- 2 weeks ago
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00:00You're also with a former TikTok CEO. You're the COO of ByteDance as well.
00:04And it blows my mind to think that it was August 2020 when you resigned
00:08because you couldn't see a path forward of managing TikTok globally.
00:13Five years later, here we are, Kevin. What do you make of this potential deal?
00:17Well, here we are. Thanks for having me. I really appreciate it.
00:20Look, I think Kurt did a good job of describing the deal.
00:23I think it works operationally.
00:25I think having a company like Oracle, a very trusted company run by Larry Ellison,
00:30who's a trustworthy figure, obviously, being in the center in charge of looking after
00:36and securing that U.S. data, that's crucial.
00:39And I think they're licensing the algorithm from China, so ByteDance will still own the code.
00:45But I do think this license will take another instance of the algorithm, all the code,
00:50put on Oracle servers, and then trained on the U.S. data that Oracle alone has access to.
00:55So I think it's going to end up having a vastly different feed and sort of content algorithm
01:01than you'll see around the world. So I think that that will work.
01:04And I think that ByteDance is now below 20% ownership, 19.9% ownership.
01:09That's a substantial difference from status quo.
01:12And I do think that ByteDance has an operational role, commercializing TikTok,
01:16selling ads, making sure e-commerce works, and all the other commercialization factors.
01:20But really, it will be run by a U.S. board, and it will be a separate U.S. company.
01:26It works.
01:27It works. The proof is in the pudding as to whether the algorithm is as powerful.
01:32How do you see, as someone who's in charge of content development,
01:35wanting to get your content out there in a marketing capacity,
01:38do you have confidence that it will be as good without ByteDance as heavily involved?
01:42Well, I think it probably will be.
01:45There's a lot of intricacies and a lot of AI, that's the word of the day, in that code.
01:51And I think that code base being kept intact is crucial.
01:54I think had they tried to recreate a new algorithm from scratch because of security concerns,
02:00that would have been exceedingly difficult.
02:02That has taken years and years and thousands of engineers in China
02:05to develop this very sophisticated AI recommendation engine.
02:08So the fact that they'll have access to that, it will remain interoperable
02:12with all the other TikTok instances around the world.
02:15I think that matters quite a bit.
02:17And I think just retraining that same code base, that same algorithm,
02:21with U.S. data should provide a very robust solution.
02:23I think it will be seamless.
02:24Really interesting, that interoperability.
02:27Because as someone who can see the power of TikTok,
02:30because you are able to get global content, not just U.S.-focused content,
02:35is that really going to work?
02:36Is that something that you think will still remain a global business,
02:39even though you're having this U.S. part hived off?
02:42It has to.
02:43It has to remain global.
02:44I think a social media platformer, and I would call TikTok more social entertainment,
02:48actually, than social media, that has to be global.
02:51If it were to be siphoned off and cordoned off from the rest of the world
02:56and having a U.S.-only presence, I think that would be a big detriment to U.S. users.
03:00As I understand it, that's not the case.
03:01It is interoperable, and I think from a user perspective,
03:05be seamlessly accessing content from around the world and vice versa.
03:08It's the recommendation that will be U.S.-based only.
03:11I mean, you just think about the entertainment element.
03:14I mean, TikTok had its first red carpet moment yesterday doing awards.
03:18I mean, this really is trying to be a juggernaut of the way you and I consume our content going forward.
03:22Just from the national security perspective, how do you think that has been silenced in terms of criticism?
03:28Because many feel that perhaps ByteDance still has a bit too much involvement,
03:31particularly if it gets some profits as well.
03:34Well, I think ByteDance deriving profits, they do that.
03:38I mean, they built this entire ecosystem, this entire code base, the technology, the app.
03:43They paid a lot of money in marketing to get that app downloaded on hundreds of millions,
03:48billions, frankly, of devices around the world.
03:50They've earned that right to have a participation in profits.
03:53And I think it's structured in such a way that's very fair.
03:56And I do think that from a national security perspective, again, having that data walled off,
04:01making sure that our potential adversaries outside of the U.S. cannot access the algorithm again,
04:07how that algorithm recommends content, content moderation policies,
04:11and the actual data underneath it that drives the training of that algorithm,
04:15the fact that that is controlled by Oracle.
04:17Well, it is like Project Texas, but I think Project Texas would have worked as well.
04:21So I think this is going to solve the whatever legitimate national security concerns there were now solved.
04:28The consumer has kind of cared less and less since the first ruling,
04:33since that first under the Biden administration desire to block U.S.
04:37well, to block TikTok or at least separating them from ByteDance.
04:41Initially, people were really worried about the national security element.
04:44And now it seems that has faded.
04:45Do you think consumers are going to be interested in what they're now presented in terms of the algorithm?
04:51It's so interesting.
04:52I now get a stem element in TikTok.
04:54They've already tried to confront that feeling that we're being dumbed down
04:58versus perhaps what they're being served by the competition in China.
