Digital Business Deal TikTok #4

Taken from DealBook's article August 24, 2020 TikTok is taking the U.S. to court

The Chinese-owned video app plans to sue the Trump administration as soon as today over its order to force a sale. It faces long odds, pressure from rivals and unrest within its ranks.

TikTok is still in talks with potential bidders, including Microsoft and Oracle. There were discussions with other would-be suitors, but some appear to have dropped out: Bloomberg reports that Alphabet, the parent of Google, quit talks to join a group bid for TikTok.

It is fending off Facebook on multiple fronts. The Silicon Valley giant has rolled out new products that clone many of TikTok’s main features. And last fall, Mark Zuckerberg reportedly told U.S. lawmakers behind closed doors that Chinese internet companies like TikTok were threatening their American counterparts, according to The Wall Street Journal. It is trying to reassure its American employees. In virtual town halls, employees are asking whether they’ll still be paid if the service is forced to shut down, according to Bloomberg. And internally, Sept. 15 — when one of the Trump executive orders is set to take effect — is reportedly referred to as “D-Day.” Deal Professor: What TikTok wants Steven Davidoff Solomon, a.k.a. the Deal Professor, is a professor at the U.C. Berkeley School of Law and the faculty co-director at the Berkeley Center for Law, Business and the Economy. Here, he considers the prospects for TikTok’s legal challenge against the White House. TikTok’s lawsuit is a delaying tactic, at best. President Trump has issued two executive orders targeting ByteDance, TikTok’s Beijing-based parent company. The first, issued on Aug. 6, cites powers under the International Emergency Economic Powers Act and the National Emergencies Act to bar any U.S. person from transacting with TikTok, starting 45 days after the announcement. The second, issued on Aug. 14, ordered ByteDance to sell TikTok to a U.S. owner within 45 days. It relies on the Exon-Florio Amendment of the Defense Production Act, which allows the president to order a foreign company to divest U.S. assets if their purchase is perceived to have hurt national security. (The transaction in question here is ByteDance’s acquisition of Musical.ly, TikTok’s predecessor, in 2017.) On the Exon-Florio order, there is one previous case to go on: President Barack Obama’s order requiring Ralls, a Chinese-owned firm, to sell a wind farm it had bought that was deemed too close to a U.S. military base. Ralls sued, and a federal court ruled that while a foreign company was entitled to due process rights, like being able to examine the unclassified information used in the order, the substance of the decision is not challengeable. Ultimately, Ralls still had to dispose of the wind farm, but with more leeway to choose the buyer. In the case of the Emergency Powers Act, ByteDance could make a similar argument about due process. Foreign states and organizations have challenged such orders over the years, and due-process rights have been held to apply. TikTok thus has precedents for a legal challenge — but it would merely delay the inevitable. It cannot challenge the substance of the divestiture order. And although Mr. Trump appears to stretch the legal boundaries of his emergency powers, courts are unlikely to interfere. Still, TikTok could extend time for a deal by persuading a court to delay the application of the orders. This is what the lawsuit is about: avoiding a fire sale. More time could help it fetch a higher price or better sales terms, but by this time next year TikTok will almost certainly be under new, American ownership.

Digital Business Deal TikTok #2

Taken from DealBook Briefing August 18, 2020 The race for TikTok gets (even more) interesting

As the Chinese-owned video app negotiates to sell itself to avoid being banned in the U.S., The Financial Times reports that a surprising new suitor has emerged: Oracle, the Silicon Valley giant better known for business software than for social networking.

Oracle has held preliminary talks with ByteDance, TikTok’s parent company, according to the FT. Its aim was to buy TikTok’s operations in the U.S., Canada, Australia and New Zealand, the same assets that Microsoft has publicly said it is negotiating to acquire. Like Microsoft and any other potential buyer, Oracle’s talks have included ByteDance investors such as Sequoia and General Atlantic.

• Oracle is only the latest company to express interest in buying TikTok after the Trump administration’s demand to transfer ownership of the app to an American company: Twitter had previously emerged as a suitor, and others are in the mix as well, DealBook’s Michael de la Merced hears. Oracle has an advantage: close ties to the White House. Both Larry Ellison, its co-founder, and Safra Catz, its C.E.O., are among the few prominent Trump supporters in Silicon Valley. It arguably has a better relationship with the Trump administration than even Microsoft, which has itself navigated the current Washington landscape more deftly than rivals like Alphabet and Facebook. • But Oracle also faces a question: What would it do with TikTok, given that it has little experience in the way of consumer-facing businesses? The White House is expanding its battle against the Chinese tech industry. The Commerce Department widened restrictions on Huawei, making it harder for the company to buy chips made or designed with American equipment and and software. The net effect of all these moves, The Times notes, is a potential splintering of the internet.

