Why TikTok Owner's AI Phone Is Making China's Apps Nervous

TikTok owner ByteDance Ltd launched its artificial intelligence-powered smartphone last week, sparking online buzz and prompting swift pushback.

Rivals like Tencent Holding Ltd (OTC:TCEHY) and Alibaba Group Holding Limited (NYSE:BABA), raised concerns over security risks and the potential for users to spend less time on their platforms.

TikTok’s parent company has tightened controls on its AI-powered smartphone after several of China’s most popular apps restricted its voice-activated features.

Also Read: TikTok Stays Online As Trump Extends US Deadline, Washington Still Demands ByteDance Divestment

These restrictions followed actions by major platforms, including Alibaba fintech affiliate Ant Group’s Alipay, which limited Doubao’s functionality.

The company scaled back the capabilities of Doubao, the agentic AI embedded in the Nubia M153 smartphone.

ByteDance announced plans to block the device from claiming incentives meant for active human users, disable interactions with financial apps such as banking and payment services, and suspend AI features in competitive games to ensure fair play, SCMP reported Sunday.

The Nubia M153, launched as a trial product, drew strong interest from early adopters by allowing hands-free control of the phone.

Chen Tang, a 21-year-old freelancer and Nubia M153 user, told SCMP that Doubao could no longer operate apps like Pinduoduo, Taobao, Alipay, and Ele.me.

While users could still log in manually, accounts faced restrictions if controlled through Doubao.

ByteDance responded by disabling WeChat control.

Broader AI Push Amid TikTok’s U.S. Uncertainty

The TikTok parent has been aggressively involved in its AI ambitions while TikTok has been grappling with its U.S. business prospects.

The Trump administration struck a deal to keep TikTok operating in the U.S. after a law mandated its owner to divest or face a ban, addressing lawmakers’ concerns over national security and privacy risks linked to the app’s Chinese parent company.

Multi-Billion-Dollar AI Infrastructure Investments

Earlier in 2025, ByteDance shared plans to invest over $12 billion in AI infrastructure by 2025.

The Beijing-based company has allocated about 40 billion Chinese yuan ($5.5 billion) for AI chip purchases in China, doubling last year’s spending, according to the Financial Times.

ByteDance also planned to spend roughly $6.8 billion overseas to enhance model training with advanced Nvidia chips.

About 60% of domestic semiconductor orders will come from Chinese suppliers like Huawei and Cambricon, while the rest will use Nvidia chips adapted to meet U.S. export rules.

Valuation Surges On AI Growth Expectations

As of February, ByteDance saw its valuation exceed $400 billion, fueled by major investors including SoftBank Group Corp (OTC:SFTBF) (OTC:SFTBY), Fidelity, and T. Rowe Price Group, Inc (NASDAQ:TROW).

Fidelity valued ByteDance at over $410 billion, while T. Rowe Price estimates it above $450 billion.

SoftBank’s Vision Fund also raised its valuation past $400 billion, factoring in growth potential from ByteDance’s AI business, Doubao, according to Bloomberg sources.

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