TikTok’s Algorithm to Be Secured by Oracle in Trump-Backed Deal

0:00Sam Fazeli:So, like, 100 % of investors think that protection is important, but only about 70 % of advisors are, like, talking to their clients about that.

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1:39Sam Fazeli:All right, let's talk tech. There's a lot going on out there. I'm doing this for John Tucker. He's a big TikTok person here. He's really interested to see what's going to be happening out there. What's his handle? Love those 30-second videos about really stupid stuff. Yeah, exactly.

1:54Scarlet Fu:Cats on Roombas, right? Oh, yeah. Cats on Roombas.

1:56Sam Fazeli:Gotta have it. Love it. That's why when we talk about cats on Roombas, we talk to our senior technology analyst at Bloomberg Intelligence, Mandeep Singh, Anurag Rana. Mandeep's here in our studio, Anurag's in our Chicago bureau. Let's just talk, Mandeep, just what's the latest on TikTok here? Because I'm seeing some big private equity guys might be involved. Some big tech names may be involved. What's going on here with TikTok? Yes, I think the White House is definitely keen to get a deal done. And as you said, there are multiple parties involved. Oracle is the publicly traded entity that's front and center in terms of being the lead company that will be owning TikTok along with these other private investors.

2:42And look, at the end of the day, it's clear the algorithm would be rewritten or they would be licensing it. That was a sticking point all along. So Oracle already has the data for TikTok in their data centers. So that part is already sorted out. And it looks like there will be a deal done. I mean, the more private investors that are involved, it kind of makes it hard. Who will determine the strategy in this age of AI, given all these companies are focused on AI and LLM? So who would call the shots in terms of what the future TikTok may look like? But at least it will be owned by U.S. entity and private investors based in U.S.

3:26Scarlet Fu:And Oracle is going to play a key role, a big role in operating everything, including retraining a copy of the algorithm that the U.S.-based TikTok would lease from ByteDance. Anurag, I mean, we knew that that was kind of in the works from the get-go, but what's surprising me today is some CEO announcements from Oracle. Safra Katz is being succeeded by two co-CEOs. Is this news a surprise?

3:54Sam Fazeli:Well, it's a surprise, yes, but at the same time, I think Oracle's in a very strong position right now. You know, I would say go back several years, I think somewhere around 2014, Larry Ellison had appointed Safra and Mark Hurd as the co-CEOs but I think Safra has been there for a very long period of time now they're basically saying they're going to move on the leadership to much younger people and one of them actually is the leader who runs OCI or Oracle Cloud Infrastructure which is behind the TikTok deal as well as all the other AI deals that we are seeing right now but uh maybe can you talk to the googles and facebook's of the world and the competitors to tiktok i mean this is no foregone conclusion that this thing's going to work is it because i'm still i'm a tiktok user i still gotta i guess get a new app port all my stuff and do i mean we're not sure this is even going to work is it it is and also a lot of the creators have moved to these alternative platforms given this uncertainty has been there for you know almost more than a year now.

4:58So who's benefiting? I mean, your YouTube, Instagram, to an extent Snapchat. But to my mind, the whole focus has shifted from, you know, oh, which who has the best recommendation algorithm to who can have the best AI based on the data they have. So look at, you know, what OpenAI has done is used all the open internet data. What Meta is trying to do with their super intelligence is use their social network data to come up with a better large-anglehold model. That's what Gemini is doing. And I think that's where the smaller players have a disadvantage or Snapchat, even though it may gain some engagement, it just doesn't have the infrastructure to train their own large-anglehold model based on the data they have.

5:44That's what you would hope to see with a company like TikTok US, that they focus on training their own large-anglehold model based on the video data that they have But I doubt when you have got so many players involved, that's never good for, you know, a long term strategy where you focus on building a product first and then monetizing. It would be more about making the company profitable and making sure they have a return on investment for what they're doing.

6:10Scarlet Fu:I mean, this is going to be a complicated transaction because the law mandates this TikTok sale to U.S. owners, but it forbids ByteDance from any operational role, including with software. Meantime, China's law bars the export of sensitive technology like algorithms. So I guess, Anurag, my question to you is, is it not only technically feasible to fully disentangle TikTok from ByteChance, but will U.S. lawmakers accept whatever convoluted plan has come up here?

6:38Sam Fazeli:You know, I think that has been very clear. I mean, imagine if you go back, you know, back in January, it was supposed to be shut down, but people have been operating it. Oracle has been hosting it. So I think Oracle is going to go out and say, we have control over the data. We have control over the algorithm. And I think that may, let's hope that will pacify all the regulators and the Congress out there. So, Mandib, do we know who the CEO of TikTok USA is going to be, who the CFO is going to be, what the board? Oh, good question. I mean, we don't know any of that stuff. No, no. I mean, the transaction isn't even finalized.

7:12We're still hearing rumors about who the private investors are going to be. And that list seems to be growing, you know, beyond the private equity guys. Now it's a Rupert Murdoch. And, you know, it was interesting to hear their names. But look, I mean, it will be somebody seasoned. My only hunch here is they may be too focused on, you know, the algorithm where the bigger opportunity lies in the LLM. And, you know, how a video LLM could be a game changer.

7:42Sam Fazeli:Everything.

7:43Scarlet Fu:Well, you know, we always have to bring everything back to AI.

