Tech watchers in the US are familiar with FAANG, the acronym for Facebook, Amazon, Apple, Netflix and Google (now under holding company Alphabet) with a combined market capitalization of $5.15 trillion. These “Big Tech” companies have led the charge in developing social networking to smartphones, video streaming to online search.
In China, BAT has been shorthand for the internet trinity of Baidu, Alibaba and Tencent. Baidu runs China’s largest search engine, and has branched out into autonomous driving and other artificial intelligence applications, much like Google, to which it is often compared. However, its mainstay search business has run up against the rise of “walled gardens” of Alibaba and Tencent, while its foray into driverless cars has yet to pay off.
Investors have taken note. Led by founder Robin Li, Baidu is no longer in the same league as Alibaba ($579 billion) and Tencent ($631 billion) when evaluated by market capitalization, according to the data released by South China Morning Post Research. The Economist noted that Baidu’s erstwhile equals “can gain or lose the equivalent of its entire market value of $45 billion in a day or two” in a recent article on China’s digital economy.
Tencent, founded by Pony Ma, is the world’s largest games publisher. The company also operates China’s most popular messaging app, WeChat. It holds the distinction of being the first Chinese company to surpass $500 billion in market value in November 2017. The company has also been a beneficiary of the COVID-19 pandemic under the increasing demand for gaming and e-commerce.
Similarly, its chief rival Alibaba, now Asia’s biggest company by market value, has ridden the surge in e-commerce as the pandemic accelerated the shift away from physical retail. Started by Jack Ma in his apartment in Hangzhou back to 1999, Alibaba is now a tech conglomerate with businesses ranging from cloud computing and food delivery to entertainment and travel.
The former Chinese internet big three are now joined by two new technology companies born in the mobile internet era.
The Economist’s article pointed out two companies to watch, food delivery giant Meituan-Dianping (Meituan) and interactive commerce pioneer Pinduoduo. The author introduced a new term “TAMP” as a potential replacement for BAT – TAMP standing for Tencent, Alibaba, Meituan and Pinduoduo.
Meituan is the biggest platform for daily services in China, and was founded in 2010 by entrepreneur Wang Xing. It was crowned “The World’s Greatest Delivery Empire” by Bloomberg Businessweek in March 2019, six months after the company listed in Hong Kong.
The local services behemoth’s market value has blown past $130 billion after its stock rose 10.4% in mid-June, making it China’s third-most-valuable internet company. The company reported revenue of 16.75 billion yuan in the first quarter of 2020, a year-on-year decrease of 12.6%, while the operating loss for the same period soared from 1.3 billion yuan in 2019 to 1.7 billion yuan this year.
Then there is Pinduoduo, the youngest of the TAMP companies, founded in 2015 by ex-Google engineer Colin Huang. The company popularized the use of team purchases and the concept of social commerce, and is best known for offering value-for-money merchandise. The social commerce company has a market capitalization of $102 billion as of June 30, 2020, the SCMP Research said.
With more than 600 million users in less than five years, Pinduoduo has been described by The Information in a recent article as nipping at the heels of market leader Alibaba. The company has been expanding its product and service categories, offering apartments for sale after following forays into automobiles, healthcare and tourism. CICC, a brokerage, noted that the number of daily active users for the Pinduoduo app is approaching that of Alibaba’s mobile Taobao, with similar time spent per user.
Also, Alibaba’s fintech affiliate Ant Group with a market valuation of $200 billion, has planned a Hong Kong listing this year, Reuters reported earlier this month citing people with knowledge of the matter. As the world’s most valuable unicorn, Ant is 33% owned by its parent company and is controlled by Jack Ma. Alipay, the company’s mobile payment platform, has reported a 2 billion annual active users by March.
Another company worth mentioning is the firm behind the global short-form video app sensation TikTok, ByteDance. As the world’s most valuable startup with a market capitalization of $110 billion, ByteDance is best known for its mobile apps such as TikTok, Douyin, Toutiao and Xigua Video. However, the company has faced growing international pressure since India banned all Chinese apps at the end of June with TikTok being one of them. Also, Trump’s administration is considering banning the app under the concern that the Beijing-based company behind TikTok might be censoring politically sensitive content and storing users’ data. ByteDance and TikTok have repeatedly denied the allegations.
To be sure, for any acronym which wants to seize the public attention, being eye-catching is not enough. The constituent companies of either BAT or TAMP need to dominate and have the power to stay on top of the list. Especially in China’s hyper-competitive tech industry, there are always up-and-comers looking for opportunities.
But one thing is certain: as the shorthand for China’s tech titans, BAT is way past its retirement age.