maintained some of its most advanced models as proprietary. This means companies access them exclusively through its cloud business. An LLM team member described ByteDance’s approach as “low key,” stating, “We are focused on training the best . . . models for our products and customers, not on the open-source race.”