Digital Business Deal TikTok #1

Taken from DealBook Briefing August 17, 2020  TikTok isn’t standing still

As TikTok negotiates its potential sale, which must be completed within 90 days to prevent the Chinese-owned app from being shut down in the U.S., it is signing a different sort of deal.

TikTok is partnering with UnitedMasters, a music distribution company, to allow artists on the video-sharing platform to distribute their songs directly from the app to streaming services like Apple Music, Spotify and YouTube. UnitedMasters also arranges music deals with brands like ESPN and the N.B.A. The deal is expected to be announced today. It’s the first major transaction for Kevin Mayer, TikTok’s C.E.O., who joined the company in May after a long career at Disney. Much of his time has been spent reacting to geopolitics, with TikTok’s parent company, the Beijing-based ByteDance, ensnared in the tech cold war between the U.S. and China. Citing national security concerns, President Trump has ordered TikTok’s U.S. operations to be sold to an American owner — Microsoft is the most likely buyer — or shut down. • Despite the uncertainty of TikTok’s fate in the U.S., the UnitedMasters deal shows that the company is not standing still, even if the benefits of the new partnership will probably accrue to a new owner. It’s an effort to deepen relationships with influential artists who use the app. TikTok’s young and engaged audience has helped songs go viral, jump-starting the careers of musicians like Lil Nas X and BMW Kenny. Trying to keep these creators engaged with the app is particularly important as TikTok faces competition from deep-pocketed rivals like Facebook’s Instagram, which recently launched a TikTok clone called Reels. It’s a sign of the times for the music industry. Instead of selling their rights to a label, artists who sign with UnitedMasters keep 90 percent of their royalties, as well as ownership of the master recordings. UnitedMasters was founded in 2017 by the former label executive Steve Stoute and funded by the likes of Alphabet and Andreessen Horowitz. The deal, which creates a platform designed to circumvent the traditional music-label business model, is aimed at “tomorrow’s stars who will be famous, fiercely independent and wealthy,” said Mr. Stoute, a long-established tastemaker in the hip-hop industry. • In many ways, TikTok has already upended the music business: Scouts no longer go to bars and clubs to discover the hottest unsigned artists — they scroll through the app instead. By partnering with UnitedMasters, the app is aiming to bolster its appeal to independent-minded artists who operate outside the traditional industry machinery. But what about that other deal? TikTok would not comment on the state of the company’s takeover talks with Microsoft. The deal with UnitedMasters does not appear to be contingent upon that transaction, and is billed as a “global” partnership. However, if TikTok were to shut down in the U.S., it would clearly affect the reach of the music deal. Terms of the transaction were not disclosed.

Digital Era

Taken from McKinsey article's

Cisco’s John Chambers on the digital era

The world has now entered a digital era that will be “the biggest technology transition ever.” 

This digital era will dwarf what’s occurred in the information era and the value of the Internet today. As leaders, if you don’t transform and use this technology differently—if you don’t reinvent yourself, change your organization structure; if you don’t talk about speed of innovation—you’re going to get disrupted. And it’ll be a brutal disruption, where the majority of companies will not exist in a meaningful way 10 to 15 years from now.

This digital age is the connectivity of going from a thousand devices connected to the Internet to 500 billion. It will transform business and transform our lives. Business models will rise and fall at a tremendous speed. It will create huge opportunities - probably $19T in economic value over the next decade. That’s the size of the US economy, plus some.

But it will also result in tremendous disruption. And this is where it’s so important—whether they’re countries or companies, regardless of their size—that you either disrupt or you get disrupted. Probably 40% of enterprise customers around the world will not exist in a meaningful way 10 years from now.

Evolving the organization

When many people think about this, you want to think about the intelligence of an architecture, where you can get access to any data, any point and time you want. It’s simple to describe, but it really means you’re dealing with intelligent networks—a next generation of the Internet. But connecting 500 billion devices doesn’t get the job done. It’s the process change behind it. So you’ve got technologies like cloud or mobility and cybersecurity and the Internet of Things that are very important. That’s actually the easy part.

The hard part is how do you change your organization structure? How do you change your culture to be able to think in terms of outcomes for your customers? It’s all about speed of innovation and changing the way you do business. The majority of companies will be digital within five years, yet the majority of their digital efforts will fail, which speaks to what a CEO has to do differently.