05:01Yeah, look, I think it's all just pretty good news.
05:06I think that Americans will be well served by having another voice, another platform.
05:11I think Americans speaking to Americans on this platform
05:14and Americans speaking to the world and the world back to us is healthy.
05:17It's a healthy dialogue to have.
05:19I think that if it's done in a way that is protecting our interests, that's protecting our security,
05:24I think that's very good news for consumers here.
05:27And I think they'll be well served.
05:28So I think it's correct that consumers should have now put this in the back of their mind a little bit.
05:33This seems like a permanent solution.
05:35The only element of doubt here and risk is that China hasn't come out
05:39and explicitly the Chinese government hasn't blessed the deal yet.
05:42I'd be a little concerned about that.
05:44You know, back five years ago, we almost had a deal with Oracle, you may recall,
05:48and the Chinese government put an end to it.
05:50It looks like, by all accounts, in the Chinese media,
05:54the right words are being said today and then in the last few days about the deal.
05:58Looks good.
05:59Looks like China will approve it.
06:01Last little fly in the ointment.
06:02But again, wouldn't be too concerned about it.
06:04Looks like it's going to happen.
06:06You're at the very cutting edge of where media is moving to.
06:10You're sort of the lead architect behind Disney Plus and how it was unveiled.
06:15You're now thinking about new areas of brands and you're helping Coco Melon get everywhere
06:19and a cameo for kids, for example.
06:22What is TikTok in terms of its competition?
06:26Because we're also considering a totally different media landscape.
06:28We're thinking about whether a Netflix owning a Warner Brothers would be the real competition.
06:34Is YouTube is the real competition TikTok?
06:36How do you see this evolution right now?
06:39Well, there's a lot going on in the media business now.
06:41It looks a lot different than it did even five years ago.
06:44There's young people and even, you know, people my age and across the demographic spectrum.
06:51People are watching more short-form entertainment.
06:53That's something that TikTok actually, well, in the beginning, YouTube, you know, pioneered short-form entertainment.
06:59It became a full-screen vertical with vertical phones when TikTok came along.
07:05And now YouTube is doing that with shorts.
07:07I think there is a sea change in how people consume content, where the influence comes from.
07:13I mean, if you look at today the landscape and what's more central to the culture, is it Hollywood, is it TikTok, is it YouTube?
07:19The answer is it's a mix of all of the above.
07:22And as usage patterns continue to evolve, I think there's going to be some challenges for Hollywood to catch up.
07:27My company, Candle Media, we own a company called Moonbug.
07:31And you mentioned Coco Melon.
07:33Coco Melon is centered on IP derived from YouTube.
07:37It's on the YouTube ecosystem.
07:38We're on shorts.
07:39We're on the traditional YouTube, you know, video.
07:42And we have over 200 million subscribers to that one English language channel.
07:47And we've been the biggest show on Netflix.
07:48So I think there is taking advantage of all the different platforms that people interact with, you know, streaming, page streaming services, advertising, supported streaming services, theatrical windows.
07:58We're having a Coco Melon movie come out in 2027.
08:01And YouTube and TikTok at the center of that IP generation machine.
08:05That's the future of media and media companies that are really at the cutting edge are really looking YouTube, TikTok, short form video alongside the long form traditional storytelling that has been their bread and butter for decades.
08:18Do you have any anxiety for Hollywood, for IP, for content creation?
08:22If, indeed, Netflix does take ownership of Warner Brothers Discovery, if Paramount does, for that example, and, indeed, what it means for your old alma mater, which is Disney?
08:33Well, Disney's in a great position.
08:34Disney has the IP, the franchises.
08:36They have the brands that matter.
08:38Disney, Star Wars, Marvel, Pixar.
08:41Disney's in a pretty unassailable position.
08:43Put them aside for a second.
08:44What Hollywood needs is a healthy ecosystem.
08:48They need studios that have enough revenue to cover their costs, that are profitable, and that are in a position to compete against these behemoths like TikTok, like YouTube and Google.
09:00So a combination there between Warner Brothers and one of Netflix or Paramount is crucial, I think, to maintain the health and the profitability of that ecosystem.
09:08It's better to have fewer competitors that are more financially viable and can buy more product and support a high production value than having more buyers and one more buyer being Warner Brothers independently in a weaker financial position.
09:23So I think that a combination is good.
09:26And even though Netflix won the first round, don't count it out.
09:29The Ellisons, they're incredibly smart and aggressive.
09:32Don't count out Jerry Cardinal or Redbird.
09:35These guys are very serious.
09:37I think they're going to come back with a higher bid.
09:39And when they approach, and remember, shareholders still haven't spoken yet.
09:42I think the likelihood of here is that Warner Brothers ends up with Paramount.
09:46And I think it's ultimately, it's going to cost some jobs, obviously, in Hollywood.
09:49There's no getting around that, but ultimately good for creators.
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