January 10, 2025 • 42 mins
Bloomberg's Caroline Hyde breaks down the latest with TikTok as the Supreme Court signals upholding the ban despite a surprising acquisition bid. Plus, a look at how tech deals might fare in 2025.
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Speaker 1 (00:01):
From the heart of where innovation, money and power collide
in Silicon Valley and beyond. This is Bloomberg Technology with
Caroline Hyde and.
Speaker 2 (00:12):
Ed Louvelow live from New York.
Speaker 3 (00:28):
This is Bloomberg Technology. We are getting straight to our
top story.
Speaker 2 (00:32):
Out of Washington.
Speaker 3 (00:32):
TikTok is at the US Supreme Court fighting for its future.
Speaker 2 (00:37):
Justices are hearing.
Speaker 3 (00:38):
Arguments only nine days before a federal law is set
to ban TikTok in the United States if it isn't
sold by its Chinese parent company. Bloemberg's Tyder Kendall standing
by at the court and remind us Tyler, the key
questions for the court is it national security versus free speech?
Speaker 2 (00:53):
Here?
Speaker 4 (00:56):
Yeah, hey, Caroline or all arguments here at the Supreme
Court now just reaching about their one hour mark. Lawyers
for TikTok started their opening arguments by saying that this
is a First Amendment issue, arguing that if that band
does go into place, it could potentially curtail the freedom
of expression of it's more than one hundred and seventy
million US based users. The lawyer for TikTok, arguing today,
(01:16):
Noel Francisco, also added that the timeline for the ban
is unrealistic and quote very difficult, asking the Court at
the very least to delay the ban going into place.
Speaker 2 (01:26):
Now.
Speaker 4 (01:26):
On the other side of this is what you mentioned,
the national security concerns. In a brief submitted to the
Supreme Court today ahead of today's arguments, the US federal
government says this is not about freedom of speech, since
there is still a viable path on the table for
TikTok to operate if they divest. Rather, they're not trying
to restrict freedom of speech. They're trying to restrict what
they call foreign adversary holding, considering bite Dance's connections to
(01:49):
China and what that could mean to national security. Now,
that appears to be the thread that we're seeing the
support the Supreme Court justices pull on here, potentially expressing
some skepticism when it comes to TikTok's arguments. For example, Caroline,
the first question out of the gate from Justice Clarence
Thomas was whether or not TikTok was trying to convert
a potential restriction on byte Dance's ownership of TikTok into
(02:13):
a restriction onto the freedom of speech of TikTok and
its users.
Speaker 2 (02:17):
Tyler Kendall, We thank you so much.
Speaker 3 (02:19):
And look, just reading the tea leaves here shares of
snap Meta on the higher side. It doesn't seem as
though thus far the arguments are going in TikTok's favor,
as has been on our tea live blog on the
Bloomberg Frank McCord is with us to keep the conversation going.
Executive chairman of the Court Global and founder of Project Liberty,
which just made a formal offer to acquire TikTok. You
call it the people's bid. Why is Project Liberty and
(02:42):
your consortium the right owners if indeed bite Dance says
it will divest.
Speaker 5 (02:48):
Yeah, Hi, Carolyn, how are you good?
Speaker 3 (02:50):
Good?
Speaker 6 (02:50):
It's I think we're the right buyers because we have
put all the pieces together. We have the funding, we've
worked through all the legal issues, We've put a formal offer,
as you point out, right in front of Biteden, so
they have something now to react to. And most importantly,
we have the clean American tech stack to move the
user base over to. And we don't need or want
(03:12):
the Chinese algorithm. And so I think that the algorithm
is something that China's very very beholden to and has
it said clearly that they're not going to be selling it.
We don't need it or want it, as I point out,
So I think we're particularly unique bidder and well positioned,
and I think as a matter of fact, we have
the leading bidder right now.
Speaker 3 (03:31):
We were just seeing some of the share price reactions
of rivals out there. From your reading into what's happening
in Washington right now, does it look to be going
in the favor you'd want to see, because would you
actually like a delay to proceedings to be able to
go forward with a.
Speaker 6 (03:43):
Bit, Well, we'd like to buy us TikTok, that's what
we'd like to see as an end result, and move
the user base over to this clean American stack. And
I think that it's no surprise that the argument is
going well for the government because this is a real
national siksecurity issue, a strongly bipartisan piece of legislation that
(04:04):
was passed by Congress upheld by the appellate court.
Speaker 5 (04:07):
So I think the.
Speaker 6 (04:07):
Conventional wisdom is that the government's position will be upheld,
the legislation will will stay in effect, which means on
January nineteenth, Byte Dance has to decide are they going
to shut it down or sell, and in order to sell,
they need to enter into an agreement, which is why
we put a formal offer in front of them in
the last twenty four hours.
Speaker 2 (04:27):
What is the price tag of that formal offer.
Speaker 6 (04:30):
So what we've said to byte Dance is we're not
going to be talking about terms of the deal until
we get into a formal conversation with them. And we
want to be very very respectful of byte Dance because
it's a very sensitive time here. We know they're arguing
in front of the Supreme Court. We've given them space
to do that, and at the point in time where
we engage in an active negotiation, we'll be happy to
(04:53):
share details once we sort things with them.
Speaker 3 (04:57):
Have you spoken to any of the current investors in
byte Dance who are United States based, General Atlantic, Susquehanna.
We also known that Sequoias involved KKR. There's a lot
of them.
Speaker 6 (05:07):
Yeah, there are, and I believe we've spoken to all
of them and they've indicated an interest in rolling over
their investment. Why not, I mean, they don't want to
lose their entire investment in us TikTok. We've put a
real proposal forward which gives them value for us TikTok.
Speaker 5 (05:26):
Having said that, they too.
Speaker 6 (05:28):
Are waiting to see what byte Edance decides to do
before committing.
Speaker 3 (05:34):
I'm really interested in the fact that investors are interested
in rolling over. What value will you reccreate for the
business going forward? Because you want as you've articulated a
totally different tech stack, how will that change the use
of TikTok? How will you monetize it as well? Because
you want a different form of social media. You don't
want us as content for the ultimate users and being
(05:56):
advertised against.
Speaker 6 (05:57):
Yeah, well they'll be advertisement advertising on the new TikTok.
Speaker 5 (06:02):
Let's call it TikTok two point zero.
Speaker 6 (06:04):
But we see an Internet evolving where, rather than an
attention economy, meaning algorithms designed to keep us addicted and
online in a very unhealthy fashion, why not an intention
economy where we just let people know we're interested in
buying something or reading something, our information on something, and
(06:26):
then we get that from the business or the advertiser.
And inference is much less valuable than intention. So rather
than have algorithms that surveil us, scrape our data, and
then guess that we might want something, why not you
and I just be very clear, you know, verify that
we're a human being, and be very clear about what
(06:46):
we want and then receive it On the Internet. We
have technology available now that didn't exist twenty five years
ago that enables you and I to actually control our identity,
our data, and our relationships. So let's put people in
charge of their data. Our data is very valuable, as
it turns.
Speaker 3 (07:06):
Out, I mean, and that's why so much value has
been accrued on a private market basis, at least to
byte dance and to TikTok. But ultimately by not making
these things quote unquote addictive, do you lose.
Speaker 2 (07:19):
Some of that value? And is that the right compromise here?
Speaker 6 (07:21):
Well, there are other factors here, right in the case
of this Supreme Court hearing and the legislation that's being discussed.
Speaker 5 (07:29):
There are national security risks.
Speaker 6 (07:33):
There's also issues around safety to children. There are issues
about a viability of our democratic system with such polarization.
So the algorithms may be powerful, that doesn't mean that
they're good or constructive. We just have an Internet technology
that's evolved into one that's attention based, which means these
(07:54):
platforms scrape our data. They aggregate it, and to do that,
they're actually surveilling us, right, and then they profile us.
And this is the problem with what's going on with TikTok,
because it's not only the surveillance and the information on
one hundred and seventy million people, it's that ByteDance can
then provide what they want to feed to the one
(08:16):
hundred and seventy million people.
Speaker 5 (08:18):
So it's an influence device as well.
Speaker 6 (08:20):
So I think we're all learning together that the current
architecture which takes advantage of people is not the best architecture.
It's leading to some very poor outcomes. This is just engineering.
It's just it can be designed differently to work differently.
We can get all the benefits we get from Internet
(08:41):
technology without the harms.
Speaker 5 (08:43):
And it's interesting that this.
Speaker 6 (08:46):
TikTok problem could actually be the way forward to a
much bigger solution to having an Internet that's much healthier
for all of us.
Speaker 3 (08:55):
How has that got ramifications on meta on snow, which
on the day are doing well because people feel okay.
If TikTok loses this argument, it's out and then the viewers,
the followers, the users just go to these other rival platforms.
The money the advertising money goes to these rival platforms.
Why are analysts like Morgan Stanley that have pointed this
(09:15):
out not saying there's a legitimate bid here and we
think this could be a whole new dawn future for
social media.
Speaker 2 (09:21):
Why aren't people not taking that seriously?
Speaker 5 (09:22):
I think they'll begin to now.
Speaker 6 (09:24):
I think that BYT Dance has been playing out their
legal strategy and it's coming to an end.
Speaker 3 (09:31):
Has been a good legal strategy from your perspective, Sorry,
hasn't been a good legal strategy from your perspective.
Speaker 6 (09:37):
From the vantage point of looking at the legislation and
how it was passed strong bipartisan legislation and the real
national security risks. I think that the Byte Dance pursuit
of a legal strategy was an uphill battle from the
very beginning. And I think, as I say, it's coming
to an end now that that's that path is closing
(10:00):
down on them. Now they're confronted with January nineteenth, So
we're talking about not nine days and something has to give,
so either that it's going to be shut down or
there'll be a transaction. That's why we put a formal
offer in place so there's enough time for them to
process that, and we hope they do because we want
(10:21):
to see TikTok stay alive.
Speaker 5 (10:23):
We want to see it lit up. We don't want
to see.
Speaker 6 (10:25):
It banned or shut down, just like President Electrump does not.
Speaker 3 (10:29):
We want to see about President Electrump and ultimately what
January the twentieth means for all of this and the
request he's made of the Supreme Court to just delay facts.