She or he has to think much more outside the box. They have to reinvent themselves. They have to reinvent their company. Not stay doing the right thing too long. That’s what got companies in trouble in the past. But the rate of change then was much slower. Today, you’re talking about digitization being an integral part of the fabric of a company’s business strategy or the way it interfaces its supply chain with its customers. Not enabled by technology—technology will become the company.

How Cisco has changed

Focus more horizontally on how things work together as opposed to silos. If all you do is have a bunch of silos in your company that don’t really talk to each other, you’re going to get displaced by, perhaps, a small company that has just a CEO and a CIO and has $1 billion in sales.

We transformed our engineering organization from being in silos to being horizontal, taking out about 5,000 people. We worked across the groups, refocused on leaders who could work horizontally together as opposed to in silos, the majority on their own profit and loss. We changed our sales organization, which is one of the top sales organizations in high tech. Yet we changed 41% of the client interface and execs because they were selling routers and switching technology, not business outcomes, architectures, and speed-to-market delivery.

And it caused us to change our top leadership. We changed probably 40% of our top leadership over the last two years. That’s not something I’m terribly proud of, but it’s something that we had to do so that we disrupt as opposed to be disrupted. So, when I talk about, what CEOs need to do, this is what we did ourselves.

Finding innovation

The sources of innovation have to move from being something you do on the fringe to something you have to do mainline. We use M&A as a way to enter new markets, and we’re number one or number two in 16 major product families. Our targeted minimum market share is 40%, which we hit most all the time. But it’s about to change again. We have to do this faster. We have to create an environment of really rapid innovation internally.

The first step is merely making it an independent group, because if you do it inside your organization, your existing culture will kill it. Companies fail to understand the implications of how quickly this technology will transform their business. And they underestimate what it really means to their economic growth or that of their competitors.

Secondly, they stay doing the right thing too long. And that’s what gets so many of us trouble, because we’re trained to get a 3% to 5% increase in productivity. To just crank it: do a little bit better each year; cut expenses a little bit; grow the top line. This is about exponential change.

Facebook Ditinggal Anak Muda

Mirip dengan posting sebelumnya berjudul Facebook's older audience , artikel yang dikutip dari Marketeers.com juga mengulas tentang sosial media Facebook

PARA REMAJA MULAI BOSAN DENGAN FACEBOOK

Facebook merupakan jejaring sosial terbesar di dunia. Sampai Juni 2014 tercatat pengguna Facebook mencapai lebih dari 1,3 milliar pengguna di seluruh dunia.

Pertumbuhan Facebook bisa dibilang sangat pesat. Ketika pertama kali didirikan pada tahun 2004, Facebook baru memiliki jumlah pengguna sebanyak 1 juta. Hanya dalam tempo satu dekade Facebook sudah meraup lebih dari 1 milliar pengguna.

Bagaimana dengan di Indonesia? Hingga September 2014, Facebook memiliki sekitar 69 juta pengguna di Indonesia. Namun begitu, di negara ini, walaupun setiap tahunnya ada pengguna baru sesungguhnya pengguna aktif Facebook mengalami penurunan.

Temuan studi GlobalWebIndex yang melibatkan 170 ribu responden di 32 negara menemukan bahwa pengguna aktif Facebook secara total mengalami penurunan. Berdasarkan riset GlobalWebIndex,  statistik pengguna Facebook yang masih berkirim pesan kepada teman-temannya mengalami penurunan.

Pada kuartal pertama 2013 masih ada sekitar 512 juta pengguna, namun bila dibandingkan kuartal pertama tahun 2014 terjadi penurunan sekitar 20%. Di kuartal pertama tahun 2014 jumlah pengguna Facebook menjadi 402 juta. Angka ini terus menurun sampai kuartal ketiga tahun 2014. Hingga kuartal ketiga tahun ini, pengguna Facebook yang masih berkirim pesan kepada rekan-rekannya melorot hingga 313 juta.

Penurunan ini terjadi pada para pengguna Facebook yang masih usia masih remaja. Temuan GlobalWebIndex mendapatkan 64% remaja sudah jarang aktif di Facebook. Bahkan, 50% kelompok remaja menganggap Facebook tidak semenarik dahulu. Sebagian dari mereka juga beranggapan bahwa Facebook dianggap membosankan, sehingga para remaja mulai mengurangi waktu penggunaan jejaring sosial tersebut.

