LT Weekly: Jan 17, 2025

Just a reminder that our 7th Annual TMT Themes survey is still live. We are gathering insights on areas such as the M&A & regulatory environment, the AI CapEx trajectory, the ARPU impact from a super-premium music subscription tier, the TikTok ban, autonomous vehicle penetration, Take-Two’s GTA launch, ESPN’s flagship DTC adoption, and more!

Overall there are ~20 quick questions and should take ~5-8min to complete. Also, as a reminder, our rule is that we send the survey results ONLY to those who participate!

**CLICK HERE** to participate.

-> Last year’s survey respondents underestimated the growth of the global ad market in 2024. 54% of respondents said that the broader ad market would grow in-line with Dentsu and GroupM’s projected +4.6-7.2% range, though both companies now predict 2024 will close showing a +6.8-9.5% y/y increase.  Will respondents correctly predict ad market trends for 2025? For reference, HERE are last year’s survey results

A US ban on TikTok moved one step closer on Friday, as the Supreme Court upheld a law that requires TikTok to find a new, non-Chinese owner or face a ban that is scheduled to go into effect this Sunday. While acknowledging TikTok’s role as a platform for expression and community for 170mn Americans, the Court sided with Congress, which deemed divestiture necessary to address national security concerns.

The law, set to take effect before President-elect Donald Trump’s inauguration on Monday, will remove TikTok from app stores and render it unusable over time unless sold to a non-Chinese entity. ByteDance has yet to signal willingness to sell, leaving TikTok’s future in the US uncertain. Enforcement of a ban will fall to the incoming administration, as questions remain about the feasibility of banning a major social media platform.

See below for the updates…

Supreme Court Rules In Favor Of The Law Requiring TikTok To Be Sold Or Banned

• The Supreme Court acknowledged that for 170mn Americans, TikTok offers “a distinctive and expansive outlet for expression, means of engagement, and source of community”

• BUT Congress was focused on national security concerns and that, the court said, was a deciding factor in how it weighed the case
  • “Congress has determined that divestiture is necessary to address its well-supported national security concerns regarding TikTok’s data collection practices and relationship with a foreign adversary,” the court wrote

What Comes Next? It Remains To Be Seen… 

• Under the law, TikTok would be made unavailable for download from the Apple and Google app stores in the US and network providers would have to block access to the website… (link)
  • The requirements would eventually make the app “unworkable” over time without support and updates, according to the Justice Department

• …but TikTok reportedly plans on taking it a step further and will completely shut off the app for US users as soon as the ban is in effect (link)

• There’s no precedent for the US government blocking a major social media platform, so there are several questions about how the ban would work in practice and how exactly the govt would enforce it

The Biden Administration Will Leave Enforcement Of The TikTok Ban Up To Trump

• Where does Biden stand on the issue? “TikTok should remain available to Americans, but simply under American ownership or other ownership that addresses the national security concerns identified by Congress,” according to a statement issued by White House Press Secretary Karine Jean-Pierre

• “Given the sheer fact of timing, this Administration recognizes that actions to implement the law simply must fall to the next Administration, which takes office on Monday,” White House Press Secretary Karine Jean-Pierre further said

• The ban will take effect just one day before President-elect Trump is set to be inaugurated as US President, i.e., January 19th

President-Elect Trump Weighs In – “I’ll Be Making The Decision”

• “The Supreme Court decision was expected, and everyone must respect it. My decision on TikTok will be made in the not too distant future, but I must have time to review the situation. Stay tuned!” Trump said in a TruthSocial post (link)

• When asked if he would take measures to try and reverse the pending ban, Trump said he’ll “be making the decision…Congress has given me the decision, so I’ll be making the decision”

• The Supreme Court did note in their decision that Trump once wanted to ban TikTok
  • “President Trump determined that TikTok raised particular concerns, noting that the platform ‘automatically captures vast swaths of information from its users’ and is susceptible to being used to further the interests of the Chinese government,” the court wrote

• Trump also confirmed he had a conversation with Chinese President Xi Jinping, saying they had “a great talk about TikTok and a great talk about many other subjects”

• On Thursday (Jan 16^th), Trump’s incoming national security advisor Mike Waltz had said, “we will put measures in place to keep TikTok from going dark”