Speaker 6 (10:40):
Well, I think the legislation will operate. It will be
the legislation and it's a hard and fast date of
January nineteenth. So the timing here is very interesting, isn't it.
President Biden will still be president. It doesn't get to
President Electrump unless the ninety day of the three month
extension kicks in. So it's a Biden administration decision to
(11:02):
extend the timeframe for Bye Dance in TikTok, and then
it gets coot.
Speaker 3 (11:09):
To allow some sort of delay, which many don't think
will happen.
Speaker 6 (11:12):
Yeah, I'm assuming in answering your question that that won't happen.
If it does, it's a different ballgame.
Speaker 5 (11:17):
I understand that.
Speaker 6 (11:18):
But you know, when you step back and think about this,
why wouldn't Bye dance accept an offer. If it doesn't
include the algorithm, they win. President Trump wins because it's
not banned. The shareholders that you mentioned win they get
value as opposed to getting nothing for us. TikTok Us
citizens win because our clean stack will protect them.
Speaker 5 (11:42):
The national security risk has gone.
Speaker 6 (11:43):
And of course TikTok users win because the app stays
in business.
Speaker 2 (11:48):
Why aren't there competing bids.
Speaker 6 (11:53):
The legislation requires that you have a clean stack. If
this be independent of by dances technology, that's not an
easy thing to do. If we hadn't been working on
the technology and invested a half a billion dollars over
the last five years, we wouldn't be in a position
to bid. It's very serendipitous in a way that the
(12:16):
work that Project Liberty has been doing to reimagine how
the Internet works just so happens to be right place,
right time to actually be the winning bidder for TikTok
keep the app going, move the user base to a
clean stack, and at the same time demonstrate to people
that there's another version of the Internet where they're in
(12:37):
charge of themselves. They own their data, they own their relationships,
they can get value for it.
Speaker 5 (12:42):
They can parse out and permission.
Speaker 6 (12:44):
Its use as opposed to being surveilled and having the
data be in the hands of someone else who's deciding
what to feed them, what to tell them.
Speaker 2 (12:53):
Briefly, next steps for you.
Speaker 3 (12:55):
You've kind of given us your time today, But what
happens after we start the arguments finish at the Supreme Court.
Speaker 6 (13:02):
I think we're all anxiously awaiting the Supreme Court to
make their decision, and then we'll look forward to a
conversation with ByteDance and see if we can.
Speaker 5 (13:10):
Get something.
Speaker 6 (13:13):
Completed prior to the nineteenth so that the Biden administration
can get it this Roe month extension.
Speaker 3 (13:19):
Please come back if that conversation happens. Frank McCourt, executive
chairman of McCourt Global, Founder of Project Liberty, and the
beard on.
Speaker 2 (13:26):
The table for us TikTok.
Speaker 3 (13:29):
Coming up, we'll take a look at some of the
tech themes dominating the deal sector in twenty twenty five.
Maybe this is a deal we need to talk about,
potentially a purchase of US TikTok with Barack ravin Is
of Ey America's that's next.
Speaker 2 (13:40):
This is blue Meg technology.
Speaker 3 (13:51):
A quick check on the market, so look broader benchmarks
are down today because the job's numbers were so hot.
Once again, we question whether the rake cuts will come
from the Federal Reserve or off by two percent on
the NASDAP. But we want to shine a light on
the key story in the Supreme Court today.
Speaker 2 (14:06):
TikTok fighting for its future.
Speaker 3 (14:07):
Meta platforms hire by five tens of percent, snap up
seven point seven percent.
Speaker 2 (14:11):
This as investors tried to.
Speaker 3 (14:12):
Descend the Actually, some of the oral arguments thus far
don't seem to be going in TikTok's favor.
Speaker 2 (14:17):
Let's just dwell on TikTok a little bit more, because
couldn't it be a deal.
Speaker 3 (14:22):
To watch for twenty twenty five as we hear those
oral arguments over in the Supreme Court, as we discern
the future of TikTok and the United States tech deals
continue to be really impressive as they were in twenty
twenty four. Remember US volumes werep thirty two percent. Bak
Revied is the man to ask ey America's strategy and
Transactions technology sector leader joining us Now, Barak, I know
(14:42):
you can't tell us about the intricacies of whether it
or not we actually get a deal out of us TikTok,
But have you been thinking through that particular deal. Is
the deal outlook for tech a strong one?
Speaker 7 (14:53):
Yeah, Caroline, thank you for having me appreciate it. The
outlook is actually very strong, and we feel generally pretty poor,
I think on you know, you're obviously you're talking about
TikTok today and it's a it's it's capturing a lot
of the imagination. But you know, when we think about
this deal, obviously we can't talk about it specifically, but
if you think about any large transaction, obviously it gets
(15:14):
very complex. And this is the kind of stuff that
generally tends to move the market and tends to show
that other M and A is possible and really can
help ignite the market if it was to happen. But
I do think that, you know, if we were to
go through this, when we talk to our clients about
complicated and complex carve outs, typically we talk about months
and quarters in terms of timelines to getting it done,
(15:37):
not you know, not generally not days or weeks, And
so you know, to the extent that some of that
work has been going on, that's that's fantastic. Depends on
who the buyer is in terms of what the stack
actually looks like, and how how capable they are to
receive it. All of that, you know, will will drive
the timeline here no matter what happens, and obviously you
need willing buyers and sellers.
Speaker 3 (16:00):
Ultimately, this is a geopolitical discussion that drives the potential
sale of TikTok. How much is geopolitics going to play
into M and A into carve outs as perhaps relationships
between the US and China become ever more tense.
Speaker 7 (16:15):
Yeah, that's a great question, Caroline. It's impossible to underestimate
the impact that it already has had, in the chilling
effect it has had, particularly when you think about big tech,
particularly when you think about the semiconductor space, I think
anti trust enforcement in the US, I think tariff wars
or skirmishes or battles. However you define those between the
(16:38):
US and China and potentially the EU and other countries,
suddenly adds complexity to that. So when you think about
big tech and semiconductors and social media getting caught in
that crosshet, it really is a big has a big
chilling effect on M and A More broadly, Now, if
you think about the market more broadly than that ninety
(16:58):
something percent of the market, it isn't really involved in
that doesn't get caught up in that. So it's only
the US anti trust enforcement which will matter to them.
And if that kind of easies off under an incoming
Trump administration, I think that's generally a nice tailwind for
M and A going into twenty twenty five.
Speaker 3 (17:14):
And you said, of course there need to be willing
sellers and willing buyers. What's interesting is we're talking with
frant McCord is. He's got other in his combined concilidation
of people coming forward to want to buy it, private equity,
family offices. For you, who are the willing buyers? Is
PE a big player here?
Speaker 5 (17:35):
Yeah?
Speaker 7 (17:35):
Pe, when you know, thinking more broadly about the market,
PE definitely has a role to play, I think, whether
it's in this deal and more broadly, you know, they're
experts at getting deals done. They've seen all the most
difficult deals, they've seen the easy deals, they've seen it all.
They add balance sheet, they add availability of capital. So
they are fantastic owners to be part of any kind
(17:58):
of bid, particularly as a It's very complex, and I
think the industry has a lot of experience in you know,
looking at carve outs come you know, this would be
effectively a carve out, and so looking at big carve
outs coming out of you know, large enterprises. I think
private equity has a very large role to play in that,
whether it's this still specifically or more broadly, I think
in general, PE is very interested in items that get
(18:21):
carved out of larger take enterprises. Generally, their viewers that
these are you know, these have been unloved a little bit,
they're potentially undermanaged. This isn't obviously the TikTok example we're
talking about here, but this is more broadly, and they
do see it as an opportunity to create value and
and and drive shareholder it time.
Speaker 2 (18:41):
You can have a busy year. Thanks for fitting us in.
Eric Ravid of Ey America.
Speaker 3 (18:53):
I just want to check in on in video Stock
right now because the company has been criticizing what we
expect to be new export restrictions coming from the Biden
White House ahead of any announcement that we expect later today,
and video is saying it's trying to undercut the incoming
Trump administration by imposing last minute rules. Bloomberg's Mike Shppard
joins us a more in video setting off three percent.
(19:15):
More to do with the macro jobs data, I'm sure,
but tell us a little bit about what also could
be a key headwind in terms of selling their devices worldwide.
Speaker 8 (19:24):
Well, this really would be a headwind, and it would
come on top of other restrictions on AI chip sales
in China and Video is already facing from the US.
Those were imposed about a year and a half ago
by the Biden administration. In this new set of proposed
restrictions that could come in the next few days, this
would add a velvet rope to the world where the
(19:48):
US would be controlling access to these chips. It would
be capped. Your access would be capped on a company
and country basis, and the closest US allies, say Europe,
the UK, Pan Australia, they would have the most and
easiest access. Most of the rest of the world would
face tougher restrictions. They would have to meet security requirements
(20:08):
and also human rights requirements as well. And then there
are a handful of US adversaries, namely China and Russia
that would face the most restrictions in the least likelihood
of having access to this sophisticated AI technology. That is
coming from the US and principally from Nvidia.
Speaker 3 (20:25):
Mike, what is so fascinating is it hasn't even been
announced yet and we've heard this strong response. I'm not
aware of how often we tend to hear these strong
rebuttals coming from companies, and video usually keeps relatively quiet
about these political changes.
Speaker 8 (20:39):
You know, Carolyn, I'm glad you framed it that way,
because this was a really unusual comment from Nvidia, and
we also heard objections more broadly from the group here
in Washington that represents the chip maker's industry, and they
together were curative criticizing very harshly the Biden administration move
ahead of its release. Seeing would be unnecessarily restrictive on
(21:02):
whatever Trump may want to do is foreign policy, but
it would also inflict wide pain on other parts of
the economy. Think the gaming industry, think computing, and just think.
Back in September, when he was asked by our own colleague,
Tyler Kendall, Jensen, Wang said, look, we will abide by
any restrictions and government policies, and now he is saying
(21:25):
earlier this week he told our friend Ed Ludlow he
is interested in meeting with Donald Trump, and so this
would give them something very much to talk about as
a new administration takes office.
