What are the Murdochs doing with a TikTok deal?

What is the Murdoch family, whose business dealings are mired in old media and often struggling with digital innovation, doing amid a high-stakes takedown of China’s own TikTok, the most algorithmically game-changing of the Trump regime’s current tech plays?

There’s a hyperscale data center full of what we don’t know about the proposed TikTok deal. All we have is Trump’s customary, more heat than light executive orderwith its all-caps headline: “Saving TikTok while protecting national security,” along with a few lines thrown in by Trump or other Trump-adjacent “sources.”

The EO has set a 120-day deadline to finalize matters, so it may be late January before we find out how everything will turn out.

But what we don’t know about the Murdochs’ involvement in Australia’s media landscape is important for them and for all of us. What will change in the family’s latest deep dive into the futuristic world of social media, where they’ve been attacking the full force of their patented old man yelling at the clouds joke for several decades?

Success in the hierarchical rankings of the billionaire class is very important, especially for Lachlan. The media empire that created Rupert (and Sir Keith before him) is outdated. Big tech is right here.

This isn’t the first time the family has tried to make the leap into technology. Consider overpayments $580 million for maturing start-up MySpace; or remember $125 million Rupert invested in the completely fraudulent high-tech blood testing business Theranos; or more recently the money lost in creating their own technology “solutions”, e.g. AU$200 million Foxtel lost out last year when it tried to unnecessarily squeeze itself into the gap between viewers and broadcasters with its Hubbl app.

It’s not (just) money. After all, that’s peanuts compared to the billions (Australian dollars, at least) News Corp paid out for the UK’s low-tech phone hacking scandal (it’s currently airing as a must-watch dramatization on Nine’s Stan). hack) and in resolving defamation claims arising from voting technology companies Fox’s coverage of the 2020 US presidential election.

Still, it’s hard to think of a 21st-century technology that News Corp or Fox could use. to have It managed to turn into a successful game that will take them from the old media of the last century to share in the power of this century’s sparkling digital world. They, too, have been slow to adjust their traditional offerings. Just 12 years ago, in 2013, News Corp sacks Australian chief Kim Williamswhile trying to implement what was even then a casual shuffle to prioritize content over traditional mastheads.

There are one or two investments where the jury is still out — like ad-supported streamer Tubi, which Fox acquired in 2020. And then there’s REA Group, the biggest moneymaker from classifieds’ shift from print to online in the 1990s, but it’s too boringly Australian (and its cash flows are too busy keeping News Corp’s newspapers above water) to matter to Silicon Valley’s muscular circles.

If the Murdochs want to make a move (after all, they live in a world where you can never get too rich), TikTok may be their last chance. More than just another social platform. It’s the platform that matters: The mass distribution of short-form video has transformed the way entire platforms work; It completed the transition from polite family and friends, the few-to-few sharing of old Facebook, to algorithmic industrial-scale content distribution.

Trump told Fox’s Peter Doocy few weeks ago: “There’s a guy called Lachlan involved. Do you know who Lachlan is? …Rupert will probably be in the band, I think they’ll be in the band too, a few other people. Really great people. Very well-known people.” via Fox handle, Murdochs He is said to be one of four to seven investors involved in the estimated $14 billion majority acquisition of TikTok in the US. How much of this will Fox need to achieve? Unknown, but equal shares suggest a figure of over US$2 billion.

The real value of TikTok is the addictive power of its algorithm sauce that keeps users online. The executive order says the agreement comes with “control” but does not require ownership of the algorithm. This will give the US company the ability to moderate content and “retrain” the algorithm on US data, but it looks like the secret ingredients that give the sauce its flavor will remain on Chinese owner ByteDance’s pantry shelf.

An agreement was reached to purchase the family’s shares of News Corp and Fox belonging to Lachlan’s siblings for a total of 200 million TL. $3.3 billionRupert and Lachlan will have a few sofas to lie back on to get some needed spare cash. Unless, of course, they are raising cash from the sale of other assets, as News Ltd did to help pay the $A2.35 million (mid-80s dollars) it paid. Herald and Weekly Times. (Hmm… Yes an active market For US television licenses. Fox has 29.)

As an aside, the TikTok reports help explain the near-market timing of Lachlan’s recent sibling purchase, which came after he put the family in an embarrassing situation by resisting doing so for nearly five years. case in nevada Checking the family’s trust in the process.

But like MySpace or Hubbl, Murdoch’s game may be a little too little, too late. At best, they’ll be one of half a dozen owners chopping up money for a Chinese-owned licence. It’s nice, but it’s not very paradigm-shattering.

At worst, they will buy at the top of the market or perhaps later. Social media use There has been a decline of approximately 10% since the end of 2022 as platforms drown in the AI ​​tide. This is increasingly becoming a world of bots talking to bots and occasionally trolls chiming in.

Worse still, it’s a deal that threatens to leave the Murdochs weaker, less powerful, and more dependent on Trump and the increasingly precarious whims of his presidency.