"Ada sentimen tertentu terhadap produk buatan Facebook, meskipun kebanyakan orang sudah terbiasa dengan produk Facebook, namun sebagian lainnya mulai bosan," ujar Head of Trends GlobalWebIndex Jason Mander di jakarta (25/11/2014)

Selain alasan-alasan tersebut juga beberapa alasan lainnya yakni mereka lebih tertarik menggunakan aplikasi seperti Instagram dan Path yang lebih privat dan aplikasi berbagi pesan seperti WhatsApp, WeChat dan Line. "Polanya, orang merasa tidak nyaman untuk membagi informasi seputar keseharian mereka di jejaring sosial. Mereka beralih ke aplikasi mobile messaging karena mereka menilai hal itu lebih aman dan bisa dikontrol," ujar Jason.

Namun yang menarik adalah aplikasi Facebook Messenger sampai November 2014 berhasil meraih lebih dari 500 juta pengguna aktif semenjak pertama kali diluncurkan pada agustus tahun 2011. Facebook memisahkan layanan berbagi pesan melalui smartphone  dari aplikasi utama Facebook sejak Agustus 2014. Untuk itu, para pengguna yang ingin berbagi pesan kepada sesama rekan harus mengunduh Facebook Messenger terlebih dahulu.

Selain Facebook Messenger, Facebook juga memiliki aplikasi lainnya seperti WhatsApp dan Instagram. Instagram dibeli oleh Facebook senilai US$ 1 milliar pada tahun 2012, yang saat ini sudah memiliki lebih dari 200 juta pengguna. Sedangkan WhatsApp dibeli oleh Facebook pada Februari 2014 dengan nilai US$ 19 milliar. Saat ini WhatsApp memiliki lebih dari 600 juta pengguna.

Microsoft on Nook Business

Taken from Business Insider's article
How Microsoft Turned $300 Million Into $116 Million
MATT ROSOFF DEC. 4, 2014

Barnes & Noble and Microsoft have dissolved their joint venture, and Barnes & Noble is buying back all shares in the joint venture for $62 million in cash and stock worth about $54 million, according to a new SEC filing (Red:Total $116 Million ?).

That leaves Microsoft with a loss of about $238 million on the deal (Red:from $300 Million minus $62 Million ?). It also gives Barnes and Noble a cleaner exit if it wants to spin off the Nook business.

It also relieves Microsoft of certain obligations, like paying for operating expenses related to the venture.

The joint venture kicked off in April 2012 when Microsoft invested $300 million for a 17% stake in Barnes & Noble. The companies announced the deal with a lot of fanfare, but the details were always vague — they built a Nook app for Microsoft's Windows 8 operating system, and earlier this year, they said they were working on something called a "Microsoft Consumer Reader," which may have been a new kind of e-reading app. It never emerged.

The deal also ended a lawsuit between the companies.

Since the early 2000s, Microsoft has been approaching companies to license its patents the company believes are being violated. Many companies, including a lot of Android resellers, have agreed, and Microsoft may be earning more than $2 billion a year from these licenses.

But Barnes & Noble initially refused to take a license for its Nook reader, which was based on Android. And in the subsequent lawsuit, it started talking about some of the details of the negotiations with Microsoft, like its demands for between $5 and $15 per device, and the precise patents that Microsoft claimed were being infringed.

The joint venture made that lawsuit go away. So even if Microsoft never got much else out of the deal, one could argue that paying a couple hundred million to keep its patent licensing program cranking along was a pretty good bargain.

Instagram effect for Facebook

Taken from Bloomberg's article
Facebook Shares Rise to Record on Mobile Growth, Instagram
By James Callan and Kelly Gilblom
December 22, 2014

Facebook shares rose to a record as the social network caps a year in which mobile advertising increased and marketing initiatives expanded with applications and video.

The shares advanced 2 percent to $81.45 at the close in New York, the highest price since Facebook’s initial public offering in May 2012. The stock has jumped 49% in 2014, compared with a 12 percent gain in the Standard & Poor’s 500 Index.

This year Facebook made further headway in mobile, a business that has flourished from a minor portion of ad revenue at the time of the IPO to a majority. Facebook’s acquisition of Instagram in 2012 has also been paying off.

Facebook’s stock has more than doubled since the IPO and the company has a market value of $227.8 billion.

Surpassing Twitter
The Citigroup analyst, said he reached his $35 billion valuation for Instagram based on faster-than-expected user growth and increased revenue from advertising. The estimate puts Instagram in the same realm as American Airlines Group Inc., with a market capitalization of about $36.5 billion, and Kraft Foods Group Inc., at about $37.9 billion.