Speaker 3 (21:35):
It would then Meg's Mike Shepherd across what we anticipate
to be the latest amount of the announcement out of
the White House. Thank you, Welcome back to Blue Meg Technology.
I'm Karen Hyde in New York. A quick check on
these markets. Look, I want to focus in on what
(21:55):
has been a macro story of the day as well.
Job's numbers really strong, two hundred and fifty six thousand added.
What does that mean in terms of the Fed policy
rate cuts on pause?
Speaker 2 (22:04):
Of course, growth stocks pull back.
Speaker 3 (22:05):
We're down one point nine percent on the NASDAK biggest
drags to the downside, also Apple in Vidia. Of course
we've got key nines on what is going to be
announced from the White House in terms of further limitations
on exports from Nvidia to the rest of the world.
That's playing on the stock but on the upside. Key
point driver on the green side is Meta and of
course that is feeling into where our key story is today.
TikTok what to expect today around what's happening over in Washington.
(22:31):
Of course, the Supreme Court hearing arguments about the future
of TikTok. That of course plays into Meta's hand if
indeed TikTok is indeed banned. Let's get to Bloomberg's Kurt
Wagner because it's interesting Snap and Meta trading higher. It
feels as though in the court it doesn't seem to
be going their direction for TikTok.
Speaker 2 (22:47):
Kert.
Speaker 9 (22:48):
Yeah, I mean, we're only halfway through right now. The
lawyer for the creator aspect of the lawsuit is making
his arguments before the court. But the first hour was
TikTok's lawyer, and I listened to the whole thing. I
don't listen to a ton of Supreme Court oral arguments,
but I walked away feeling that TikTok's in real trouble.
A lot of the justices did not seem convinced with
(23:09):
TikTok's argument that this is a free speech issue. A
lot of them push back on the idea that you know,
it's not just speech, this is also a data in
a security issue, and so they did not seem convinced
from my opinion, as to what the TikTok lawyer was
presenting this morning, and.
Speaker 3 (23:25):
Certain analysts Morgan Stanley, for example, have theorized what would
happen if indeed TikTok is banned, money goes to Snap potentially,
but the key winner is Meta YouTube. Can you spell
out who the winners and losers are and what it
means in terms of advertising revenue here?
Speaker 9 (23:41):
Yeah, I mean you hit the top three. I think
Meta and Google and YouTube in particular are probably one
A and one B there because they both have products
in YouTube shorts and in reels at Meta that are
you know, essentially TikTok clones, right, So if you are
a TikTok creator, if you're a TikTok user, very easy
to migrate to one of these other services, And they
(24:03):
both have massive advertising businesses already, so I think they don't,
you know, they don't have to do a lot different
to really capitalize on the fact that all of the
money that's currently going and TikTok will need to go
somewhere else. So I think there's a very you know,
obvious reason why MetaStock is up right now today. It's
that people see there's a real potential for this mass
migration of users from TikTok over to reels if indeed
(24:25):
TikTok gets banned.
Speaker 3 (24:26):
Kut Wagner the the latest from the court and what
it means for the rivals. We thank you more on
TikTok's impact on the social media landscape. But please to
welcome Spreta Coajuria, Will Research Global Internet Managing director who
has thought long and hard about who the.
Speaker 2 (24:39):
Winners and the losers are.
Speaker 3 (24:40):
Schwetter just take us to what you're reading of the
tea leaves of the arguments right now.
Speaker 2 (24:44):
It doesn't seem to look good for TikTok.
Speaker 10 (24:46):
I agree, first fall, thanks for having me. I actually
listen to part of the argument this morning, and I
know it's far from over. But my understanding from and
I don't do a lot of these Supreme Court argument hearings,
but I guess my understanding is that the TikTok lawyer
did not come off convincing enough for the justices, and
(25:08):
not only around free speech, but also around the privacy
and security natural security of US citizens. So with that,
why is we are already seeing stock reactions as it
relates to the internet name Snap is up, as is Meta,
and as is Google. Based on our research, we think
that there is an eight to ten percent upside to
(25:30):
metas earnings per share. That's quite meaningful because we think
that over fifty percent of the time spent can actually
be going to meta reels as the number one beneficiary
for YouTube shorts, we think that about thirty to forty
percent of the time spent on TikTok today could go
to YouTube short and we think that there is about
five to eight percent upside to YouTube's revenue. And then
(25:51):
for Snap, part of the reason why it's trading up
so much is because of the volatility around how much
benefit Snap could have on a smaller base, and we
think that it could be about five to ten percent
of its revenue even if only ten to fifteen percent
of the time spent today on TikTok goes to Snapchat Wow.
Speaker 3 (26:08):
And of course eyeballs and focus of a consumer means
more advertising revenue. Ultimately, is that also how it's a
portioned meta gets the bulk of the advertising revenue that
currently is sent towards TikTok's direction, and then it's apportioned
to YouTube and then Snap as well.
Speaker 10 (26:25):
That's exactly right, and what we're actually hearing from advertisers
right now is that the budgets have actually not yet migrated,
even with the upcoming risk of TikTok being banned. I
think the advertisers want to see the ban being implemented
and then transition the ad dollars in part with snap
There will be integrations required for those advertisers who have
(26:47):
not integrated with Snapchat just yet. But what we're also
hearing is that that work has already begun Shutta.
Speaker 3 (26:52):
That's so interesting because if advertised, if marketers aren't changing yet,
the reason is because there is one hundred and seventy
million US users of TikTok who really like the product.
And from that perspective, do you think that actually it
does just overnight go away. Have you thought through the
action of if indeed it is banned, what technically happens
and if we see users migrade, how long that takes.
Speaker 11 (27:14):
Oh?
Speaker 10 (27:15):
I believe that it will be a moderately fast leak.
I don't think it will be overnight that the advertising
budgets will be shut down, in part because there will
be still some TikTok users in the United States. I mean,
you won't be users won't be able to download them,
and service providers will say that we are not going
to be supporting TikTok, but there will still be millions
(27:35):
of users and eyeballs on TikTok platform, and the technological
integrations of ad dollars going away from TikTok into meta
may not all happen overnight, as advertisers still try and
figure out how they want to shift their budgets and
what kind of targeting they want to do, so it
will be a slow lead. My guess is that it
will probably take about a quarter or two before most
(27:57):
of the budgets will move.
Speaker 3 (27:59):
At the start of the show, we had Franklin Court,
junior joint of Project Liberty.
Speaker 2 (28:03):
He, as far as he's.
Speaker 3 (28:04):
Aware, has made the only bid for us TikTok, asking
Byte Dance ultimately to sell, which they promised us far
not to do. But have you thought through the likelihood
of Bite Dance selling TikTok based.
Speaker 10 (28:17):
On the arguments of this morning, It did not sound
like that would be a very high likelihood outcome, whether
that was even a possibility in a ninety day window
or even in a one hundred and eighty day window,
So I would be very surprised. I would put it
in a low probability scenario where that actually happens. I'm
not sure if they actually want that to happen. If
(28:38):
we're speculating, so to speak, on who the buyer could be.
I mean, I wouldn't be surprised if Elon Musk makes
a bid. He already has Twitter and he has the
resources to do so too. But I just don't think
that that will be a high likelihood scenario that they
actually sell the asset.
Speaker 3 (28:58):
Amazon has been another name that and thrown out that
would benefit by purchasing TikTok, for example.
Speaker 2 (29:04):
So the next steps from your perspective, how do you start.
Speaker 3 (29:07):
To judge the day reactions of these companies? Followed by
the as you say potential? What did you mention for
Meta up to like eight to ten percent upside in
terms of revenue? How long apath for this share price
reaction to last?
Speaker 10 (29:20):
You think, I think it'll be sustained. Today's hearing will
be whether the Supreme Court tells us their decision today
or not. The way it goes will be very telling
in terms of the likelihood of the outcome, because it
seems like it will be binary whether TikTok is banned
or Supreme Court is going to bring it as a
hearing to see what happens if TikTok is expected to ban,
(29:43):
then the rally actually stays and there will be a
lot more interest from investors on Meta and in fact
the potential overhand on these stocks on Meta and Snap
on the uncertainty of where TikTok, whether TikTok will be
banned or not, will be lifted, so that in part
will also be a relief.
Speaker 3 (30:00):
Treider Conjuria of all for research. Great to get your
take on the implications of social media.
Speaker 2 (30:05):
Thank you.
Speaker 3 (30:06):
Coming up, look, we're going to delve into LTK President
Ama Ven's Boxes perspective. She's got the take on the
frade of TikTok as it impacts the creator economy.
Speaker 2 (30:15):
This is blome meg Technology.
Speaker 3 (30:27):
Now, as the Supreme Court is hearing arguments on the
future of TikTok and the United States, let's take a
look at the apps impact on the creator economy. Here's
what TikTok CEO had to say about that.
Speaker 11 (30:36):
A couple of months ago, creators from all around the
world come to TikTok to be discovered, to find an
audience that live their dreams of fame and fortune. Now,
in addition to launching countless global stars. The discovery and
authenticity that defined the TikTok experience have also made the
platform home the serious issues that are vital to the
(31:00):
global good.
Speaker 3 (31:01):
Let's bring an LTK co founder president Ammaven's Box, who
knows a thing or two about these content creators worldwide.
How are they reacting at the moment.
Speaker 12 (31:12):
Well, Kiln, I have to start out by acknowledging what's
happening with the wildfires in La are the arts and
prayers are with the huge portion of the LTK community.
Speaker 13 (31:20):
That's impacted today.
Speaker 12 (31:21):
We have ten thousand creators that are operating their businesses
out of La County, and so I'd be remiss not
to acknowledge that they really have had a struggle in
the start of this year, both with how they will
operate out of their homes and with what products that
they show to their audience, and then now also thinking
about rehoming their community.
Speaker 13 (31:40):
So I did want to start there.
Speaker 3 (31:41):
Well said thank you, Ama, do you want to then,
having discussed, of course the heart that goes out to
a lot of your user base, a lot of your
user base are therefore also having to analogize what's happening
in Washington.
Speaker 2 (31:54):
At the same time.
Speaker 13 (31:56):
Exactly.
