Paul Stenhouse: Details on the US/China TikTok deal, ad-free subscriptions for Meta services

We're learning more about how the TikTok deal will look and just how much money will flow back to China

This isn't going to be just an ownership play, which largely explains why US Vice President JD Vance said the price tag for the sale would be about $14 billion – far below the $35-$40 billion estimate analysts had expected.

They will have an ownership stake, but that's in addition to licensing fees and profit sharing. 

This group of investors is said to include names like Rupert Murdoch and Michell Dell, as well as Oracle who currently host TikTok's US data. Between the two, it's estimated about half the profits of TikTok US will go back to ByteDance. 

Critics will say the law doesn't allow for "cooperation", while those in favour will focus on the "operation of" part of the language. 

 

Will other nations opt to take the US version?  

In Australia this is the question on the table. Liberal senator James Paterson is suggesting that if the deal went ahead, then Australia should move to the US version of the app.

 

Ad-free Facebook and Instagram is coming to the UK  

Paid versions of Facebook and Instagram in the UK will remove advertising from both platforms. Users will be given the choice to pay £3-£4 a month to access ad-free versions of either service.

The UK's privacy watchdog, the Information Commissioner's Office, "welcomed" the new model, saying it moves Meta away from targeting users with ads as part of the standard terms and conditions.

Based on that price point, it means we're each worth about $65 USD a year to Meta – around $110 NZD a year.

 

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Episode Transcript

Speaker 1 (00:07):
You're listening to the Saturday Morning with Jack Tame podcast
from News Talks a'd be.

Speaker 2 (00:12):
Than Our Textbook. Paul sten Houses here and Paul, we
are learning more about how the tick top deal is
going to look and just how much money is going
to be going back to China once the US government
signs this thing off.

Speaker 3 (00:23):
Yeah, they are doing too bad, to be honest, Jack.
The estimates are that about fifty percent of the profits
of this new entity will be making their way back
to China through various different means, which I guess isn't
I mean, it's not great if you have a Byte Danced,
But at the same time, if your other option was

(00:44):
well not being able to operate in the United States,
then I guess that's not terrible. Yeah. I think it's
going to be like, you know, into the single digit
billions every year going back to Byte Dance. But it's
interesting that this isn't just an ownership play in US
Vice President Jady Vance put a price tag on the
sale this week. He said it fourteen billion dollars, which

(01:05):
was really low compared to the thirty five to forty
billion dollars at the end that the analysts were expecting.
And the reason for that is this kind of bizarre
setup that I've got because not only will they be owners,
and they'll be less than twenty percent owners, so it
works within the law, but they're also going to be
getting a licensing fee for their algorithm, so they'll get

(01:25):
that just cash in hand effectively. And then they're also
going to be getting profit sharing, right, so a unique arrangement,
but they're kind of getting value, I guess, in three ways,
which isn't too bad. And on the US side of
this deal, some names you've probably heard of, first of all,
Oracle with Larry Allison's his company Oracle is currently already

(01:48):
hosting US the TikTok Us data that are going to
take on the algorithm, as well a couple of other names,
Rupert Murdoch of Fox News and News Corp. Fame and
Michael Dell of Dell Computers. So they're just a couple.
There's a big VC names and things in there as well,
but it's really kind of all of the all of

(02:09):
the big names wanting to get in on the US
TikTok deal.

Speaker 2 (02:14):
Yeah right, no, Steenhouse just yet though, I take it.

Speaker 3 (02:18):
No, you know, they didn't almost a look at.

Speaker 2 (02:20):
The almost So do you reckon that other countries are
going to take the US version of it then or
will they take the current version, the Chinese version?

Speaker 3 (02:29):
Well, at the moment, there's only one version that they
can take, and it's the the version that China will
be giving the rest of the world as well. But
it's certainly a question that has been posed in Australia,
where one of the Senate is there suggested that if
the deal went ahead and there is a US version,
Australia probably should be on the US version, right because

(02:52):
if the US is wanting to do this, well, if
the US is trying to do this for national security
reasons and you're an ally friend partner of the United States,
you probably want to go to the other one. But
who's to say they'll let the How would that even work?
It all starts getting into some kind of bizarre gray
areas there.

Speaker 2 (03:11):
Yeah, right, Hey, ad free Facebook and Instagram is being
introduced in the UK.

Speaker 3 (03:17):
Yeah, I kind of would like that. I get a
lot of ads on my Instagram. I don't know about you,
but I feel like sometimes they double and triple them
up on me.

Speaker 2 (03:26):
But would you pay for it? Paul? Would you pay well.

Speaker 3 (03:28):
Look, hey Si, here's the thing, right, The saying always
is is that if you're not paying for it, you
are the product. And interestingly you've now got a price.
So depending on the platform, it's going to be either
three pounds or four pounds a month to get an
ad free version of Facebook or Instagram. The UK has
really been pushing to make sure that if you don't

(03:51):
want to be the product, there's a way out of it,
and that you still get access to these products because
the bit of a utility these days, things like Facebook
and Instagram, right, so if you don't like the terms
and conditions, they're really trying to give you another pathway.
But here's the number, Jack. It works out to be
that you are worth to Meta based on those UK numbers,
sixty five US dollars a year. That's about one hundred

(04:13):
and ten New Zealand dollars a year. That's what you're
worth to them.

Speaker 2 (04:18):
Feel good or bad? Why that figures? I mean, it
is amazing. Just that's you, that's your data, as you say,
but yeah, that's probably about what I would have anticipated.
The trick is, of course, when you've got a bid
in the news as worldwide, how you're able to massively
massively ramp up that revenue and profits. Thanks so much, Paul,

(04:40):
That's our textbook. Paul Steinhouse.

Speaker 1 (04:42):
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