TikTok CEO Thanks Trump In Video After Ruling (link)

• In a video posted to TikTok just hours after the Court decision and shortly after the Biden administration said it would leave enforcement of the TikTok ban to the Trump administration, TikTok CEO Shou Chew praised Trump’s support

• “I want to thank President Trump for his commitment to work with us to find a solution that keeps TikTok available in the United States,” he said. “This is a strong stand for the First Amendment and against arbitrary censorship

• TikTok CEO Shou Chew reportedly plans to attend President-elect Trump’s inauguration and has been invited to sit in a position of honor on the dais, where former presidents, family members and other important guests traditionally are seated (link)
  • Chew will join Mark Zuckerberg, Jeff Bezos and Elon Musk on the dais, along with other tech executives at the event, according to people with knowledge of the planning

Selling TikTok Is Still An Option, Though ByteDance Has Not Said That It Is Willing To Sell

• The law gives the president the option to extend the ban by 90 days…
  • …but triggering the extension requires evidence that parties working on purchasing have made significant progress, including binding legal agreements for such a deal, and TikTok’s parent company, ByteDance, has NOT publicly updated its stance that the app is not for sale

• “Everyone – the Biden Administration, the incoming Trump Administration, even the Supreme Court – should continue working to find a way to find an American buyer for TikTok, so we can both free the app from any influence and control from the Chinese Communist Party and keep TikTok going, which will preserve the jobs of millions of creators,” Democratic Sen. Chuck Schumer of New York said on the Senate floor prior to the Supreme Court decision

• “It’s all about the money. If the price is right, the Chinese will sell it,” said Democratic Sen. Richard Blumenthal of Connecticut

• “If ByteDance cares about its users, the company will come to the table and help us make the deal of the century,” Republican Rep. John Moolenaar of Michigan and chair of the China Select Committee, said in a statement

• “I think somebody would buy it if China would sell it. That’s the problem. They’re preventing its sale. So, but I predict somebody will buy it…It’s entirely up to Beijing. I mean, there are willing buyers,” said Republican Sen. Josh Hawley of Missouri
  • Hawley said he doesn’t care who buys the app, “just not somebody subject to the Chinese government”

• Democrats had tried on Jan 15th to pass legislation that would have extended the deadline, but Republican Sen. Tom Cotton of Arkansas blocked it (link): Cotton, Chair of the Senate Intelligence Committee, said that TikTok has had ample time to find a buyer
  • “TikTok is a Chinese Communist spy app that addicts our kids, harvests their data, targets them with harmful and manipulative content, and spreads communist propaganda,” Cotton said

In The Meantime, TikTok Users Have Been Flocking To Another Chinese App, RedNote (link)

• What is Rednote? The Chinese-owned app Xiaohongshu, or “RedNote” was founded in 2013 and is a lifestyle platform “where over 300mn users every month share their life experiences,” according to a description on Apple’s app store
  • The photo and video-sharing platform has often been compared to Instagram: It operates as a platform for e-commerce, a manual for tips on travel and fine dining, as well as a vehicle for users to share content from their everyday lives
  • RedNote maintains only one version of its app, rather than splitting it into overseas and domestic apps, which is rare among Chinese social apps that are subject to domestic moderation rules

• In two days, 700,000+ new users joined Xiaohongshu, a person close to the company told Reuters

• US downloads of RedNote were up 200%+ y/y this week, and up +194% from the week prior, according to estimates from app data research firm Sensor Tower

• In a live chat dubbed “TikTok Refugees” on RedNote on January 13th, more than 50,000 American and Chinese users joined the room

• In a collateral benefit, subscriptions to Duolingo’s Mandarin Chinese courses have increased by 216% over this same period in 2024 (link)

• Lemon8, another social media app owned by ByteDance, also saw a surge: It was the second most-popular free app on Apple’s App Store list on January 14^th; It also experienced a similar surge last month, with downloads jumping by 190% in December to about 3.4mn

As the race to develop advanced AI chips has been heating up around the world, governments have started to become more cognizant of the technology’s potential to not only rapidly produce content and drive scientific breakthroughs, but also transform economies and how militaries conduct warfare. Consequently, protecting and limiting the distribution of high-end AI chips has increasingly been viewed as a “critical” matter of national security. To this end, President Joe Biden’s administration proposed new rules earlier this week “designed to safeguard the most advanced AI technology and ensure that it stays out of the hands of [the US’] foreign adversaries” while “enabling the broad diffusion and [the] sharing of benefits with partner countries,” per Commerce Secretary Gina Raimondo. The framework builds on the Biden administration’s prior efforts to restrict exports to the country’s geopolitical rivals, including China and Russia, by closing loopholes that were used to skirt some of these controls. Furthermore, the new regulations apply to a much broader range of countries, though there are provisions in place to enable countries that align with the new agreements to raise the number of advanced GPUs that they can import.