Speaker 12 (31:57):
Well, you know, on the TikTok side, we've had nine
months to prepare, and so we have been educating our
creators about what they can do to get their arms
around their audience. We call it meat and keep, and
so over that period of time, they've been educating their
communities of where.
Speaker 13 (32:12):
They can be found.
Speaker 12 (32:14):
What we've seen in the numbers is that with our
TikTok creators specifically they've launched their LTK pages, they've actually
produced twice the number of video in twenty twenty four
versus the year prior, and I would describe that as
really making a house a home. They want to make
sure that when that community transitions to the LTK that
they have a place that they love and they're getting
tons of content there.
Speaker 13 (32:35):
That has returned in material growth in their earnings.
Speaker 12 (32:37):
Our TikTok creators earned twice as much last year as
the year prior, so they've got a way to.
Speaker 13 (32:43):
Really transition that community.
Speaker 12 (32:45):
And then on the brand side, we've actually seen that
brands intend to spend more on creator marketing in twenty
twenty five. That was a finding from our Northwestern study
where we pull the cmos both inside of LTK, all
eight thousand of them, plus those outside of our universe.
They all expect to continue to grow their investment, and
I know Goldman still says that by twenty twenty seven
(33:06):
they expect this industry to be worth five hundred billion.
So these brands are not slowing down their investment creators.
They're really seeing it as a channel play and not
a platform play.
Speaker 3 (33:16):
As you mentioned, money marketers looking at LTK. But where
else do you think we'll ultimately benefit if, for example,
it is indeed banned, is it immediately Meta that benefits
the most? Is CMO is going to be putting most
of the advertising dollars that they would have spent on
TikTok to Instagram?
Speaker 13 (33:33):
Right?
Speaker 12 (33:33):
I think on the biggest losers certainly would be TikTok themselves.
You know, they're losing eight billion dollars it's expected of revenue,
and of course they are based in Asia and so
that revenue is going to their kind of homeland. On
kind of the biggest winners, I do think that Meta
will be the biggest winner out of this. I echo
your other guests that we saw here today. Really from
the creator industry side, though cmos are putting their dollars
(33:55):
with the creators themselves. Those creators are on average four
different platforms today, and so it will ultimately drive content
into the other existing social platforms.
Speaker 13 (34:06):
I think Meta will be the biggest winner.
Speaker 12 (34:08):
There, followed by YouTube and then on down the line.
Speaker 3 (34:13):
What's interesting is ultimately how creators themselves not only using
TikTok and other platforms to tell people how to circumvent
any future ban, maybe trying to advocate the use of VPNs,
but have they been migrating their user based to other platforms.
They said, they've come to you a lot more with LTK,
But have they managed to convert their YouTube audience and
(34:33):
not their YouTube audience TikTok audience over to YouTube, over
to Instagram ahead of this.
Speaker 12 (34:39):
Yes, and actually so for LTK, the way they're thinking
about us is like the home base for across all
of their platforms, Like where can they gain ownership of
that community? Because you have to think, what's happening with
TikTok is a revolution. This is a moment in time
where it might go away entirely. But what we've seen
over twenty twenty four is an evolution of every other platform.
(35:00):
You're looking at YouTube shorts, or you're looking at what's
happened across Instagram. It's no longer a place to follow
people or be part of a community. It's an interest
based entertainment platform. So creators across the entire creator economy
have been looking for where they are going to house
and have ownership of their audience. We've seen that, you know,
in Q four, specifically those last three months of the year,
(35:20):
we saw a tremendous uptick in TikTokers applying to LTK
to get their shops launched so that they can have
their home base there. But it's a trend across the
entire creator universe where they know they've got to get
their arms around that community because the most important thing
about their ability to continue their business is their reachable,
(35:41):
engaged audience. And the problem is not just here on
TikTok it's across all platforms today.
Speaker 3 (35:46):
What's interesting is there is a smaller probability that bite
dance does decide to sell. If it does and we
have a change of ownership and a change of the
underlying algorithm, how sticky do you think the one hundred
and seventy million used reso of TikTok, or indeed the
content courage is on that actually are.
Speaker 12 (36:04):
You know, I actually believe it's an algorithm preference. There
are some unique things about TikTok when they first started,
specifically around music. I think those things have become a
little bit more ubiquitous. But I think we learn a
lot by looking to Europe. You know, TikTok does exist
in Europe, except that they have much more restrictive privacy
over there versus what we have here in the United States,
(36:24):
and TikTok has not really been able to grab hold
of the European customer the way it has the United
States customer. If you have a TikTok, that's not I
mean it, excuse me. If you few an algorithm that's
informed by less data, it's just inherently lesser, and so
ultimately this becomes an algorithm choice for our US consumers.
I do expect that you know the patterns that we've
(36:44):
created as individuals of how much time and how frequently
we are picking up our phone. I think I just
read that the average American user picks up their phone
over twenty two hundred times a day. What are they opening?
They're looking for entertainment. I don't think that they're going
to stop that behavior. I do believe that there's going
to be a lift and shift to other platforms, and
creators are hoping that that lift comes directly then over
(37:06):
to them as creators so they can continue their businesses.
Because remember, the platforms are not the ones that pay creators.
Speaker 13 (37:12):
Creators are responsible.
Speaker 12 (37:13):
For building their own business in their own revenue streams,
but except for a YouTube and long format, they are
really not being paid at scale or really any meaningful
way by the platforms directly. So it's very critical that
they own that customer relationship so that they can create
those businesses around their reach.
Speaker 2 (37:31):
I'm a ven's box.
Speaker 3 (37:32):
I let you go back and tap for one of
the twenty two hundred times you're going to be picking
up your phone today. LTK co founder president, It's always
great to have you.
Speaker 2 (37:40):
Thank you. TikTok fighting for its future in the Supreme Court.
Speaker 3 (37:50):
Let's bring back Bloomberg's Tyler Kendall, who is outside that
court and the latest in terms of the arguments, I
understand US Solicitor General Elizabeth Prologar is now testify.
Speaker 4 (38:02):
Yes, she's representing the federal government in this case, who
is arguing that this is an issue of national security.
Before that happened that we just heard the lawyer representing
TikTok creators wrap up his statements to the Supreme Court,
and Jeffrey Fisher made similar arguments to what we heard
from TikTok's lawyer earlier today, that this is an issue
of freedom of speech and potentially curtailing the freedom of
(38:25):
expression of the nearly one hundred and seventy million US
based users who use the app. Now, it does appear
that the Supreme Court justices are signaling they are skeptical
to that argument. I've been struck just how many times
they had brought up the specifics of the text of
the bill that Congress passed, saying that this is not
an outright ban, that the lag could knew that the
app could still continue to operate. Rather, it is a choice,
(38:46):
and that the app has to divest in order to
maintain its platform. You overcall, of course, that this text
was originally introduced by the China Select Committee on a
partisan basis over those national securities cancers. We even heard
Chief Justice John Roberts hit on that saying that Congress
is not concerned about what is on the platform. They
are concerned about what the federal government calls a foreign adversary,
(39:09):
holding who.
Speaker 2 (39:10):
Owns the platform.
Speaker 3 (39:12):
Tyler, what's also some intriguing about all of this is
President elect Trump and where he feels the delay should
come in.
Speaker 4 (39:22):
Right exactly so, a lawyer for Trump actually filed a
Friend of the Court brief last month of requesting that
there be a delay and citing Trump's own negotiation skill,
saying that he could ultimately help reach some sort of
agreement between the parties to get this done and as
well as address those national security concerns. Now, if this
span is put into place, we actually heard this come
(39:43):
up in the questioning whether or not Trump could delay it. Further,
we know that the law was written to include a
ninety day pause if there is a potential deal on
the table, but of course that would have to materialize.
He also could potentially instruct his Department of Justice to
not enforce it, however, that would open him up to
legal scrutiny. And then lastly, you could try to work
with Congress to repeal the law that they put into place,
(40:04):
but that appears highly unlikely considering the bipartisan support that
this bill originally received when it passed back in April.
I'm talking about unlikely allies coming together to push it forward,
such as the Democratic House Leader Hackeing Jeffreys and House
Speaker Mike Johnson working hand in hand on this one.
Speaker 3 (40:21):
Bipartisan ship perhaps has its limits. Tyder Kendall, we thank
you so much. Let's get out more for intricacies around
the legal arguments. Bloom back Sarah Forden for more in DC.
And you're really analyzing how it's all unfolding inside the
court the arguments.
Speaker 2 (40:36):
Anything struck here?
Speaker 14 (40:39):
Well, first, let's go back to the legal framework. Why
this is in front of the Supreme Court. They're basically
being called to decide on a request from Trump to
pause the start of the band January nineteenth. So they're
going to have to decide do they pause the band
and if they do, is it just a temporary pause
so they can figure out what they want to do
(40:59):
on the underling issues of the law, or is it
a permanent band. They're also being asked by TikTok to
ponder the national security versus the First Amendment rights question.
Of course, TikTok is really really bearing down hard on
the fact that this reflects a violation of people's First
(41:20):
Amendment rights. But then you have the Justices coming in
and saying, well, actually, foreign actors don't have First Amendment
rights the way Americans do. So there's a lot of
parsing there. You know, is TikTok considered a foreign actor.
It's technically a US company, but it's owned by a
Chinese company, and so there is so much to unpack
(41:40):
in these arguments.
Speaker 3 (41:42):
That is very briefly, probability of thirty percent that TikTok
wins is what Bloing Bag Intelligence thinks. Have you got
a probability what people have been saying?
Speaker 14 (41:50):
Yeah, I mean, I think that our analyst is really
calling it pretty pretty correctly. And as we're seeing, as
Tyler mentioned, you know, the Justices are expressing a lot
of skepticism about the First Amendment arguments, and they are
also raised in concerns about the national security arguments. It's
true that we don't have as much visibility on what
the government feels as the most concerning about TikTok, but
(42:15):
we've had a lot of examples of propaganda and data security,
privacy and more.
Speaker 2 (42:22):
Sarah Forden the latest from DC.
Speaker 3 (42:24):
We so appreciate it on those legal arguments, But that
does it for this particular edition of Bloomberg Technology.
