ByteDance founder Zhang Yiming visited the company's headquarters in Beijing two weeks ago and sent a message to the Seed AI research team that can be interpreted as a public directive. Zhang told the team that the distillation method would no longer be used. He noted that using a larger competing model to train a smaller one can quickly boost benchmark scores, but this limits long-term technical breakthroughs. Zhang emphasized the need to create real potential, otherwise, they should stop pretending to create artificial intelligence.
This statement is significant because distillation served as the invisible foundation for the wave of open-source Chinese models over the past eighteen months. The most cost-effective way to reach the top ten on OpenRouter was by renting API calls from advanced foreign models, generating large-scale labeled corpora, and subsequently training a smaller model on this data. Now, Zhang Yiming has pointed this out and documented it within one of China's largest AI research teams.
Structural changes were clearly announced at the mid-year general meeting on August 6th. CEO Liang Rubo announced that Doubao and Douyin are now the two main 'thick lines' of the company. Doubao ceased to be merely a wrapper around a model; it became a flagship business direction equal to Douyin. Zhao Ci, Doubao's product lead, was promoted to the executive board for the first time. Feishu and Doubao products were merged into a single Doubao team, and former Feishu head Xie Xin now reports to Zhao. Volcano Engine and Feishu GTM were merged into the Creativity Services Platform under Tan Dai. This is the largest B-side restructuring at ByteDance since the BU review in 2021.
The strategic logic has shifted. At the general meeting, AI was presented as a bet on AGI, not a feature race. Liang directly criticized the notion of 'Chinese innovation,' asserting that the next generation of performance infrastructure will be determined by who owns the agent's entry point into the enterprise. Recently, Alibaba consolidated QoderWork, Wukong, and MuleRun into Qwen Office. Tencent elevated its SkillHub to a top-level strategy. ByteDance's response is the merger of Feishu with Doubao and using the agent as the entry point.
The financial logic is equally telling. According to LatePost, Doubao's daily revenue in the first half of the year was less than one million yuan, while daily computing costs reached tens of millions. The launch of the paid Pro tier in June at prices of 68, 200, and 500 yuan per month was the first commercial experiment. Zhang Yiming's ban on distillation is a long-term version of this same calculation. Cheaper models that win through rented capacity cannot cover the B-side computing costs. For ByteDance, AI now means creation, not borrowing.