Unsurprisingly, the response to the new rules from the US semiconductor industry was negative, as they risk “causing unintended and lasting damage to America’s economy and global competitiveness in semiconductors and AI by ceding strategic markets to [its] competitors,” according to Semiconductor Industry Association chief John Neuffer. A spokesperson from NVIDIA also deemed the proposal to be a “sweeping overreach” and argued that they would do nothing to improve US national security. Ultimately, it will be up to the incoming Trump administration to enforce the new regulations once they become effective 120 days from the announcement.

See below for more details.

• The Biden administration proposed new restrictions to limit other countries’ access to AI chips (link/link): The Interim Final Rule on Artificial Intelligence Diffusion aims to enhance US national security and economic strength by “thwarting smuggling, closing other loopholes, and raising AI security standards”
  • 120 countries will be affected by the new export restrictions: Although the rules are mostly intended to be targeted at China, other countries that could have limited access include Mexico, Portugal, and Switzerland, among others
  • The rule contains six key mechanisms to “catalyze the responsible diffusion of US tech” –
    • No restrictions apply to chip sales to the US’ 18 key allies and partners: This allows countries w/ “robust tech protection regimes” and tech ecosystems aligned w/ US national security interests to “benefit from seamless large-scale purchases”
    • Chip orders w/ collective computation power up to ~1,700 advanced GPUS do not require a license: These don’t count against national chip caps, given that the “overwhelming majority” of these are for “clearly innocuous purposes,” such as research
    • Entities that meet high security and trust standards are HQ’d in close allies and partners can obtain highly trusted Universal Verified End User (UVEU) status: This means they can place up to 7% of their global AI computational capacity in countries around the world
    • Entities that meet the same security requirements and are HQ’d in areas that aren’t in a country of concern can apply for “National Verified End User status”: This permits them to purchase computational power up to 320,000 advanced GPUs
    • Non-VEU entities located outside of close allies can still purchase large amounts of computational power: Specifically, up to the equivalent of 50,000 advanced GPUs per country
    • Governments that sign these arrangements can double their chip caps (up to 100,000 of today’s advanced GPUs)
  • Actions against “countries of concern” include –
    • Continuing to ensure that advanced semiconductors sold abroad are not used by countries of concern to train advanced AI systems
    • Restricting the transfer to non-trusted actors of the model weights for advanced closed-weight models
    • Setting security standards to protect the weights of advanced closed-weight AI models
  • Enforcement will depend on the incoming Trump administration: As the new regulations are set to take effect 120 days after their publication on Jan 13

-> On a separate but related note, President Joe Biden also signed an executive order this week to provide federal support to address the massive energy needs required by rapidly growing AI data centers; To address the substantial power needs on a short timeframe, the order calls for federal sites owned by the Defense and Energy depts to be leased out to host gigawatt-scale AI data centers and new clean power facilities; The order also requires Cos using federal land for AI data centers to purchase an “appropriate share” of US-made semiconductors (link)

Source

However, The New Rules Provoked Industry Backlash (link/link)

• The rules are a “sweeping overreach” per NVIDIA: The Co argued that the White House would be clamping down on “tech that is already available in mainstream gaming PCs and consumer hardware”
  • “These rules would do nothing to enhance US security”: A NVIDIA spokesperson also claimed that the proposal would hurt innovation

-> NVIDIA shares fell -2.0% in reaction to the announcement but recovered to finish the week up +1.3%

• The Semiconductor Industry Association (SIA) expressed disappointment that the policy was “rushed out the door”: “The new rule risks causing unintended and lasting damage to America’s economy and global competitiveness in semiconductors and AI by ceding strategic mkts to our competitors,” per SIA President and CEO John Neuffer
• The new rule could fragment global supply chains and put US Cos at a disadvantage, per the Information Technology Industry Council