Speaker 2 (42:29):
Do not forget to check out the podcast. You'll find
it on the
Speaker 3 (42:32):
Terminal as well as online on Apple, Spotify, Aniheart, this
is Bloomberg
From the heart of where innovation, money and power collide
in Silicon Valley and beyond. This is Bloomberg Technology with
Caroline Hyde and.
Speaker 2 (00:12):
Ed Louvelow live from New York.
Speaker 3 (00:28):
This is Bloomberg Technology. We are getting straight to our
top story.
Speaker 2 (00:32):
Out of Washington.
Speaker 3 (00:32):
TikTok is at the US Supreme Court fighting for its future.
Speaker 2 (00:37):
Justices are hearing.
Speaker 3 (00:38):
Arguments only nine days before a federal law is set
to ban TikTok in the United States if it isn't
sold by its Chinese parent company. Bloemberg's Tyder Kendall standing
by at the court and remind us Tyler, the key
questions for the court is it national security versus free speech?
Speaker 2 (00:53):
Here?
Speaker 4 (00:56):
Yeah, hey, Caroline or all arguments here at the Supreme
Court now just reaching about their one hour mark. Lawyers
for TikTok started their opening arguments by saying that this
is a First Amendment issue, arguing that if that band
does go into place, it could potentially curtail the freedom
of expression of it's more than one hundred and seventy
million US based users. The lawyer for TikTok, arguing today,
(01:16):
Noel Francisco, also added that the timeline for the ban
is unrealistic and quote very difficult, asking the Court at
the very least to delay the ban going into place.
Speaker 2 (01:26):
Now.
Speaker 4 (01:26):
On the other side of this is what you mentioned,
the national security concerns. In a brief submitted to the
Supreme Court today ahead of today's arguments, the US federal
government says this is not about freedom of speech, since
there is still a viable path on the table for
TikTok to operate if they divest. Rather, they're not trying
to restrict freedom of speech. They're trying to restrict what
they call foreign adversary holding, considering bite Dance's connections to
(01:49):
China and what that could mean to national security. Now,
that appears to be the thread that we're seeing the
support the Supreme Court justices pull on here, potentially expressing
some skepticism when it comes to TikTok's arguments. For example, Caroline,
the first question out of the gate from Justice Clarence
Thomas was whether or not TikTok was trying to convert
a potential restriction on byte Dance's ownership of TikTok into
(02:13):
a restriction onto the freedom of speech of TikTok and
its users.
Speaker 2 (02:17):
Tyler Kendall, We thank you so much.
Speaker 3 (02:19):
And look, just reading the tea leaves here shares of
snap Meta on the higher side. It doesn't seem as
though thus far the arguments are going in TikTok's favor,
as has been on our tea live blog on the
Bloomberg Frank McCord is with us to keep the conversation going.
Executive chairman of the Court Global and founder of Project Liberty,
which just made a formal offer to acquire TikTok. You
call it the people's bid. Why is Project Liberty and
(02:42):
your consortium the right owners if indeed bite Dance says
it will divest.
Speaker 5 (02:48):
Yeah, Hi, Carolyn, how are you good?
Speaker 3 (02:50):
Good?
Speaker 6 (02:50):
It's I think we're the right buyers because we have
put all the pieces together. We have the funding, we've
worked through all the legal issues, We've put a formal offer,
as you point out, right in front of Biteden, so
they have something now to react to. And most importantly,
we have the clean American tech stack to move the
user base over to. And we don't need or want
(03:12):
the Chinese algorithm. And so I think that the algorithm
is something that China's very very beholden to and has
it said clearly that they're not going to be selling it.
We don't need it or want it, as I point out,
So I think we're particularly unique bidder and well positioned,
and I think as a matter of fact, we have
the leading bidder right now.
Speaker 3 (03:31):
We were just seeing some of the share price reactions
of rivals out there. From your reading into what's happening
in Washington right now, does it look to be going
in the favor you'd want to see, because would you
actually like a delay to proceedings to be able to
go forward with a.
Speaker 6 (03:43):
Bit, Well, we'd like to buy us TikTok, that's what
we'd like to see as an end result, and move
the user base over to this clean American stack. And
I think that it's no surprise that the argument is
going well for the government because this is a real
national siksecurity issue, a strongly bipartisan piece of legislation that
(04:04):
was passed by Congress upheld by the appellate court.
Speaker 5 (04:07):
So I think the.
Speaker 6 (04:07):
Conventional wisdom is that the government's position will be upheld,
the legislation will will stay in effect, which means on
January nineteenth, Byte Dance has to decide are they going
to shut it down or sell, and in order to sell,
they need to enter into an agreement, which is why
we put a formal offer in front of them in
the last twenty four hours.
Speaker 2 (04:27):
What is the price tag of that formal offer.
Speaker 6 (04:30):
So what we've said to byte Dance is we're not
going to be talking about terms of the deal until
we get into a formal conversation with them. And we
want to be very very respectful of byte Dance because
it's a very sensitive time here. We know they're arguing
in front of the Supreme Court. We've given them space
to do that, and at the point in time where
we engage in an active negotiation, we'll be happy to
(04:53):
share details once we sort things with them.
Speaker 3 (04:57):
Have you spoken to any of the current investors in
byte Dance who are United States based, General Atlantic, Susquehanna.
We also known that Sequoias involved KKR. There's a lot
of them.
Speaker 6 (05:07):
Yeah, there are, and I believe we've spoken to all
of them and they've indicated an interest in rolling over
their investment. Why not, I mean, they don't want to
lose their entire investment in us TikTok. We've put a
real proposal forward which gives them value for us TikTok.
Speaker 5 (05:26):
Having said that, they too.
Speaker 6 (05:28):
Are waiting to see what byte Edance decides to do
before committing.
Speaker 3 (05:34):
I'm really interested in the fact that investors are interested
in rolling over. What value will you reccreate for the
business going forward? Because you want as you've articulated a
totally different tech stack, how will that change the use
of TikTok? How will you monetize it as well? Because
you want a different form of social media. You don't
want us as content for the ultimate users and being
(05:56):
advertised against.
Speaker 6 (05:57):
Yeah, well they'll be advertisement advertising on the new TikTok.
Speaker 5 (06:02):
Let's call it TikTok two point zero.
Speaker 6 (06:04):
But we see an Internet evolving where, rather than an
attention economy, meaning algorithms designed to keep us addicted and
online in a very unhealthy fashion, why not an intention
economy where we just let people know we're interested in
buying something or reading something, our information on something, and
(06:26):
then we get that from the business or the advertiser.
And inference is much less valuable than intention. So rather
than have algorithms that surveil us, scrape our data, and
then guess that we might want something, why not you
and I just be very clear, you know, verify that
we're a human being, and be very clear about what
(06:46):
we want and then receive it On the Internet. We
have technology available now that didn't exist twenty five years
ago that enables you and I to actually control our identity,
our data, and our relationships. So let's put people in
charge of their data. Our data is very valuable, as
it turns.
Speaker 3 (07:06):
Out, I mean, and that's why so much value has
been accrued on a private market basis, at least to
byte dance and to TikTok. But ultimately by not making
these things quote unquote addictive, do you lose.
Speaker 2 (07:19):
Some of that value? And is that the right compromise here?
Speaker 6 (07:21):
Well, there are other factors here, right in the case
of this Supreme Court hearing and the legislation that's being discussed.
Speaker 5 (07:29):
There are national security risks.
Speaker 6 (07:33):
There's also issues around safety to children. There are issues
about a viability of our democratic system with such polarization.
So the algorithms may be powerful, that doesn't mean that
they're good or constructive. We just have an Internet technology
that's evolved into one that's attention based, which means these
(07:54):
platforms scrape our data. They aggregate it, and to do that,
they're actually surveilling us, right, and then they profile us.
And this is the problem with what's going on with TikTok,
because it's not only the surveillance and the information on
one hundred and seventy million people, it's that ByteDance can
then provide what they want to feed to the one
(08:16):
hundred and seventy million people.
Speaker 5 (08:18):
So it's an influence device as well.
Speaker 6 (08:20):
So I think we're all learning together that the current
architecture which takes advantage of people is not the best architecture.
It's leading to some very poor outcomes. This is just engineering.
It's just it can be designed differently to work differently.
We can get all the benefits we get from Internet
(08:41):
technology without the harms.
Speaker 5 (08:43):
And it's interesting that this.
Speaker 6 (08:46):
TikTok problem could actually be the way forward to a
much bigger solution to having an Internet that's much healthier
for all of us.
Speaker 3 (08:55):
How has that got ramifications on meta on snow, which
on the day are doing well because people feel okay.
If TikTok loses this argument, it's out and then the viewers,
the followers, the users just go to these other rival platforms.
The money the advertising money goes to these rival platforms.
Why are analysts like Morgan Stanley that have pointed this
(09:15):
out not saying there's a legitimate bid here and we
think this could be a whole new dawn future for
social media.
Speaker 2 (09:21):
Why aren't people not taking that seriously?
Speaker 5 (09:22):
I think they'll begin to now.
Speaker 6 (09:24):
I think that BYT Dance has been playing out their
legal strategy and it's coming to an end.
Speaker 3 (09:31):
Has been a good legal strategy from your perspective, Sorry,
hasn't been a good legal strategy from your perspective.
Speaker 6 (09:37):
From the vantage point of looking at the legislation and
how it was passed strong bipartisan legislation and the real
national security risks. I think that the Byte Dance pursuit
of a legal strategy was an uphill battle from the
very beginning. And I think, as I say, it's coming
to an end now that that's that path is closing
(10:00):
down on them. Now they're confronted with January nineteenth, So
we're talking about not nine days and something has to give,
so either that it's going to be shut down or
there'll be a transaction. That's why we put a formal
offer in place so there's enough time for them to
process that, and we hope they do because we want
(10:21):
to see TikTok stay alive.
Speaker 5 (10:23):
We want to see it lit up. We don't want
to see.
Speaker 6 (10:25):
It banned or shut down, just like President Electrump does not.
Speaker 3 (10:29):
We want to see about President Electrump and ultimately what
January the twentieth means for all of this and the
request he's made of the Supreme Court to just delay facts.
