TikTok’s parent company, ByteDance, is making pretty heavy bets on the health sector by acquiring Amcare, which runs high-end children’s and women’s hospitals across China.
The takeover cost ByteDance $1.5 billion, according to Bloomberg. A spokesperson for Xiaohe Health, ByteDance’s healthcare business, confirmed the acquisition but declined to comment on the size of the deal.
The transaction is turning heads in the tech industry. On the one hand, China has in recent years tightened anti-competitive regulations on tech companies and blocked major consolidation deals, including Tencent’s proposal to combine the country’s two major live-streaming platforms for players.
Amcare’s expertise also seems tangential to ByteDance’s core business, a content machine that produces eye-catching and addictive videos. It is not uncommon, however, to see Internet giants in China and the United States branching out into healthcare as part of their diversification strategy when they have the capital and business base. users to exploit. Tencent tried to open physical clinics. Alibaba and JD.com operate online pharmacies.
The short-video giant is unlikely to take over the management of Amcare, but at best will link its healthcare portfolio to the newly acquired company, which runs private maternity hospitals popular among China’s wealthy classes and elites.
ByteDance’s foray into healthcare, at least into public records, began in 2020 when it purchased a company that provided healthcare information to the masses. ByteDance’s health business later became known as Xiaohe Health and its interest in the space is extensive, with a growing investment portfolio that includes a company specializing in drug discovery and one that performs DNA synthesis.
It remains to be seen how ByteDance finds synergies between its entertainment empire and the nascent healthcare and biotech industry. Search engine giant Baidu has shown the risk of merging the greedy advertising industry and the healthcare industry which should in principle prioritize people’s lives over financial interests. The company sparked national outrage in 2016 when it emerged that a college student who died of cancer had borrowed money to fund an unsuccessful treatment he found advertised on Baidu’s search engine.
ByteDance is adept at channeling users from an established platform to a young one to help the latter grow. Its Chinese short video app Douyin, which hit 600 million daily active users in 2020, could easily squeeze in a few promo clips for its healthcare services. It is a level of power that must be exercised with caution and responsibility.