Hot off the heels of last week’s announcements regarding the merger between Disney’s Hulu+ Live TV and Fubo as well as Disney, Fox, and Warner Bros Discovery’s decision not to move forward with their Venu sports streaming joint venture, DirecTV revealed that it is launching MySports, a streaming multichannel video service that will offer consumers a sports skinny bundle that will include all the same channels as Venu, plus more. That said, the added content will also come with a heftier price tag, as MySports will normally cost $69.99/month compared to the $42.99/month proposed price for Venu, and the new service will only be available in 24 markets initially before distribution is expanded moving forward. Elsewhere across the sports streaming space this week, it was announced that Tubi will host Super Bowl LIX free of charge to subscribers to the service, while DAZN is reportedly nearing a $1bn investment from Saudi Arabia’s Public Investment Fund.

There were also some interesting developments pertaining to changes in ownership within the sports world. Along with sources indicating that Maverick Carter, a longtime business partner of Lebron James, is leading a group of investors seeking to raise $5bn to create an international rival to the NBA, news also emerged that Comcast is taking a minority stake in the 76ers as part a JV with Harris Blitzer Sports & Entertainment to build a new arena for the team and that Google CEO Sundar Pichai joined a consortium of tech executives to bid for a stake in a London-based Cricket team.

See below for more details.

• DirecTV is launching MySports, a streaming multichannel video svs (link): The svs will feature the same channels as Venu, plus others
  • The package will include 40+ channels: Including ABC, NBC and Fox, as well as cable channels like ESPN, TNT, TBS, USA Network, and Fox Sports 1; NFL Network, NBA TV, and MLB Network will also be included as well
    • The svs will not include any channels owned by Paramount: Such as CBS, among others; Otherwise, DirecTV has carriage agreements w/ Fox, Disney, WBD, and NBCUniversal, along with the major sports leagues
  • MySports will be more expensive than that expected for Venu: MySports will cost $70/mo, which a good bit pricier than the $43/mo that Venu was targeting
    • A limited time offer provides a $20 discount on the first three months: The offer also comes with a 5-day free trial period but ends on Feb 28, 2025
  • MySports will only be available in a select 24 mkts: Though more mkts are “coming soon”; See the graphic below for the full list

The svs is the “first of several genre-based options” that DirecTV plans to launch over the coming months: Per DirecTV CEO Bill Morrow

Source

-> DirecTV’s head of communications and community, Jon Greer, also revealed that RSNs will be available as add-ons to MySports subscriptions later in 2025, appealing to the “next tier” of sports fans; Greer indicated that while MySports only includes ABC, Fox and NBC affiliates, those station groups could bring themselves into MySports in the future; Greer noted that 5 of MySports initial 25 mkts have all three of those local broadcast stations and that DirecTV will “look and ask if [it has] enough mkt size… for locals to actually activate the whole mkt” (link)

• Super Bowl LIX will stream on Tubi free of charge, per Fox (link): Tubi subscribers will be able to stream the game in 4K from the svs’ app on their phones or smart TVs on Feb 9, 2025
  • This marks the first time that the Super Bowl will be available on Tubi: As well as the streaming svs largest live sporting event yet
  • The game will also continue to air on other distribution networks: Including Fox, Fox Deportes, Telemundo, Fox’s website, and the NFL+ app

• DAZN is nearing a $1bn investment from Saudi Araiba’s Public Investment Fund (PIF), per Bloomberg (link): The investment would provide PIF w/ a minority stake in DAZN and value the Co at ~$10bn
  • The investment would strengthen ties between Saudi Arabia and DAZN…: DAZN already broadcasts a wide range of sports from Saudi Arabia, including the Saudi Pro League (soccer), Saudi-funded boxing bouts, and the Six Kings Slam tennis exhibition event
    • … And allow the country to further its ambitions in sports: Saudi Pro Leagues have invested heavily in playing talent; PIF and the SURJ sports investment venture have also backed LIV Golf, acquired Premier League club Newcastle United, and supported the WTA tennis tour
  • The deal would provide DAZN more resources to expand its global footprint: the Co owns the domestic rights to top-tier soccer competitions in France, Germany, Italy, and Spain; DAZN is also the global distributor of the Uefa Women’s Champions League, several boxing promotions, and the NFL’s intl Game Pass