Speaker 6 (10:40):
Well, I think the legislation will operate. It will be
the legislation and it's a hard and fast date of
January nineteenth. So the timing here is very interesting, isn't it.
President Biden will still be president. It doesn't get to
President Electrump unless the ninety day of the three month
extension kicks in. So it's a Biden administration decision to
(11:02):
extend the timeframe for Bye Dance in TikTok, and then
it gets coot.
Speaker 3 (11:09):
To allow some sort of delay, which many don't think
will happen.
Speaker 6 (11:12):
Yeah, I'm assuming in answering your question that that won't happen.
If it does, it's a different ballgame.
Speaker 5 (11:17):
I understand that.
Speaker 6 (11:18):
But you know, when you step back and think about this,
why wouldn't Bye dance accept an offer. If it doesn't
include the algorithm, they win. President Trump wins because it's
not banned. The shareholders that you mentioned win they get
value as opposed to getting nothing for us. TikTok Us
citizens win because our clean stack will protect them.
Speaker 5 (11:42):
The national security risk has gone.
Speaker 6 (11:43):
And of course TikTok users win because the app stays
in business.
Speaker 2 (11:48):
Why aren't there competing bids.
Speaker 6 (11:53):
The legislation requires that you have a clean stack. If
this be independent of by dances technology, that's not an
easy thing to do. If we hadn't been working on
the technology and invested a half a billion dollars over
the last five years, we wouldn't be in a position
to bid. It's very serendipitous in a way that the
(12:16):
work that Project Liberty has been doing to reimagine how
the Internet works just so happens to be right place,
right time to actually be the winning bidder for TikTok
keep the app going, move the user base to a
clean stack, and at the same time demonstrate to people
that there's another version of the Internet where they're in
(12:37):
charge of themselves. They own their data, they own their relationships,
they can get value for it.
Speaker 5 (12:42):
They can parse out and permission.
Speaker 6 (12:44):
Its use as opposed to being surveilled and having the
data be in the hands of someone else who's deciding
what to feed them, what to tell them.
Speaker 2 (12:53):
Briefly, next steps for you.
Speaker 3 (12:55):
You've kind of given us your time today, But what
happens after we start the arguments finish at the Supreme Court.
Speaker 6 (13:02):
I think we're all anxiously awaiting the Supreme Court to
make their decision, and then we'll look forward to a
conversation with ByteDance and see if we can.
Speaker 5 (13:10):
Get something.
Speaker 6 (13:13):
Completed prior to the nineteenth so that the Biden administration
can get it this Roe month extension.
Speaker 3 (13:19):
Please come back if that conversation happens. Frank McCourt, executive
chairman of McCourt Global, Founder of Project Liberty, and the
beard on.
Speaker 2 (13:26):
The table for us TikTok.
Speaker 3 (13:29):
Coming up, we'll take a look at some of the
tech themes dominating the deal sector in twenty twenty five.
Maybe this is a deal we need to talk about,
potentially a purchase of US TikTok with Barack ravin Is
of Ey America's that's next.
Speaker 2 (13:40):
This is blue Meg technology.
Speaker 3 (13:51):
A quick check on the market, so look broader benchmarks
are down today because the job's numbers were so hot.
Once again, we question whether the rake cuts will come
from the Federal Reserve or off by two percent on
the NASDAP. But we want to shine a light on
the key story in the Supreme Court today.
Speaker 2 (14:06):
TikTok fighting for its future.
Speaker 3 (14:07):
Meta platforms hire by five tens of percent, snap up
seven point seven percent.
Speaker 2 (14:11):
This as investors tried to.
Speaker 3 (14:12):
Descend the Actually, some of the oral arguments thus far
don't seem to be going in TikTok's favor.
Speaker 2 (14:17):
Let's just dwell on TikTok a little bit more, because
couldn't it be a deal.
Speaker 3 (14:22):
To watch for twenty twenty five as we hear those
oral arguments over in the Supreme Court, as we discern
the future of TikTok and the United States tech deals
continue to be really impressive as they were in twenty
twenty four. Remember US volumes werep thirty two percent. Bak
Revied is the man to ask ey America's strategy and
Transactions technology sector leader joining us Now, Barak, I know
(14:42):
you can't tell us about the intricacies of whether it
or not we actually get a deal out of us TikTok,
But have you been thinking through that particular deal. Is
the deal outlook for tech a strong one?
Speaker 7 (14:53):
Yeah, Caroline, thank you for having me appreciate it. The
outlook is actually very strong, and we feel generally pretty poor,
I think on you know, you're obviously you're talking about
TikTok today and it's a it's it's capturing a lot
of the imagination. But you know, when we think about
this deal, obviously we can't talk about it specifically, but
if you think about any large transaction, obviously it gets
(15:14):
very complex. And this is the kind of stuff that
generally tends to move the market and tends to show
that other M and A is possible and really can
help ignite the market if it was to happen. But
I do think that, you know, if we were to
go through this, when we talk to our clients about
complicated and complex carve outs, typically we talk about months
and quarters in terms of timelines to getting it done,
(15:37):
not you know, not generally not days or weeks, And
so you know, to the extent that some of that
work has been going on, that's that's fantastic. Depends on
who the buyer is in terms of what the stack
actually looks like, and how how capable they are to
receive it. All of that, you know, will will drive
the timeline here no matter what happens, and obviously you
need willing buyers and sellers.
Speaker 3 (16:00):
Ultimately, this is a geopolitical discussion that drives the potential
sale of TikTok. How much is geopolitics going to play
into M and A into carve outs as perhaps relationships
between the US and China become ever more tense.
Speaker 7 (16:15):
Yeah, that's a great question, Caroline. It's impossible to underestimate
the impact that it already has had, in the chilling
effect it has had, particularly when you think about big tech,
particularly when you think about the semiconductor space, I think
anti trust enforcement in the US, I think tariff wars
or skirmishes or battles. However you define those between the
(16:38):
US and China and potentially the EU and other countries,
suddenly adds complexity to that. So when you think about
big tech and semiconductors and social media getting caught in
that crosshet, it really is a big has a big
chilling effect on M and A More broadly, Now, if
you think about the market more broadly than that ninety
(16:58):
something percent of the market, it isn't really involved in
that doesn't get caught up in that. So it's only
the US anti trust enforcement which will matter to them.
And if that kind of easies off under an incoming
Trump administration, I think that's generally a nice tailwind for
M and A going into twenty twenty five.
Speaker 3 (17:14):
And you said, of course there need to be willing
sellers and willing buyers. What's interesting is we're talking with
frant McCord is. He's got other in his combined concilidation
of people coming forward to want to buy it, private equity,
family offices. For you, who are the willing buyers? Is
PE a big player here?
Speaker 5 (17:35):
Yeah?
Speaker 7 (17:35):
Pe, when you know, thinking more broadly about the market,
PE definitely has a role to play, I think, whether
it's in this deal and more broadly, you know, they're
experts at getting deals done. They've seen all the most
difficult deals, they've seen the easy deals, they've seen it all.
They add balance sheet, they add availability of capital. So
they are fantastic owners to be part of any kind
(17:58):
of bid, particularly as a It's very complex, and I
think the industry has a lot of experience in you know,
looking at carve outs come you know, this would be
effectively a carve out, and so looking at big carve
outs coming out of you know, large enterprises. I think
private equity has a very large role to play in that,
whether it's this still specifically or more broadly, I think
in general, PE is very interested in items that get
(18:21):
carved out of larger take enterprises. Generally, their viewers that
these are you know, these have been unloved a little bit,
they're potentially undermanaged. This isn't obviously the TikTok example we're
talking about here, but this is more broadly, and they
do see it as an opportunity to create value and
and and drive shareholder it time.
Speaker 2 (18:41):
You can have a busy year. Thanks for fitting us in.
Eric Ravid of Ey America.
Speaker 3 (18:53):
I just want to check in on in video Stock
right now because the company has been criticizing what we
expect to be new export restrictions coming from the Biden
White House ahead of any announcement that we expect later today,
and video is saying it's trying to undercut the incoming
Trump administration by imposing last minute rules. Bloomberg's Mike Shppard
joins us a more in video setting off three percent.
(19:15):
More to do with the macro jobs data, I'm sure,
but tell us a little bit about what also could
be a key headwind in terms of selling their devices worldwide.
Speaker 8 (19:24):
Well, this really would be a headwind, and it would
come on top of other restrictions on AI chip sales
in China and Video is already facing from the US.
Those were imposed about a year and a half ago
by the Biden administration. In this new set of proposed
restrictions that could come in the next few days, this
would add a velvet rope to the world where the
(19:48):
US would be controlling access to these chips. It would
be capped. Your access would be capped on a company
and country basis, and the closest US allies, say Europe,
the UK, Pan Australia, they would have the most and
easiest access. Most of the rest of the world would
face tougher restrictions. They would have to meet security requirements
(20:08):
and also human rights requirements as well. And then there
are a handful of US adversaries, namely China and Russia
that would face the most restrictions in the least likelihood
of having access to this sophisticated AI technology. That is
coming from the US and principally from Nvidia.
Speaker 3 (20:25):
Mike, what is so fascinating is it hasn't even been
announced yet and we've heard this strong response. I'm not
aware of how often we tend to hear these strong
rebuttals coming from companies, and video usually keeps relatively quiet
about these political changes.
Speaker 8 (20:39):
You know, Carolyn, I'm glad you framed it that way,
because this was a really unusual comment from Nvidia, and
we also heard objections more broadly from the group here
in Washington that represents the chip maker's industry, and they
together were curative criticizing very harshly the Biden administration move
ahead of its release. Seeing would be unnecessarily restrictive on
(21:02):
whatever Trump may want to do is foreign policy, but
it would also inflict wide pain on other parts of
the economy. Think the gaming industry, think computing, and just think.
Back in September, when he was asked by our own colleague,
Tyler Kendall, Jensen, Wang said, look, we will abide by
any restrictions and government policies, and now he is saying
(21:25):
earlier this week he told our friend Ed Ludlow he
is interested in meeting with Donald Trump, and so this
would give them something very much to talk about as
a new administration takes office.
Speaker 3 (21:35):
It would then Meg's Mike Shepherd across what we anticipate
to be the latest amount of the announcement out of
the White House. Thank you, Welcome back to Blue Meg Technology.
