Check out the latest Tencent earnings call transcript.

Tencent's (TCEHY 0.06%) WeChat is the largest mobile messaging app in China, with 1.08 billion monthly active users (MAUs). It's also a growing ecosystem of over a million "mini programs" that let users make mobile payments, order food and tickets, hail rides, play games, and perform other tasks without ever leaving the app.

That massive social platform makes Tencent one of the dominant tech companies in China. However, Tencent's fastest growing rival in the social networking market, ByteDance, recently launched its own social networking app to challenge WeChat.

There young women take a selfie at a party.

Image source: Getty Images.

Trying to "pull a Snapchat" on Tencent

ByteDance's Duoshan is a chat app that lets users communicate via text messages and stickers, as well as images and videos that disappear after 72 hours. On its own, Duoshan doesn't seem like a major threat to WeChat.

However, Duoshan is tethered to ByteDance's flagship app Duoyin (known as TikTok overseas), the viral lip-syncing short video app with over 500 million MAUs. Duoshan lets users log in with their Duoyin accounts, making it a social expansion of that massive video platform. That integration could cause younger users, who often favor ByteDance's Gen Z-oriented apps over WeChat, to use Duoshan as their main messaging app.

In other words, ByteDance is trying to disrupt Tencent in the same way Snap (SNAP -1.17%) lured teen users away from Facebook (META 0.20%). Facebook survived that assault by cloning Snapchat's most popular features in Instagram, but Tencent doesn't own any apps that resonate with teen users as much as Instagram.

Instead, Tencent's "answer" to Duoyin is Weishi, a short video app it launched in 2013. The app hit 45 million active users the following year, but its growth peaked and Tencent rebooted the app as a Duoyin clone last year. Tencent hasn't disclosed any active user numbers for Weishi, but it likely has a much smaller user base than Duoyin.

A young woman records a video on her smartphone.

Image source: Getty Images.

Yet Duoyin only represents one of the ways ByteDance can hurt Tencent. ByteDance's ecosystem also includes the news aggregator platform Jinri Toutiao, which reaches over 200 million daily active users (DAUs), and the video platform Xigua, which has over 100 million MAUs. It also owns the growing content creation platform Huoshan. In theory, Duoshan could unite all those platforms under a single social umbrella -- which would represent a serious threat to WeChat.

Tencent sees the writing on the wall

Tencent is clearly worried about ByteDance's growth. It invested in a wide range of Gen Z-oriented apps, including Jinri Toutiao's rival Qutoutiao and the digital content platform Bilibili, and even restructured its businesses to prioritize the expansion of its digital platforms.

Tencent also sued ByteDance for defamation last year, claiming that its news apps intentionally promoted negative news stories about the company. Tencent also blocked its WeChat users from sharing content from Duoyin and Jinri Toutiao. ByteDance countersued, claiming that Tencent intentionally displayed fake stories from its apps to justify an anti-competitive move.

That's why it wasn't surprising when Tencent recently blocked download links to Duoshan on WeChat. It also blocked two other competing apps: Kauiru Technology's Liaotianbao (formerly known as Bullet Messenger"), and Ringo.AI's anonymized social media app Matong.

Those moves indicate that Tencent is afraid of the competition. After all, WeChat and video games are its two pillars of growth, and the latter remains stuck in limbo even as China gradually restarts gaming approvals.

But Duoshan probably isn't a "WeChat killer"

If Facebook didn't own Instagram, Snapchat could have seriously dented its user growth. That's the kind of situation Tencent now faces.

However, WeChat also has unique strengths that Facebook lacks: WeChat Pay is one of the most popular payment platforms in China, over 200 million DAUs use its Mini Programs, and it recently launched a virtual assistant that links WeChat to smart home devices and cars.

ByteDance CEO Chen Lin recently downplayed the rivalry with Tencent, claiming that "WeChat doesn't have to see us as a direct rival because we are doing different things." Duoshan might win over some of WeChat's younger users, but there could still be room for both platforms to flourish.