There Were Also Some Noteworthy Updates Pertaining To Sports Ownership

• A group of investors led by Maverick Carter is reportedly seeking to raise $5bn to create an international basketball league (link): The group is looking to raise the funds from private capital sources to form the league, which would rival the NBA; Carter has been a longtime biz partner of NBA star Lebron James
  • Investment banks have already been tapped to raise the money: Sources indicate the funds could come from wealthy individuals and institutional investors, such as sovereign wealth funds
    • There are already some high-profile backers, per sources: These include Skype co-founder Geoff Prentice, former Facebook exec Grady Burnett, and the investment firm SC Holdings, which is led by co-founders Jason Stein and Daniel Haimovic
  • Details on the format of the league: It is envisioned to include 6 men’s teams and 6 women’s teams, w/ games occurring in eight cities around the world w/ two weeks in each city, a similar model to that of F1 races; Singapore has already been designated as one mkt

• Comcast bought a minority stake in the Philadelphia 76ers (link): The deal came as part of an agreement between Comcast and Harris Blitzer Sports & Entertainment (HBSE) to enter into a 50-50 joint venture to build a new arena that will be shared by the 76ers and the NHL’s Flyers in the South Philadelphia Sports Complex
  • The new arena is set to open in 2031: Comcast will have the naming rights to the building
  • There has been some disputes between HBSE and Comcast over the venue’s location: As Comcast, which owns the 76ers’ current venue, the Wells Fargo Center, wanted the team to stay, while HBSE and the team wanted to build a new $1.3bn arena
    • The 76ers will remain in Philadelphia’s sports stadium district, per the agreement
  • Comcast and HBSE will also work together to bring a WNBA team to Philadelphia

• Google CEO Sundar Pichai is reportedly joining a consortium of tech execs in bidding for a London cricket team (link): The group is submitting a bid of £80mn+ ($97mn+) for either the Oval Invincibles or London Spirit, per sources; The teams play in The Hundred, a short-form tournament in England and Wales
  • Members of the consortium: The group is being led by Palo Alto Networks CEO Nikesh Arora and vice chairman of the Times Internet Satyan Gajwani; Other members include Microsoft CEO Satya Nadella, Adobe CEO Shantanu Narayen, and co-CEO of Silver Lake Egon Durban
  • The England and Wales Cricket Board (ECB) is hoping to raise £300mn+ from the sales: The ECB opened a process last Sept to secure private investment into The Hundred’s eight teams; The franchises have been asked to rank two preferred bidders for the auction’s final round
    • The ECB is looking to sell the 49% stake it owns in each of the 8 teams: Though the two London-based franchises have drawn the most interest

Following a few upgraded ad forecast estimates towards the later part of last year (which we detailed in our December 6 and December 13 editions), IAB published their 2025 Outlook on US Ad Spend with a few datapoints/ estimates that we wanted to flag.

See below and if you want to check out the full IAB deck…Click Here

• Ad spend will continue to grow in 2025 (+7.3% y/y) but will be slower than 2024’s cyclical event-driven surge (+11.8%): Not a surprise but growth will be led by double-digit growth in CTV, social media, and retail media (CTV, social, search, and display projected to make up nearly 70% of ad spend in 2025)
  • All digital channels will post growth this year
  • Linear TV will dip sharply y/y due to the absence of cyclical events

• More specifically, retail media is projected to be the fastest-growing channel in 2025, growing 2x the rate of ad spend overall, but its growth rate is expected to drop the most y/y (down 10% pts)…
  • Retail media is projected to grow 15.6% in 2025 but that is a decel from +25.1% in 2024
  • “This indicates that while buyers still value benefits like proximity to commerce, closed-loop measurement, and integration with broader retailer buys, challenges such as ecosystem fragmentation, lack of standardization, and rising costs are likely prompting pullback”

• A large portion of media buyers (80%) are using or exploring Gen AI tools for media planning and activation.
  • “Agencies are more likely than brands to be using or exploring gen AI technology (83% vs. 71%) to streamline workflows, enhance processes, and improve client asset and deliverable production, among other applications”

