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Oracle joins race to acquire TikTok

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According to the Financial Times, software giant Oracle has held preliminary discussions with ByteDance to discuss the potential acquisition of its subsidiary TikTok. Microsoft and Twitter are also involved in discussions.

As trade tensions between the US and China escalate, US President Donald Trump is focusing his attacks on Chinese tech companies with a global reach, such as Huawei and TikTok. The latter video-sharing app, which is owned by Beijing-based ByteDance, has been downloaded more than two billion times and has quickly become extremely popular and influential among young Americans.

However, TikTok is facing the spectre of an imminent ban in the US. Earlier this month, Trump unleashed an executive order forbidding any transactions with TikTok, and last week issued another order effectively compelling ByteDance to divest all of its US operations within 90 days (before 12 November). Trump has claimed that TikTok could be used as a tool for espionage by the Chinese government due to its data collection practices, despite there being no evidence presented as yet to support this claim. TikTok denies the allegations and asserts that US user data are stored securely in US-based data centres.

ByteDance is now engaged in discussions with US-based tech companies in a frantic effort to close a deal with a local buyer and thus keep TikTok operating in the US. Trump has indicated that discussions must be concluded by mid-September.

Microsoft is considered the frontrunner in the race to close a deal. The company confirmed that it is engaged with discussions with ByteDance and the White House regarding a possible acquisition. It has said that it would operate TikTok under a model with “world-class security, privacy and digital safety protections” and that it is open to inviting other US investors to participate with the acquisition on a minority basis.

Twitter is also reported to be involved in discussions, although – with a comparable market capitalisation to TikTok in the low-to-mid tens of billions – it is highly unlikely that it has the capacity to acquire a majority stake.

Now, the Financial Times is reporting that Oracle is “seriously considering” acquiring TikTok’s operations in the US, Canada, Australia and New Zealand.

The report says that Oracle has had preliminary talks with ByteDance and that it has engaged at least two venture capital firms which own stakes in TikTok already: Sequoia Capital and General Atlantic.

The Financial Times notes that Oracle co-founder Larry Ellison is one of a small handful of US tech executives to be publicly supportive of Trump. However, it cannot be taken for granted that Oracle would be Trump’s preferred choice to take over TikTok’s US operations, or that Trump’s personal preferences would be strongly taken into account by ByteDance.

Although Oracle is one of the largest tech companies in the US, unlike Microsoft and Twitter it does not have any significant presence in the social media sphere. Oracle – which has a market capitalisation of more than $150bn – is highly likely to have the financial capacity to wholly acquire TikTok.

In June, the Indian government banished TikTok along with 58 other Chinese apps, citing a need to assert “data sovereignty”. India was previously TikTok’s largest market, with Indian users accounting for 30 per cent of its userbase.

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