MX3 Collectif Partner, Oaklins DeSilva + Phillips – Jay Kirsch on ChatGPT’s First Deal Tombstone?.

As part of our Collectif, in which we feature the work of our partners (see more here), Jay Kirsch, partner at Oaklins DeSilva + Phillips sees what ChatGPT has to say about the future of TikTok. He’s got his scoreboard with him too.

Artificial Intelligence and TikTok – that’s all anyone in the digital media M&A sphere has talked about for the first few months of 2023. So I prompted ChatGPT to “write a 500 word essay on the potential impact on the media industry of a sale of TikTok including who a buyer could be.”

Should I be worried about M&A advisory getting outsourced to AI? Let’s see how it did.

The potential sale of TikTok, the popular social media app, has been a topic of much discussion in the media industry. The app, which allows users to create and share short-form videos, has experienced explosive growth in recent years, with over one billion active users worldwide. However, concerns over data privacy and national security have led to increased scrutiny of the app, and the US government has even threatened to ban it. 

Ok, so it can give us a very high-level overview of TikTok, a little wordy in my opinion. It does quickly get to the regulatory concerns driving a potential sale. 

Currently, TikTok is owned by the Chinese tech company ByteDance, and its sale could create a new dominant player in the social media space. For example, if a company like Microsoft or Facebook were to acquire TikTok, they could integrate it into their existing social media platforms and gain access to its massive user base. This could give them a competitive advantage over other social media companies and potentially even lead to the demise of smaller players in the industry.

Again, gets the basics of corporate ownership and the nuance around some of the market concentration issues that would also arise in a sale. Not bad.

Another potential impact of a sale of TikTok is the transformation of the content creation industry. TikTok has revolutionized the way that people create and consume content, with its emphasis on short-form, highly engaging videos. If a buyer were to acquire TikTok and invest in its growth, it could lead to the emergence of new content creators and even new genres of content. This could create new opportunities for advertisers and marketers, who are always looking for new ways to reach consumers.

Wow, ok, now I’m impressed. It is even speculating on the impact on creativity. The Creator Economy has certainly been the most innovative sector of media in the past few years so a growth engine focused on that market is a strong possibility. I think the bot makes a good point here and one that is not purely regurgitating facts.

The potential sale of TikTok also raises questions about data privacy and national security. As mentioned, concerns over these issues have led to increased scrutiny of the app, and a sale to a US-based company could help allay these concerns. However, it also raises questions about the power and influence of tech companies, and their responsibility to protect user data and uphold national security interests. This is a complex issue, and any sale of TikTok would need to take these concerns into account.

Needs some wordsmithing for sure. Sort of repetitive with the earlier discussion of concerns driving Congress to consider this action.

So who could be a potential buyer for TikTok? Several companies have been mentioned as potential acquirers, including Microsoft, Facebook, and Oracle. Microsoft has been the most visible candidate.

Ok, they nail the biggest possible strategic acquirers. A next-gen AI could also dig deeper to find other buyers that are not obvious including syndicates of financial buyers or any media conglomerates that could stretch for it. It misses any implications on valuation of the business caused by being forced to sell or the commentary coming out of China that they just won’t do it regardless of what the US Government says. 

Overall I’d give ChatGPT a sold B on this effort. I’m not worried about a bot handling the sale of a middle-market media company anytime soon (but I’m not ignoring it either.)

Jay Kirsch is a partner with Oaklins DeSilva + Phillips