• Within the video streaming ecosystem, buyers are most bullish regarding its evolution and growth while concerns with cross-platform measurement persist

• The Paramount-Skydance merger should be reviewed by the CFIUS, per the chair of the House China Select Committee (link): John Molenaar, chairman of the House China Select Committee, called for the Treasury Dept’s Committee on Foreign Investment in the US (CFIUS) to review the merger due to Tencent’s stake in Skydance
  • Molenaar wants to “ensure the Chinese Communist Party is not further solidifying its hold on the American entertainment industry”: He outlined some of the below points as key reasons for his concerns –
    • Preventing “rampant self-censorship” among Hollywood Cos: Molenaar cited testimonies from several Hollywood execs that revealed that studios have edited content, including CBS’ interview of Kamala Harris, to “curry favor w/ the Chinese Communist Party
    • Tencent was also recently added to a US military blacklist: Earlier in Jan, the Dept of Defense designated Tencent as a Chinese military Co
  • The proposal has bipartisan support: Senator Mark Warner, a Virginia Democrat, joined Molenaar, who is a Republican House rep from Michigan, in raising “serious concerns” about the deal and indicating that it “should absolutely prompt CFIUS scrutiny”
  • Tencent would have less than a 5% stake in a combined Paramount-Skydance: Tencent would be a passive, non-voting investor in the merged Co, per sources
  • Other parties are also pushing for more scrutiny –
    • The FCC won’t rule out a national security review: “We’re going to look at all the issues that have been raised… at this point, sort of nothing is off the table,” per Brandon Carr, who has been nominated to be FCC chairman by president-elect Donald Trump
    • The Center for American Rights: This watchdog media group previously filed an FCC complaint about the editing of the Harris CBS interview
    • Investor Mario Gabelli is separately asking a Delaware court to force Paramount and Skydance to share more details about the merger

-> Paramount Global shares were down -2.2% following the news and closed the week down -2.0%

• IAC announces plan to spin off home improvement firm Angi and reorganize leadership (link)
  • The spin-off transaction will give IAC shareholders direct ownership of Angi, resulting in IAC and Angi becoming wholly separate entities: IAC expects that the spin-off will be in the form of one share/one vote common stock of Angi, eliminating Angi’s dual-class structure
    • How does IAC benefit? Allows IAC mgmt to focus on its broader portfolio and new growth oppties; A simplified IAC is also expected to benefit from an enhanced ability to use its stock to make acquisitions and incentivize employees
    • How does Angi benefit? Will have “a more attractive equity currency to accelerate growth…undiluted focus on its specific operating and strategic priorities, and streamlined decision-making”
    • Timeline: The transaction is expected to close in H1:25 but no sooner than March 31, 2025.
  • IAC CEO Joey Levin will transition to an advisory role and IAC will continue to operate w/o a CEO
    • Joey Levin will leave his role as IAC CEO and become an advisor to the Co, with the transition expected to occur upon the completion of the spin-off
    • Angi concurrently announced its appointment of Levin as Executive Chairman of Angi: He will serve as Angi’s senior executive in partnership with Angi CEO Jeff Kip, who will continue to report to Levin and the Angi Board of Directors
    • Following Levin’s transition, IAC does not intend to appoint a new CEO: IAC’s CFO, COO, and CLO will report directly to Barry Diller, Senior Executive and Chairman of IAC

-> IAC shares were up +0.7% on the announcement and ended the week up +2.6% 

• OpenAI bring Tasks to ChatGPT in beta (link/link)
  • “Tasks is a new way to ask ChatGPT to do things for you at a future time”: “Whether it’s one-time reminders or recurring actions, tell ChatGPT what you need and when–from a weekly news briefing to daily weather updates–you can schedule it ahead of time and ChatGPT will follow up”
  • Availability: Tasks in beta will roll out globally across all versions of ChatGPT and on all platforms, with the tasks manager only available on the web version
  • Some sample prompts to get users started with Tasks:
    • Remind me that my passport will expire in 6 months from today.
    • Give me a daily weather report for my area every morning at 7am.
    • Every Friday, give me a list of things I can do over the weekend based on my location and the forecasted weather.
    • Start my day with daily affirmations at 7am.
    • My kids love knock-knock jokes. Send me one to tell them before bed every night at 6pm.