I'm Karen Hyde in New York. A quick check on
these markets. Look, I want to focus in on what
(21:55):
has been a macro story of the day as well.
Job's numbers really strong, two hundred and fifty six thousand added.
What does that mean in terms of the Fed policy
rate cuts on pause?
Speaker 2 (22:04):
Of course, growth stocks pull back.
Speaker 3 (22:05):
We're down one point nine percent on the NASDAK biggest
drags to the downside, also Apple in Vidia. Of course
we've got key nines on what is going to be
announced from the White House in terms of further limitations
on exports from Nvidia to the rest of the world.
That's playing on the stock but on the upside. Key
point driver on the green side is Meta and of
course that is feeling into where our key story is today.
TikTok what to expect today around what's happening over in Washington.
(22:31):
Of course, the Supreme Court hearing arguments about the future
of TikTok. That of course plays into Meta's hand if
indeed TikTok is indeed banned. Let's get to Bloomberg's Kurt
Wagner because it's interesting Snap and Meta trading higher. It
feels as though in the court it doesn't seem to
be going their direction for TikTok.
Speaker 2 (22:47):
Kert.
Speaker 9 (22:48):
Yeah, I mean, we're only halfway through right now. The
lawyer for the creator aspect of the lawsuit is making
his arguments before the court. But the first hour was
TikTok's lawyer, and I listened to the whole thing. I
don't listen to a ton of Supreme Court oral arguments,
but I walked away feeling that TikTok's in real trouble.
A lot of the justices did not seem convinced with
(23:09):
TikTok's argument that this is a free speech issue. A
lot of them push back on the idea that you know,
it's not just speech, this is also a data in
a security issue, and so they did not seem convinced
from my opinion, as to what the TikTok lawyer was
presenting this morning, and.
Speaker 3 (23:25):
Certain analysts Morgan Stanley, for example, have theorized what would
happen if indeed TikTok is banned, money goes to Snap potentially,
but the key winner is Meta YouTube. Can you spell
out who the winners and losers are and what it
means in terms of advertising revenue here?
Speaker 9 (23:41):
Yeah, I mean you hit the top three. I think
Meta and Google and YouTube in particular are probably one
A and one B there because they both have products
in YouTube shorts and in reels at Meta that are
you know, essentially TikTok clones, right, So if you are
a TikTok creator, if you're a TikTok user, very easy
to migrate to one of these other services, And they
(24:03):
both have massive advertising businesses already, so I think they don't,
you know, they don't have to do a lot different
to really capitalize on the fact that all of the
money that's currently going and TikTok will need to go
somewhere else. So I think there's a very you know,
obvious reason why MetaStock is up right now today. It's
that people see there's a real potential for this mass
migration of users from TikTok over to reels if indeed
(24:25):
TikTok gets banned.
Speaker 3 (24:26):
Kut Wagner the the latest from the court and what
it means for the rivals. We thank you more on
TikTok's impact on the social media landscape. But please to
welcome Spreta Coajuria, Will Research Global Internet Managing director who
has thought long and hard about who the.
Speaker 2 (24:39):
Winners and the losers are.
Speaker 3 (24:40):
Schwetter just take us to what you're reading of the
tea leaves of the arguments right now.
Speaker 2 (24:44):
It doesn't seem to look good for TikTok.
Speaker 10 (24:46):
I agree, first fall, thanks for having me. I actually
listen to part of the argument this morning, and I
know it's far from over. But my understanding from and
I don't do a lot of these Supreme Court argument hearings,
but I guess my understanding is that the TikTok lawyer
did not come off convincing enough for the justices, and
(25:08):
not only around free speech, but also around the privacy
and security natural security of US citizens. So with that,
why is we are already seeing stock reactions as it
relates to the internet name Snap is up, as is Meta,
and as is Google. Based on our research, we think
that there is an eight to ten percent upside to
(25:30):
metas earnings per share. That's quite meaningful because we think
that over fifty percent of the time spent can actually
be going to meta reels as the number one beneficiary
for YouTube shorts, we think that about thirty to forty
percent of the time spent on TikTok today could go
to YouTube short and we think that there is about
five to eight percent upside to YouTube's revenue. And then
(25:51):
for Snap, part of the reason why it's trading up
so much is because of the volatility around how much
benefit Snap could have on a smaller base, and we
think that it could be about five to ten percent
of its revenue even if only ten to fifteen percent
of the time spent today on TikTok goes to Snapchat Wow.
Speaker 3 (26:08):
And of course eyeballs and focus of a consumer means
more advertising revenue. Ultimately, is that also how it's a
portioned meta gets the bulk of the advertising revenue that
currently is sent towards TikTok's direction, and then it's apportioned
to YouTube and then Snap as well.
Speaker 10 (26:25):
That's exactly right, and what we're actually hearing from advertisers
right now is that the budgets have actually not yet migrated,
even with the upcoming risk of TikTok being banned. I
think the advertisers want to see the ban being implemented
and then transition the ad dollars in part with snap
There will be integrations required for those advertisers who have
(26:47):
not integrated with Snapchat just yet. But what we're also
hearing is that that work has already begun Shutta.
Speaker 3 (26:52):
That's so interesting because if advertised, if marketers aren't changing yet,
the reason is because there is one hundred and seventy
million US users of TikTok who really like the product.
And from that perspective, do you think that actually it
does just overnight go away. Have you thought through the
action of if indeed it is banned, what technically happens
and if we see users migrade, how long that takes.
Speaker 11 (27:14):
Oh?
Speaker 10 (27:15):
I believe that it will be a moderately fast leak.
I don't think it will be overnight that the advertising
budgets will be shut down, in part because there will
be still some TikTok users in the United States. I mean,
you won't be users won't be able to download them,
and service providers will say that we are not going
to be supporting TikTok, but there will still be millions
(27:35):
of users and eyeballs on TikTok platform, and the technological
integrations of ad dollars going away from TikTok into meta
may not all happen overnight, as advertisers still try and
figure out how they want to shift their budgets and
what kind of targeting they want to do, so it
will be a slow lead. My guess is that it
will probably take about a quarter or two before most
(27:57):
of the budgets will move.
Speaker 3 (27:59):
At the start of the show, we had Franklin Court,
junior joint of Project Liberty.
Speaker 2 (28:03):
He, as far as he's.
Speaker 3 (28:04):
Aware, has made the only bid for us TikTok, asking
Byte Dance ultimately to sell, which they promised us far
not to do. But have you thought through the likelihood
of Bite Dance selling TikTok based.
Speaker 10 (28:17):
On the arguments of this morning, It did not sound
like that would be a very high likelihood outcome, whether
that was even a possibility in a ninety day window
or even in a one hundred and eighty day window,
So I would be very surprised. I would put it
in a low probability scenario where that actually happens. I'm
not sure if they actually want that to happen. If
(28:38):
we're speculating, so to speak, on who the buyer could be.
I mean, I wouldn't be surprised if Elon Musk makes
a bid. He already has Twitter and he has the
resources to do so too. But I just don't think
that that will be a high likelihood scenario that they
actually sell the asset.
Speaker 3 (28:58):
Amazon has been another name that and thrown out that
would benefit by purchasing TikTok, for example.
Speaker 2 (29:04):
So the next steps from your perspective, how do you start.
Speaker 3 (29:07):
To judge the day reactions of these companies? Followed by
the as you say potential? What did you mention for
Meta up to like eight to ten percent upside in
terms of revenue? How long apath for this share price
reaction to last?
Speaker 10 (29:20):
You think, I think it'll be sustained. Today's hearing will
be whether the Supreme Court tells us their decision today
or not. The way it goes will be very telling
in terms of the likelihood of the outcome, because it
seems like it will be binary whether TikTok is banned
or Supreme Court is going to bring it as a
hearing to see what happens if TikTok is expected to ban,
(29:43):
then the rally actually stays and there will be a
lot more interest from investors on Meta and in fact
the potential overhand on these stocks on Meta and Snap
on the uncertainty of where TikTok, whether TikTok will be
banned or not, will be lifted, so that in part
will also be a relief.
Speaker 3 (30:00):
Treider Conjuria of all for research. Great to get your
take on the implications of social media.
Speaker 2 (30:05):
Thank you.
Speaker 3 (30:06):
Coming up, look, we're going to delve into LTK President
Ama Ven's Boxes perspective. She's got the take on the
frade of TikTok as it impacts the creator economy.
Speaker 2 (30:15):
This is blome meg Technology.
Speaker 3 (30:27):
Now, as the Supreme Court is hearing arguments on the
future of TikTok and the United States, let's take a
look at the apps impact on the creator economy. Here's
what TikTok CEO had to say about that.
Speaker 11 (30:36):
A couple of months ago, creators from all around the
world come to TikTok to be discovered, to find an
audience that live their dreams of fame and fortune. Now,
in addition to launching countless global stars. The discovery and
authenticity that defined the TikTok experience have also made the
platform home the serious issues that are vital to the
(31:00):
global good.
Speaker 3 (31:01):
Let's bring an LTK co founder president Ammaven's Box, who
knows a thing or two about these content creators worldwide.
How are they reacting at the moment.
Speaker 12 (31:12):
Well, Kiln, I have to start out by acknowledging what's
happening with the wildfires in La are the arts and
prayers are with the huge portion of the LTK community.
Speaker 13 (31:20):
That's impacted today.
Speaker 12 (31:21):
We have ten thousand creators that are operating their businesses
out of La County, and so I'd be remiss not
to acknowledge that they really have had a struggle in
the start of this year, both with how they will
operate out of their homes and with what products that
they show to their audience, and then now also thinking
about rehoming their community.
Speaker 13 (31:40):
So I did want to start there.
Speaker 3 (31:41):
Well said thank you, Ama, do you want to then,
having discussed, of course the heart that goes out to
a lot of your user base, a lot of your
user base are therefore also having to analogize what's happening
in Washington.
Speaker 2 (31:54):
At the same time.
Speaker 13 (31:56):
Exactly.
Speaker 12 (31:57):
Well, you know, on the TikTok side, we've had nine
months to prepare, and so we have been educating our
creators about what they can do to get their arms
around their audience. We call it meat and keep, and
so over that period of time, they've been educating their
communities of where.