7:45Sam Fazeli:Yeah, he knows we'll get BI clicks. He knows what's going on. We trained him well. All right, just Anurag, what's the 30 seconds left? What's the big thing you're looking at this week? This week, it's going to be Apple and how the pro is going to be doing in the market. Stay with us. More from Bloomberg Intelligence coming up after this. I don't love the word retirement because I think it has negative baggage. I like the word financial independence. If you were to be financial independent, like how would you spend your time?

8:13Scarlet Fu:And that's exactly what a lot of my clients talk about. And the term they'll use is a work optional lifestyle. I agree, like the next gen, millennials and below are not thinking about retirement. We're thinking about let's find something that we enjoy, that we can have financial independence. I think that's a better way to think about the end of life stage versus quote unquote retirement.

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9:21Sam Fazeli:I swear this whole health care discussion used to be more than just obesity drugs.

9:25Scarlet Fu:I know, but it feels like that's the most exciting part of the health care world, the pharma world.

9:29Sam Fazeli:Yes, I don't know. I mean, Sam Fazelli joins us here. He's a director of research for global industries. He's also like the best health care guy over there in Europe. He's based in London, one of the leaders there. And we talk to him all the time. Sam, it looks like, again, Pfizer here is spending four point nine billion dollars for this obesity startup. MetSera. What can you tell us about MetSera? Yeah, Paul, how are you doing? And Scarlett. Nice to have you both again talking about this topic. Thank you. Topic of obesity. So look, just to answer your opening point, obesity is one of the key causes of a whole variety of diseases, cardiovascular, cancer, mental health.

10:14Sam Fazeli:So if we can treat it, if we can prevent it, if we can reduce it, it's brilliant for the entirety of society. Here there is a deal where Pfizer thinks they've got something that's going to be able to give them a chance at playing in this very important area and very massive market, right? So the drugs are interesting. They're relatively early stage. We're looking to see with some new data coming up whether some of the promise that we've seen earlier for these drugs that the company has, which the latest stage one is still in phase two. They need to start the phase three in 2026, whether they are as competitive as they looked in the earlier trials.

10:52Sam Fazeli:There were some questions on efficacy less so than side effect profile. So we'll have to wait and see how that pans out.

10:59Scarlet Fu:Sam, can you get into the science a little bit and maybe keep it basic for folks like Paul and me? Because Metzera is described as the next generation hopeful in obesity. They use these long-acting amylin analogs versus GLP-1. And I'm wondering for people who might be holding out for Metzera's treatment, what that means versus the currently available Zipbound or Wigovi? Yeah, yeah.

11:24Sam Fazeli:So the latest stage drug is very similar to Wigovi and similar to Zepatide or Zepant. And the amylin drug is a little bit earlier stage. There are companies with more advanced drugs in that world, but they all kind of feed into the same pathway, which is the pathway that talks between your food intake and your satiety centers in your brain and your insulin centers in your pancreas. It tries to balance, have eaten enough? Let's stop eating now and let's release some insulin, make it more sensitive so that we can deal with the onslaught of sugar that comes into our blood. That's where they are. It's central to that space.

12:08Sam Fazeli:There's cells in the gut that release gluconolide GLP-1s, gluconolide peptides, the cells in other parts of the body who are responding to it. So that's where these things sit. And amylin is just one of those agents in the middle of it. Sam, just kind of stepping back on these GLP-1 drugs in general, there's a certain level of efficacy today. There's a certain level of, let's say, side effects, whether it's nausea or something else today. Is there room for improvement on both efficacy and side effects going forward with these drugs? Yeah, I mean, it's the balance that's the most important. With efficacy, I think we're pretty much there.

12:45Sam Fazeli:I mean, you know, there are folks that we know that go on a drug for a week or two and they lose four or five kilograms. That's fine. You don't want to lose much faster than that because I don't think it's particularly healthy if you lose weight at a much higher speed. And also, you don't want to get much lighter than a 80 kilo or 90 kilo or 75 kilograms, depending on your size. So the key is how do you get there? If you get there by having lots of side effects, then your probability of staying on the drug is lower. But we want you to stay on the drug. So it's a very, very tight balance. And then, of course, you have to figure out, well, am I happy taking a weekly injection, which I think a lot of people don't have a problem with it.

13:24Sam Fazeli:But what if MedSera is right and push it to once monthly? What if some of the other competitors coming along with once every three months? Now, those are things that we have to wait and see how the data shows in terms of that balance I've just referred to.

13:37Scarlet Fu:Sam, we mentioned earlier the headline that the White House now says doctors may be exempt from H-1B visa fees that were just announced of one hundred thousand dollars. Obviously, that has huge ramifications for the medical industry. What does it mean, potentially, the one hundred thousand dollar fee for H-1B visas for the pharma and the biotech industry in the U.S.?

13:57Sam Fazeli:Yeah, I think that any industry that requires skilled workers, I think the sector that's most exposed is one that you guys probably have already talked about is the tech industry, right? In terms of pharma biotech, I think the US has really good existing talent. The point is, though, that sometimes a particular talent is based somewhere else. You just want that particular person. So why do you have to go through this process if they really are the one person who knows this particular disease area so well? And does really one or two people at that level make a difference, especially in a sector where US is already a leader?

14:39Sam Fazeli:You're not really bringing in people to compete with the US talent. So that's something that I think is important to remember. Doctors, of course, you know, a country that doesn't, like Europe, many countries in Europe aren't producing enough doctors, UK especially, you need to allow that. Stay with us. More from Bloomberg Intelligence coming up after this.