Toutiao, China’s largest news aggregator, has reportedly acquired augmented reality-based selfie app Faceu for USD300 million, according to Chinese tech news media 36Kr. The acquisition comes as the algorithm-driven news recommendation app keeps diversifying its service offerings through acquisitions at home and abroad.
Toutiao, officially known as Bytedance, is one of the world’s most valuable unicorns according to CB Insights. The company is well funded by Sequoia Capital China and SIG Asia Investment among other investors. The company was reportedly raising new funding from some of its existing investors at a valuation of over USD 30 billion in December 2017.
Founded in 2012, the Chinese tech giant has over 200 million daily active users across its apps including flagship news aggregator Toutiao, TopBuzz – an overseas version of Toutiao, and Xigua which is one of the most popular short video apps in China.
Utilizing AR technologies, Faceu differs itself from many other beauty apps in the market by allowing users to edit photos with filters, stickers, emojis and texts in real time while taking selfies rather than editing photos after a photo is taken. The app has a penetration rate of 9.8%, ranking the 3rd after MeituPic and BeautyCam. In December 2016, Meitu has listed in Hong Kong bourse, marking the largest tech listing in the special administration region in almost a decade at the time of its float.
Rather than remaining a simple photo-editing tool app, Faceu has tried to pivot to a social app with features by introducing features like video chatting and social networking. A move aligned with Toutiao founder ZHANG Yiming’s ambition for a smart social networking future.
Through the acquisition, Toutiao gets to leverage on Faceu’s AR technologies, which can be applied to short videos and video chats and create synergy between Faceu and Toutiao’s portfolio of short video platforms.
Toutiao has been investing heavily in short videos, because as LIU Zhen, senior vice president at Bytedance, told media at the company’s AI conference, “it’s easier to make it (short video product) a global platform.” Bytedance’s subsidiary short video streaming apps Xigua, Huoshan and Douyin are among top 10 Chinese short video apps in Q3 2017. In last February, it merged Flipgram, an LA-based video startup and later in November 2017, the company invested USD50 million in Live.me, a live-streaming app targeting young adults in the U.S. and has acquired Musical.ly, a lip-syncing video app who claims to have 20 million daily active users globally.
Read more: Toutiao Strikes Licensing Deal with BuzzFeed, Paving Its Way for Global Expansion
Additionally, Toutiao can tap into the niche market and reach the young audience that Faceu is currently serving. The beauty app reports 250 registered users as of October 2017. Over 75% of its users are female and over 70% are aged under 18.
Toutiao has been on a shopping spree last year, buying businesses around its core news app to beef up its global presence. In last February, it made a strategic investment in India-based aggregator DailyHunt and in last November, it acquired French news and information platform News Republic.
GUO Lie, founder of Faceu, is an ex-employee at Tencent and has founded social networking app MYOTee (脸萌) which once outcompeted Tencent’s app and ranked #1 in China’s Apple App Store in 2016.
“I hope Faceu will become as popular as Snapchat,” Guo wrote in a post, “Just like Snapchat taking the chance when Facebook becomes too complicated, we think WeChat is way too bloated now and this is Faceu’s chance to grow.”