It’s been about a year since Instagram started making advertising available, as Facebook CEO Mark Zuckerberg starts monetizing the app’s audience and data assets. Instagram’s monthly active users rose to 300 million this month, giving it more users than Twitter Inc., which said it had 284 million in October.

Mobile Growth
Sales are projected to surge 46 percent to $3.78 billion in the fourth quarter, according to the average of analysts’ estimates compiled by Bloomberg. Mobile promotions accounted for 66% of ad sales last quarter, up from 62 percent in the prior period and 59 percent in the first quarter, the company said in October.

Marketers have also been paying more for fewer ads. Higher-quality ads, improved targeting and premium video advertising, led Menlo Park, California-based Facebook to more than triple prices for promotions in the last quarter compared with a year earlier.

Facebook is projected to take 8% of the $140.7 billion global ad market this year, up from 5.8 percent last year, according to EMarketer.

Facebook's older audience

8Taken from Bloomberg's article
Facebook’s Popularity Among Teens Dips Again
By Sarah Frier
December 19, 2014

Facebook Inc. (FB) is getting less and less cool, at least among teens.

A report yesterday by Frank N. Magid Associates Inc. found that the portion of 13- to 17-year-old social-media users in the U.S. on Facebook slipped to 88% this year from 94 percent in 2013 and 95% in 2012. In the same period, Twitter Inc. and messaging applications rose in popularity in that age group, the study showed.

The Menlo Park first warned a year ago that teens weren’t using its website as often as before. Facebook stopped discussing teen usage on its earnings calls after last year’s disclosure alarmed investors. While the issue was all but forgotten as the company’s advertising revenue reached new highs, it’s a bigger concern now.

ADVERTISEMENT
“You look at Facebook and you say, ‘Wow, something really changed in 2014, If kids are starting to use so much of their daily time on messaging apps, surely it’s going to hurt somebody.”

Among 13- to 17 year-olds, Twitter usage climbed 2 percentage points to 48%, according to the report.

While more people use Facebook and its messaging app than any competitor, its user base tends to be older, with 55% of Facebook Messenger users being 37 or younger. By the same measure, 86% of Snapchat users and 83% of Kik Interactive Inc.’s users are under 37. Facebook sought to buy Snapchat in 2013 for more than $3 billion, and was rebuffed.

Trust, Fun
One reason for the decline in teen Facebook usage is due to concerns that the service may not be trustworthy. Just 9% of those surveyed described the website as “safe” or “trustworthy,” while almost 30% of people said they would use those words to describe Pinterest. Pinterest also ranked higher in “fun,” with 40% saying so compared with 18% for Facebook, as did Instagram, which Facebook owns.

Instagram Gains
Facebook CEO Mark Zuckerberg has been working to diversify the company’s offering beyond the main Facebook application. He acquired Instagram, the photo-sharing application, in 2012 for less than $1 billion. This year, Facebook also purchased messaging application WhatsApp Inc. for about $18 billion.

The Instagram purchase is showing gains, with Citigroup Inc. estimating the app is worth $35 billion, due to its faster-than-anticipated user growth. Instagram is especially popular among younger users, too.

Though Facebook has said it is in no rush to make money off of the app, Instagram CEO Kevin Systrom has been taking steps to make the service more appealing to advertisers. The company recently started eliminating spam accounts, wiping off large portions of fake followers for celebrities on the service such as Justin Bieber, which some have dubbed an “Instagram Rapture.”

“Not only is Instagram’s audience now larger than Twitter, but its users are about 1.8 times more engaged, and user growth has been greater,” Mark May, an analyst at Citigroup, wrote in a note. “Instagram is at the early stages of rolling out advertising, but we believe brands have and will find it an effective channel.”

Gartner’s Digital Business Development Path

Taken from Forbes article "Where are you on the Digital Business Development Path?"

The Digital Business Development Path examines six different business era models from before the Web to after the Nexus of Forces (social, mobile, cloud, information) to help organizations understand their current state and assist CIOs in making the case for digital business.

Gartner’s Digital Business Development Path

Gartner predicts that by 2020, 75% of business will be digital businesses or preparing to become one. However, a Gartner digital business survey showed that only 22% of respondents defined themselves as already being a digital business. Most organizations, or 41%, see themselves as a digital marketing business, and 22% of companies remain Web businesses.

Where is your organization today and where do you want it to be ?