TikTok app on phone

Oracle edges out Microsoft as TikTok deadline looms

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TikTok owner ByteDance has chosen California-based software giant Oracle over Microsoft as its preferred candidate to manage video-based social media platform TikTok in the US, according to latest reports.

Amid the ongoing US-China trade war, US President Donald Trump has increasingly focused his ire on influential Chinese tech enterprises such as Huawei, Tencent and TikTok.

Trump threatened to ban TikTok (owned by Beijing-based ByteDance) by 20 September 2020 unless it can arrange to be transferred to a US owner, accusing TikTok of acting as a tool for espionage by the Chinese Communist Party.

TikTok has firmly denied these allegations and is taking legal action in an effort to block the proposed ban.

Trump’s threats have sparked frantic discussions involving Microsoft, Twitter, Walmart and Oracle as potential buyers. These discussions have been mired with complications, such as Trump’s extraordinary demands that the US government should receive a “cut” of any deal, and new Chinese restrictions on the export of certain technologies which would require ByteDance to obtain a license to export its AI content recommendation algorithms to a US-based company.

Reports have claimed that the Chinese government would rather see TikTok snuffed out in the US – where it has 100 million users – than see it forced into a sale to a US company.

With just a week to go before the axe swings on TikTok, Microsoft has confirmed that its bid has been rejected. Walmart, which had originally planned to partner with Microsoft on the acquisition – and thus establishing a presence in the digital entertainment space to compete with Amazon – said in a statement that it “continued to have an interest in a TikTok investment” and remains involved with discussions with ByteDance and other parties.

Now, sources are claiming that ByteDance has chosen Oracle as its preferred suitor for TikTok. While Oracle does not have a presence in the social media space, it has experience handling and protecting data, as well as having considerable funds available immediately for a cash purchase.

The sources claim that the deal will be structured as a partnership rather than as an outright acquisition; under this proposal, Oracle would take over management of TikTok’s US user data and potentially claim a stake in its US operations. The sources said that ByteDance’s top investors, including Sequoia and General Atlantic, will also take minority stakes in these operations.

Yuval Ben-Itzhak, CEO of Socialbakers, commented: “The news that Oracle will become a 'trusted tech partner' to TikTok’s US operations certainly looks very promising at first glance. Having Oracle’s expertise in cloud and data technologies at an enterprise scale can certainly support TikTok’s backend needs and phenomenal growth.

The only risk that such a partnership may present would be if Oracle tries to change TikTok’s DNA into a traditional operation, instead of focusing its efforts on building out the technology infrastructure and leaving the TikTok business to do what it does best: acquire and engage users authentically at scale.”

Any deal must still gain approval from the Committee on Foreign Investment in the US, which is chaired by the Treasury Secretary. Trump retains the power to approve or reject transactions recommended by the panel. However, given Trump’s good relationship with Oracle and its leadership – its co-founder and CTO Larry Ellison is one of a small handful of pro-Trump voices in Silicon Valley – it is unlikely to be blocked by the US President.

The Oracle-TikTok partnership is yet to be confirmed, with Chinese state media claiming that ByteDance is not prepared to sell TikTok’s US operations to Oracle, Microsoft or any other US company.

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