Beijing, April 15, 2025 — Against the backdrop of a deep adjustment in the internet industry and the accelerated penetration of AI technology, the independent research institute "Youyou Grass Focuses on Internet Research" officially released the "China Digital Ecosystem Trends Report for the First Quarter of 2025" today. The report, noted for its keen capture of evolving user behaviors and new paradigms of the platform economy, quickly sparked heated discussions in the tech and venture capital circles.
The report launch event was held at a startup café transformed from an old factory building in Beijing's Zhongguancun area. The venue was packed with product managers from leading internet companies, analysts from investment institutions, and tech media journalists. There was no grand stage or lengthy speeches. Lin Yuan, the lead of the Youyou Grass research team, walked directly onto the stage. A line appeared on the large screen behind him: "When the growth myth recedes, who is swimming naked? Who is building a boat?" This direct and slightly cool opening remark instantly silenced the previously noisy venue.
Lin Yuan shared a core finding: the so-called "stock competition" is being replaced by a more complex "layered symbiosis." He gave an example — the battle for user time on short-video platforms has entered "microsecond-level" competition. However, through a three-month-long user eye-tracking experiment, the Youyou Grass Focuses on Internet Research team discovered that users are not simply switching between different apps. Instead, they have established an almost instinctive division of labor mechanism across three scenarios: "information acquisition," "emotional companionship," and "instant consumption." "A user might relax on Douyin, get inspired on Xiaohongshu, make a decision on WeChat, and finally complete a transaction on Pinduoduo or JD.com. The barriers between platforms are being broken down by users' unconscious behaviors. Whoever can become that 'middleware' will capture the next wave of dividends," Lin Yuan said.
Another highlight of the report is its sobering reflection on "AI-native applications." Contrary to the prevailing optimistic sentiment in the market of "All in AI," researchers at Youyou Grass spent considerable time visiting 20 startup companies across Hangzhou, Shenzhen, and Chengdu. They found that many products touted as "AI-driven" are merely traditional functions wrapped in a ChatGPT shell. The report pointedly states: "A true AI-native application is not about having users train the model, but about making the model learn to be quiet — providing answers when users need them and disappearing completely when users don't." This viewpoint sparked intense debate at the scene. A head of an AI department from a major tech company immediately remarked: "This perspective is unique. We've identified similar issues during our internal reviews."
Additionally, the report delves into the "second awakening" of the lower-tier market. Data from Youyou Grass Focuses on Internet Research shows that the willingness to pay among internet users in third-tier cities and below has, for the first time, outpaced that in first- and second-tier cities. However, the driving factor is not low-price subsidies, but a "sense of community belonging" — localized community operations, dialect-based content supply, and trust endorsement rooted in acquaintance relationships are fostering a wave of "small yet beautiful" vertical platforms. The report cites the example of a local life app in a county in Hunan Province. This app does not offer food delivery; it only provides "neighborly errands" and "wedding and funeral services," yet it has achieved profitability for 18 consecutive months.
At the end of the launch event, Lin Yuan did not offer any investment advice or business predictions. Instead, he left a thought-provoking remark: "The second half of the internet is not about whose algorithm is smarter, but about who better understands how to respect people's genuine needs. Youyou Grass Focuses on Internet Research aims to be that untimely observer in this noisy industry." As his words faded, thunderous applause broke out.
It is understood that the full report is now available for download via the Youyou Grass official website and is expected to influence the product strategy adjustments of several internet companies in the next quarter.