The AI market in 2025 is a tale of two extremes.

According to Zhidx statistics, at least 25 AI applications in China have announced shutdowns due to sluggish user growth, unclear business models, or depleted funding, becoming the first casualties after the 'Hundred-Model War.' Meanwhile, leading AI developments remain robust: ByteDance's Doubao quietly surpasses 100 million daily active users, while Alibaba announces a 380 billion yuan investment over three years in cloud and AI hardware infrastructure.

On one side lies a 'battle royale' of casualties, while on the other, ByteDance achieves counter-trend growth. Bloomberg reports its 2025 profits could exceed $50 billion, with the Financial Times disclosing an 85 billion yuan AI chip procurement budget for 2026 alone.

At a time when AI applications burn cash to survive and most players struggle for existence, ByteDance silently discovers a path to AI profitability.

| AI App 'Battle Royale,' Doubao Rises Against the Tide |

As the inaugural year of AI applications, 2025 sees the AI track swiftly abandon the romanticism of the 'Hundred-Model War' and plunge into a brutal 'deep water zone.' From large model iteration to commercialization, competition intensifies into a veritable industry 'battle royale.'

This 'battle royale' is not unique to China; global AI giants engage in equally brutal competition.

On November 18, Google's Gemini 3.0 Pro scores 31.1% on the ARC-AGI-2 benchmark, dubbed the 'AI Turing Test,' far surpassing GPT-5.1's 17.6% and outperforming OpenAI across key dimensions. Following the model's release, Google's stock surges 20% in a month.

This surprise attack prompts OpenAI CEO Sam Altman to issue an internal 'red alert,' accelerating GPT-5.2's launch to confront this existential battle over technical reputation and hundred-billion-dollar financing. Even OpenAI feels suffocating pressure from systemized attacks by sector peers.

Against this backdrop, Doubao's counter-trend rise is particularly striking. QuestMobile data through October shows Doubao's daily active users reach 54.1 million, far exceeding other domestic native AI apps, and surpassing 100 million by year-end. Remarkably, insiders reveal Doubao as ByteDance's 'lowest marketing spend' product to reach 100 million DAU.

Without overwhelming ads or hefty user acquisition subsidies, Doubao's unique success stems not from pure product strength but from ByteDance's ecosystem-driven 'dimensional strike.' For many users, Doubao is more than a chatbot—it's a full-scene content ecosystem meticulously crafted by ByteDance.

Currently, Doubao integrates into over 50 ByteDance internal business scenarios, including Douyin, Feishu, and Tomato Novels, breaking barriers between AI technology and massive application scenarios. AI transforms from an isolated tool requiring active user search into an embedded workflow capability.

With this ecosystem spanning diverse tasks, users leverage AI for inspiration generation, production, and distribution.

As the ecosystem's frontend gateway, Doubao's massive user growth fundamentally reflects the ecosystem's potential energy. The vast user bases and creator ecosystems of Douyin, Tomato Novels, and others provide Doubao with endless demand scenarios and initial traffic, while Doubao lowers content production barriers for Douyin creators, further enriching the main platform's ecosystem.

The 'product matrix + super traffic gateway' combination forms Doubao's strongest moat. From inception, Doubao avoids the struggle of independent AI apps to find users and scenarios in vast public domains. While competitors ponder '0 to 1,' ByteDance leverages its mature ecosystem for scalable 'N to N+1' replication.

| Diving into Cross-Sector Races, Reaping AI 'Taxes' |

If Doubao's 100 million users prove ByteDance's AI ecosystem potential, how does this translate into revenue? ByteDance uses AI apps like Doubao as 'springboards,' selling AI capabilities as 'production materials' on one hand and monetizing content through its ecosystem on the other, effectively imposing an 'AI tax' across the industry.

This commercial closed loop (translated as 'closed loop') is vividly demonstrated in the 2025 booming 'comic-drama' sector.

Comic-dramas, a new content form blending comics, animation, and short dramas, explode due to significantly lower production costs than live-action shorts. AI maturation further accelerates this revolution: traditional animation costs thousands of yuan per minute, while AI comic-dramas compress costs to 350-400 yuan, with production cycles shrinking from months to weeks.

ByteDance precisely captures this trend, launching the Red Guo Free Comic-Drama App in late October. Simultaneously, Douyin Group's Short Drama Copyright Center releases the 'Finished Comic-Drama Business Cooperation Guidelines,' systematically defining three cooperation models and rapidly establishing a complete 'comic-drama industrial pipeline.'

ByteDance grants creators access to adapt over 60,000 original IPs from Tomato Novels. Creators use Doubao's large model for rapid script adaptation and storyboarding, then employ tools like Ji Meng and Xiaoyunque for character and scene generation. For complex rendering and computing needs, they purchase cloud services and computing power from Volcano Engine.

