The "Resource Curse": Why Tencent failed to suppress ByteDance?

In the development history of the Internet, there is a frequently discussed topic: why did Tencent, which owns a huge social empire, abundant cash flow and top engineers, fail to establish a crushing advantage over ByteDance in the early stage of the short video era?

Recently, a review perspective from a former Tencent employee has been circulating on the Internet, summarizing four reasons: first, it underestimated the speed at which short videos reshaped graphic and text traffic in the initial stage; second, with the rise of Douyin, the huge organization faced challenges in response speed; third, when adopting the internal horse racing strategy, the simultaneous advancement of multiple teams led to scattered resources; fourth, it eventually gave up the head start in the competition in the short video field.

Putting aside the details of the rumors, this review hits the common pain points of large enterprises when facing disruptive innovation. In the short video wave and the subsequent AI boom, the change of Tencent's rhythm is not accidental, but the result of the combined effect of "path dependence" and "organizational inertia".

Misalignment from the Cognitive Perspective: From "Supplement" to "Reshaping"

The primary reason why Tencent failed to make full efforts in the early stage of short video lies in its judgment of industry trends.

Around 2017 to 2018, Tencent had already made layouts for short videos internally. But in the business context at that time, the senior management regarded short videos more as clips of long videos, or a supplementary form in the pan-entertainment ecosystem. After all, the graphic and text ecosystem of WeChat Official Accounts and the social distribution of Moments were at their peak at that time. The business logic in the graphic and text era is: high information density, high reading threshold, and relying on in-depth content to precipitate users' social relationships.

However, ByteDance saw a completely different picture. Through the combination of algorithm recommendation and fast-paced visual stimulation, the video stream quickly reshaped the structure of users' attention with its extremely low threshold. Zhang Yiming was extremely keen to grasp the "dopamine code" that combines algorithm distribution and content consumption. When users got used to high-frequency stimulation, short videos changed from a "supplement" to a "basic content form".

When Tencent fully realized this paradigm shift, users' consumption habits had already changed. This kind of reshaping based on the underlying content form cannot be reversed by relying on the defense of a single business line. In the blitzkrieg of the short video track, Tencent's graphic and text ecosystem became a kind of path dependence instead, leading to the missed best window to seize users' fragmented time in the early stage.

The Gravitational Force of Organization: Decision-making Link and Collaboration Cost

If the only problem is that the cognition lags a little behind, with Tencent's size and resources, it is fully capable of catching up quickly. However, the operation mechanism of large organizations often faces higher friction costs on new tracks.

During the window period of Douyin's rapid growth, Tencent needed to coordinate complex department silos and business line interests. For mature large factories, stabilizing the existing profit base (such as games and social advertisements) is usually more certain than transferring core resources to open up a new battlefield full of uncertainties.

Under the existing KPI system, the person in charge of each business group needs to ensure the healthy financial statements of their own business. When the R&D and promotion of new businesses require cross-departmental collaboration and there is no clear profit path in the short term, the decision-making link of the organization will be extended, and the cross-departmental mobilization of resources will also face challenges. This is also a common management problem that large global technology companies generally need to overcome when dealing with the impact of start-ups.

In contrast, ByteDance, as an expanding start-up company, does not have a heavy profit burden. It can pour all its resources, top talents and traffic unreservedly into the main track of short videos. This "burn one's boats" level of focus is something that Tencent could not replicate at that time.

Limitations of Internal Horse Racing: Resource Dispersion and Defense Rhythm

When Tencent decided to enter the short video track with heavy troops, it adopted its good-at "internal horse racing" mechanism.

Tencent supported Weishi, and at the same time launched different defense projects in the QQ and WeChat ecosystems, such as Fanxia Video, Sukan Video and so on. However, short video is a track that relies extremely on network effects and algorithm flywheel. The simultaneous advancement of multiple teams, while maintaining internal competition, also means the dispersion of resources.

Weishi invested a lot of resources externally, but it was still difficult to compete for head creators from Douyin. The WeChat team adhered to the ultimate product restraint concept, prioritizing the protection of social experience. Although WeChat Channels finally successfully broke through relying on WeChat's social relationship chain, in the first few years, this cautious promotion rhythm failed to stop Douyin's expansion across the entire network.

Internal horse racing was very effective in the graphic and text era because of the low trial and error cost; but in the algorithm and data-driven short video era, the data silos and resource internal consumption caused by the horse racing mechanism instead slowed down the overall defense rhythm. When ByteDance's creator ecosystem and commercial closed loop formed a scale, the space for Tencent to change the pattern through pure capital investment on the short video track narrowed.

The Curse of Resources: The Transformation Burden Brought by Advantages

The above phenomenon is often called "the innovator's dilemma" in the field of business management.

Tencent's slowness in the early stage of short video is partly due to its excessive success in the past.

Because of abundant capital, enterprises tend to respond to emerging threats through capital mergers and acquisitions or internal incubation, rather than thorough business restructuring; because of the huge traffic pool, product design naturally tends to guide users to the mature commercial system; because of the stable development of tens of thousands of employees, it is difficult for enterprises to carry out radical transformation with extremely low trial and error cost and extremely high fault tolerance rate like start-up teams.

ByteDance did not have the burden of a social base in the early stage, and its core logic was to concentrate resources to run fast on the algorithm and content track; while Tencent needed to find a balance between protecting the social ecosystem, maintaining profit growth and developing new businesses. The more advantages you have, the higher the decision-making cost of transformation. Tencent wears the most gorgeous shoes, so it is difficult to fight hand-to-hand in the mud without scruples like barefoot entrepreneurs.

Facing the AI Wave: Strategic Choices in the New Cycle

The evolution of history always has a similar rhythm.

In the current large model era, facing the technological change brought by ChatGPT, Tencent is once again facing a similar test. When ByteDance's Doubao occupies a share in the C-end and DeepSeek forms influence in the open source and geek circles, Tencent's Hunyuan large model is also advancing at its own pace.

WeChat maintains extremely high prudence in accessing AI to maintain the experience of a national-level product; and each business group also needs to collaborate with existing business lines in the allocation of AI resources.

However, Tencent still has the most solid social moat and the strongest cash flow in China. In the current competition of large models, Tencent has adopted a pragmatic strategy of technology follow-up and ecological integration. Relying on the huge application scenarios of WeChat, the commercialization of WeChat Channels is also continuing to advance steadily.

At the stage when large AI models are gradually landing on the application layer, Tencent, which has rich landing scenarios, still has the possibility to reshape the market pattern with latecomer advantages. The competition of large models is a marathon, and the final victory or defeat does not entirely depend on the explosive power at the starting line, but more on the penetration and monetization ability of technology in actual scenarios.

Conclusion

Business competition is a dynamic game.

Start-ups can quickly enter the market by relying on keen sense and the flexibility of traveling light; while large enterprises need to use strategic determination, resource reorganization and organizational self-iteration to meet challenges.

For Tencent, the experience and lessons of the short video era provide an important reference for the strategic adjustment of enterprises. In the process of moving towards the next generation of computing platform, how to balance the profit of stock business and the investment of incremental business, and how to improve the collaboration efficiency of huge organizations, is a longer-term topic than the victory or defeat of a single track. For latecomers, as long as they can seize the opportunity in the gap when the giants turn around, the market pattern will always be full of variables.

This article is from the WeChat Official Account "Tech Business", author: Tech Business, authorized for release by 36Kr.