TikTok owner steps forcefully into healthcare

ByteDance, the Chinese social media giant behind the short video platform TikTok, has made a significant $1.5bn acquisition of hospital company Amcare – another step in big tech’s global efforts to enter and disrupt healthcare.

Why it matters

ByteDance’s acquisition of the chain, which specialises in obstetrics, gynaecology, and paediatric medicine, will strengthen an existing health app business, Xiaohe, in what is becoming a seriously competitive landscape alongside apps from Alibaba and Baidu. But the firm has found a critical niche.

The global digitalisation of health

Online healthcare in China is growing fast, the number of private hospitals is growing ahead of public hospitals. As the South China Morning Post, notes, Amcare’s target market is usually high-income patients including expats.

In part, it reflects the pandemic-induced behaviour shift toward online consultations, which animated the platform’s debut in 2020, as a way to communicate with doctors at major hospitals for consultation and to search for medical information and explainers.

These ideas also formed some of the rationale behind Amazon’s recent acquisition of One Medical last month, which saw the e-commerce firm bring a large employer-healthcare provider on board.

Ideas to think about

Profitability: unlike social media whose marginal costs don’t increase that much with scale, healthcare is really expensive to provide. You need buildings, you need doctors and nurses, and you need to comply with a huge amount of regulation. To what extent will ByteDance’s innovation be able to find margins here?

Deeper currents: the more cynical side of this deal is perhaps the focus on maternal health, paediatrics, and the rich – these might help to answer that question. General healthcare is one thing – China provides most citizens with basic medical coverage – but maternity and pediatrics is another thing. Amcare is licensed to provide IVF treatment.

With greater educational and employment opportunities, the age of those who have children tends to increase, but so does the likelihood of complications. Later – the dealmakers will be aware – there are some sacrifices that people will make for their own health, but nothing makes parents move heaven and earth like the health of their child. 

 Sourced from Bloomberg, SCMP, WARC, KR-Asia. Image: ByteDance