Finished comic-dramas distribute on ByteDance's Red Guo or Douyin, with mature algorithms enabling precise paid distribution. According to Ocean Engine data, comic-drama commercial distribution reaches 4 million yuan/day by August 2025, with revenue scaling 12-fold.

In this mature 'pipeline,' ByteDance earns copyright revenue if creators use Tomato Novels' IPs, charges for Volcano Engine services, and takes commissions from distribution and paid promotion on Douyin and Red Guo.

Achieving 'triple charging' in one production line, ByteDance transforms from a mere content platform into a super-ecosystem leader integrating 'production material providers, production tool developers, distribution channel operators, and commercialization service providers.'

This 'taxation' model extends beyond comic-dramas; ByteDance's strategy is equally clear in e-commerce. The Doubao App fully integrates with Douyin Mall, directly recommending product links for user consumption demands, enabling the shortest path from 'Q&A' to 'purchase.' Leveraging AI for vendor marketing services not only opens new traffic gateways for Douyin e-commerce but also becomes Doubao's commercialization engine.

Even in emerging sectors like healthcare, ByteDance has begun layout (translated as 'layout'). On December 2, its subsidiary Beijing Ninghe Kangrui Medical Management Co., Ltd. acquires hospital land in Beijing's Zhongguancun Chaoyang Park North District for 330 million yuan. From acquiring medical platforms to launching AI doctor products and now establishing offline presence, ByteDance's AI-driven healthcare ambitions become increasingly clear.

Whether in comic-dramas, e-commerce, or healthcare, ByteDance's AI strategy consistently uses apps like Doubao as traffic gateways, deeply embedding AI capabilities across vertical industries and building closed loops. In this model, richer ecosystem content and greater prosperity expand ByteDance's 'taxation' scope and revenue.

| Beyond Software, ByteDance 'Breaks Walls' with Hardware |

If ByteDance's software ecosystem layout (translated as 'layout') represents 'intensive cultivation' within existing mobile internet rules, its hardware moves reveal ambitions to 'rewrite the rules.'

Currently, AI competition—whether model contests or app growth—remains software-centric, essentially games within Apple's iOS and Google's Android operating system frameworks. Apps exist as isolated islands, requiring users to frequently switch between them for complex tasks.

ByteDance clearly aims higher. In late 2025, it partners with ZTE Nubia to launch the 'Doubao Phone,' dropping a bombshell on the market. This phone's greatest disruption lies in its 'Doubao Phone Assistant,' granted system-level permissions.

This means AI is no longer an 'app prisoner' but a 'super assistant' controlling the entire system.

Imagine telling your phone, 'Book me a high-speed train ticket to Shanghai Friday evening, find a 4.5+ rated hotel under 800 yuan near Hongqiao Airport, and send the itinerary to my family.'

On traditional phones, this requires sequentially opening 12306, Ctrip, WeChat, and other apps for cumbersome operations. On the Doubao Phone, AI agents automatically complete all cross-app operations in the background, with users awaiting only final results.

This disruptive experience undeniably challenges traditional internet giants' core interests. When AI bypasses app homepage ads and information feeds to directly invoke services, business models relying on traffic distribution and user retention—like Taobao and Meituan—face 'disintermediation' risks.

Thus, shortly after the Doubao Phone's release, mainstream apps like WeChat, Taobao, and Alipay collectively 'besiege' it under 'security risk control' pretexts.

However, this brief conflict clearly reveals ByteDance's true intent: to break app isolation and reshape mobile internet interaction paradigms and business rules.

ByteDance's ambitions don't stop there. According to media reports, following market buzz around the Doubao Phone, ByteDance rapidly advances partnerships with mainstream manufacturers like Vivo, Lenovo, and Transsion, planning to pre-install or system-upgrade its AI capabilities across hundreds of millions of devices.

Beyond phones, ByteDance launched its first AI agent earphones, Ola Friend, in October 2024, featuring 'what the earphones hear, what the phone sees, what the cloud knows' scenario integration. In November 2025, the automobile Roewe M7 DMH deeply integrates with Doubao's large model, becoming the world's first true Doubao AI vehicle. Leveraging its 'reasoning, thinking, emotional understanding' interactive experience, smart cockpits enter a new era.

This war spanning software ecosystems to hardware gateways reveals ByteDance's vast commercial ambitions. No longer content to 'build on others' land,' it aspires to become the 'landlord' defining the rules. If successful, ByteDance could control the ultimate gateway to next-generation mobile internet, with commercial potential far exceeding today's e-commerce and advertising.

And Doubao's 100 million daily active users? They're merely the tip of this commercial iceberg.

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