TikTok's parent company ByteDance is making some pretty heavy bets on the healthcare space as it acquired Amcare, which runs high-end children's and women's hospitals across China.
The buyout 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 deal size.
The transaction is turning some heads in the tech industry. For one, China has over the past few years ramped up anti-competition regulations on tech companies and blocked major consolidation deals, including Tencent's proposal to combine the country's top two livestreaming platforms for gamers.
Amcare's expertise also seems tangential to ByteDance's main business of a content machine that churns out snappy, addictive videos. It's not uncommon, however, to see internet giants in both China and the U.S. dabbling in the healthcare sphere as part of their diversification strategy when they've got the capital and user base to tap. Tencent has tried opening brick-and-mortar clinics. Alibaba and JD.com run online pharmacies.
The short video giant probably won't take over Amcare's management but at best hook up its healthcare portfolio with the newly-acquired company, which runs private maternity wards that are popular among China's well-to-do and elites.
ByteDance's foray into healthcare, at least on public record, started in 2020 when it bought a company that provided health information to the masses. ByteDance's health business later came to be known as Xiaohe Health and its interest in the space is far-reaching, with a growing investment portfolio that includes a company that specializes in drug discovery and one that conducts DNA synthesis.
It remains to be seen how ByteDance finds synergies between its entertainment empire and budding healthcare and biotech arm. Search engine giant Baidu showed the risk of coalescing the greedy advertising business and the health business which should in principle prioritize people's lives over financial interest. The firm sparked national outrage in 2016 when it emerged that a student who died of cancer had borrowed money to finance an unsuccessful treatment that he found advertised on Baidu's search engine.
ByteDance is adept at funneling users from one 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 insert a few promotional clips for its healthcare services. It's a level of power that needs to be exercised with caution and responsibility.