Misreported billions: How Bloomberg’s ByteDance blunder distorts economic debate
April 19, 2024
Bloomberg tells the world that ByteDance – the owner of TikTok – has made $40 billion in profit. This is wrong, wholly wrong, and it’s also hugely dangerous. That this sort of error – or misdirection – is coming from the financial press itself creates vast problems within politics and even reality.
Some number of people think that we could just get the rich, or the corporations, to pay for everything. We could – say – clear student loan debt, abolish poverty, raise wages to $20 an hour for everyone and so on. You know, the usual demands. And yes, it is possible to do those things but over time and with a great deal of effort. We need to make the whole economy better to be able to do those things.
But then there are those who insist that we could do all those things – and more! – if we just took all the money off the corporations and the rich to pay for it. The problem with that is that the rich – and the corporations – just don’t have enough money to pay for all those good and desirable things.
Then we get Bloomberg telling us that actually, ByteDance does! But that’s not, in fact, correct:
ByteDance’s profit surged roughly 60 percent in 2023, outpacing the growth of online peers Tencent Holdings and Alibaba Group Holding, in a sign of the TikTok owner’s resilience in the face of an economic downturn.
Earnings before interest, tax, depreciation and amortization jumped to more than US $40 billion from about US $25 billion in 2022,
“Profit” and EBITDA, that earnings before interest, tax, depreciation and amortisation, are entirely different things. EBITDA is a measure of how much operating profit is being made before a huge chunk of the corporate costs. It’s not possible to tax away EBITDA to pay for all those lovely things we could buy with corporate money. No, really, not possible, not just not desirable. There’s not even any evidence that there’s a net profit, a real profit, after all those additional costs either.
But, because Bloomberg has reported it this way we get from Time:
While TikTok faces an uncertain future in the U.S., its Chinese parent company continues to rake in cash. On Wednesday, Bloomberg reported that ByteDance’s profit jumped 60% in 2023 to more than $40 billion, compared to $25 billion in 2022,
From Barron’s:
The profits of TikTok owner ByteDance jumped around 60 percent in 2023, Bloomberg reported Wednesday citing sources, beating online rivals Tencent and Alibaba.
That qualification, that this is not profit being measured but EBITDA, gets lost in the repetition. And this is dangerous, as we say. For it means that people really do start to believe that we can just have all these nice things if we take the money off corporations.
That’s the danger. But of course we’re called Accuracy in Media, so it’s not just that it’s dangerous. It’s inaccurate. EBITDA is not profit, so calling EBITDA profit is simply inaccurate. And we really should be able to expect better from outlets like Bloomberg.