Speaker 13 (32:12):
They can be found.
Speaker 12 (32:14):
What we've seen in the numbers is that with our
TikTok creators specifically they've launched their LTK pages, they've actually
produced twice the number of video in twenty twenty four
versus the year prior, and I would describe that as
really making a house a home. They want to make
sure that when that community transitions to the LTK that
they have a place that they love and they're getting
tons of content there.
Speaker 13 (32:35):
That has returned in material growth in their earnings.
Speaker 12 (32:37):
Our TikTok creators earned twice as much last year as
the year prior, so they've got a way to.
Speaker 13 (32:43):
Really transition that community.
Speaker 12 (32:45):
And then on the brand side, we've actually seen that
brands intend to spend more on creator marketing in twenty
twenty five. That was a finding from our Northwestern study
where we pull the cmos both inside of LTK, all
eight thousand of them, plus those outside of our universe.
They all expect to continue to grow their investment, and
I know Goldman still says that by twenty twenty seven
(33:06):
they expect this industry to be worth five hundred billion.
So these brands are not slowing down their investment creators.
They're really seeing it as a channel play and not
a platform play.
Speaker 3 (33:16):
As you mentioned, money marketers looking at LTK. But where
else do you think we'll ultimately benefit if, for example,
it is indeed banned, is it immediately Meta that benefits
the most? Is CMO is going to be putting most
of the advertising dollars that they would have spent on
TikTok to Instagram?
Speaker 13 (33:33):
Right?
Speaker 12 (33:33):
I think on the biggest losers certainly would be TikTok themselves.
You know, they're losing eight billion dollars it's expected of revenue,
and of course they are based in Asia and so
that revenue is going to their kind of homeland. On
kind of the biggest winners, I do think that Meta
will be the biggest winner out of this. I echo
your other guests that we saw here today. Really from
the creator industry side, though cmos are putting their dollars
(33:55):
with the creators themselves. Those creators are on average four
different platforms today, and so it will ultimately drive content
into the other existing social platforms.
Speaker 13 (34:06):
I think Meta will be the biggest winner.
Speaker 12 (34:08):
There, followed by YouTube and then on down the line.
Speaker 3 (34:13):
What's interesting is ultimately how creators themselves not only using
TikTok and other platforms to tell people how to circumvent
any future ban, maybe trying to advocate the use of VPNs,
but have they been migrating their user based to other platforms.
They said, they've come to you a lot more with LTK,
But have they managed to convert their YouTube audience and
(34:33):
not their YouTube audience TikTok audience over to YouTube, over
to Instagram ahead of this.
Speaker 12 (34:39):
Yes, and actually so for LTK, the way they're thinking
about us is like the home base for across all
of their platforms, Like where can they gain ownership of
that community? Because you have to think, what's happening with
TikTok is a revolution. This is a moment in time
where it might go away entirely. But what we've seen
over twenty twenty four is an evolution of every other platform.
(35:00):
You're looking at YouTube shorts, or you're looking at what's
happened across Instagram. It's no longer a place to follow
people or be part of a community. It's an interest
based entertainment platform. So creators across the entire creator economy
have been looking for where they are going to house
and have ownership of their audience. We've seen that, you know,
in Q four, specifically those last three months of the year,
(35:20):
we saw a tremendous uptick in TikTokers applying to LTK
to get their shops launched so that they can have
their home base there. But it's a trend across the
entire creator universe where they know they've got to get
their arms around that community because the most important thing
about their ability to continue their business is their reachable,
(35:41):
engaged audience. And the problem is not just here on
TikTok it's across all platforms today.
Speaker 3 (35:46):
What's interesting is there is a smaller probability that bite
dance does decide to sell. If it does and we
have a change of ownership and a change of the
underlying algorithm, how sticky do you think the one hundred
and seventy million used reso of TikTok, or indeed the
content courage is on that actually are.
Speaker 12 (36:04):
You know, I actually believe it's an algorithm preference. There
are some unique things about TikTok when they first started,
specifically around music. I think those things have become a
little bit more ubiquitous. But I think we learn a
lot by looking to Europe. You know, TikTok does exist
in Europe, except that they have much more restrictive privacy
over there versus what we have here in the United States,
(36:24):
and TikTok has not really been able to grab hold
of the European customer the way it has the United
States customer. If you have a TikTok, that's not I
mean it, excuse me. If you few an algorithm that's
informed by less data, it's just inherently lesser, and so
ultimately this becomes an algorithm choice for our US consumers.
I do expect that you know the patterns that we've
(36:44):
created as individuals of how much time and how frequently
we are picking up our phone. I think I just
read that the average American user picks up their phone
over twenty two hundred times a day. What are they opening?
They're looking for entertainment. I don't think that they're going
to stop that behavior. I do believe that there's going
to be a lift and shift to other platforms, and
creators are hoping that that lift comes directly then over
(37:06):
to them as creators so they can continue their businesses.
Because remember, the platforms are not the ones that pay creators.
Speaker 13 (37:12):
Creators are responsible.
Speaker 12 (37:13):
For building their own business in their own revenue streams,
but except for a YouTube and long format, they are
really not being paid at scale or really any meaningful
way by the platforms directly. So it's very critical that
they own that customer relationship so that they can create
those businesses around their reach.
Speaker 2 (37:31):
I'm a ven's box.
Speaker 3 (37:32):
I let you go back and tap for one of
the twenty two hundred times you're going to be picking
up your phone today. LTK co founder president, It's always
great to have you.
Speaker 2 (37:40):
Thank you. TikTok fighting for its future in the Supreme Court.
Speaker 3 (37:50):
Let's bring back Bloomberg's Tyler Kendall, who is outside that
court and the latest in terms of the arguments, I
understand US Solicitor General Elizabeth Prologar is now testify.
Speaker 4 (38:02):
Yes, she's representing the federal government in this case, who
is arguing that this is an issue of national security.
Before that happened that we just heard the lawyer representing
TikTok creators wrap up his statements to the Supreme Court,
and Jeffrey Fisher made similar arguments to what we heard
from TikTok's lawyer earlier today, that this is an issue
of freedom of speech and potentially curtailing the freedom of
(38:25):
expression of the nearly one hundred and seventy million US
based users who use the app. Now, it does appear
that the Supreme Court justices are signaling they are skeptical
to that argument. I've been struck just how many times
they had brought up the specifics of the text of
the bill that Congress passed, saying that this is not
an outright ban, that the lag could knew that the
app could still continue to operate. Rather, it is a choice,
(38:46):
and that the app has to divest in order to
maintain its platform. You overcall, of course, that this text
was originally introduced by the China Select Committee on a
partisan basis over those national securities cancers. We even heard
Chief Justice John Roberts hit on that saying that Congress
is not concerned about what is on the platform. They
are concerned about what the federal government calls a foreign adversary,
(39:09):
holding who.
Speaker 2 (39:10):
Owns the platform.
Speaker 3 (39:12):
Tyler, what's also some intriguing about all of this is
President elect Trump and where he feels the delay should
come in.
Speaker 4 (39:22):
Right exactly so, a lawyer for Trump actually filed a
Friend of the Court brief last month of requesting that
there be a delay and citing Trump's own negotiation skill,
saying that he could ultimately help reach some sort of
agreement between the parties to get this done and as
well as address those national security concerns. Now, if this
span is put into place, we actually heard this come
(39:43):
up in the questioning whether or not Trump could delay it. Further,
we know that the law was written to include a
ninety day pause if there is a potential deal on
the table, but of course that would have to materialize.
He also could potentially instruct his Department of Justice to
not enforce it, however, that would open him up to
legal scrutiny. And then lastly, you could try to work
with Congress to repeal the law that they put into place,
(40:04):
but that appears highly unlikely considering the bipartisan support that
this bill originally received when it passed back in April.
I'm talking about unlikely allies coming together to push it forward,
such as the Democratic House Leader Hackeing Jeffreys and House
Speaker Mike Johnson working hand in hand on this one.
Speaker 3 (40:21):
Bipartisan ship perhaps has its limits. Tyder Kendall, we thank
you so much. Let's get out more for intricacies around
the legal arguments. Bloom back Sarah Forden for more in DC.
And you're really analyzing how it's all unfolding inside the
court the arguments.
Speaker 2 (40:36):
Anything struck here?
Speaker 14 (40:39):
Well, first, let's go back to the legal framework. Why
this is in front of the Supreme Court. They're basically
being called to decide on a request from Trump to
pause the start of the band January nineteenth. So they're
going to have to decide do they pause the band
and if they do, is it just a temporary pause
so they can figure out what they want to do
(40:59):
on the underling issues of the law, or is it
a permanent band. They're also being asked by TikTok to
ponder the national security versus the First Amendment rights question.
Of course, TikTok is really really bearing down hard on
the fact that this reflects a violation of people's First
(41:20):
Amendment rights. But then you have the Justices coming in
and saying, well, actually, foreign actors don't have First Amendment
rights the way Americans do. So there's a lot of
parsing there. You know, is TikTok considered a foreign actor.
It's technically a US company, but it's owned by a
Chinese company, and so there is so much to unpack
(41:40):
in these arguments.
Speaker 3 (41:42):
That is very briefly, probability of thirty percent that TikTok
wins is what Bloing Bag Intelligence thinks. Have you got
a probability what people have been saying?
Speaker 14 (41:50):
Yeah, I mean, I think that our analyst is really
calling it pretty pretty correctly. And as we're seeing, as
Tyler mentioned, you know, the Justices are expressing a lot
of skepticism about the First Amendment arguments, and they are
also raised in concerns about the national security arguments. It's
true that we don't have as much visibility on what
the government feels as the most concerning about TikTok, but
(42:15):
we've had a lot of examples of propaganda and data security,
privacy and more.
Speaker 2 (42:22):
Sarah Forden the latest from DC.
Speaker 3 (42:24):
We so appreciate it on those legal arguments, But that
does it for this particular edition of Bloomberg Technology.
Speaker 2 (42:29):
Do not forget to check out the podcast. You'll find
it on the
Speaker 3 (42:32):
Terminal as well as online on Apple, Spotify, Aniheart, this
is Bloomberg
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