Oracle soars 10% after (allegedly) winning partnership offer for TikTok US operations
Enterprise vendor Oracle is said to have won the bidding war for TikTok’s US operations, a manhunt in which Microsoft was pulled today.
A TikTok spokesperson said the company “(does not) comment on rumors or speculation” and Oracle has not immediately responded for comment.
The Wall Street Journal reports that Oracle, a rare ally of the Trump administration in Silicon Valley, will be announced as TikTok’s “trusted technology partner” in the United States. In addition, the Journal cites a person familiar with the matter saying that the deal “probably will not be structured as a direct sale.”
Oracle’s alleged purchase of TikTok’s US operations would end the app’s unclear fate within the country. The reported purchase of the app comes days before September 20, the day the Trump administration banned TikTok operations if the company doesn’t reach an agreement with a buyer. But there is a lot of confusion about what deadline TikTok will adhere to, as Trump said last week that there will be “no extension” of the Sept. 15 deadline.
On Sunday, Microsoft noted that its offer for TikTok’s US operations had been rejected by the app’s parent company, ByteDance:
We are confident that our proposal would have been good for TikTok users, while protecting national security interests, the statement read, stating that Microsoft would make “significant changes” around security, privacy, security in line and misinformation.
“We look forward to seeing how the service evolves in these important areas,” the statement added.
The issues and fears surrounding TikTok’s security have been a flagship issue for the app. TikTok was banned in India, along with 58 other apps, due to “national security and defense” issues. India was the largest foreign market for TikTok. In addition to Microsoft, several prominent tech companies are rumored to be in the market for TikTok operations in the United States, including Twitter, Google, and Walmart. But, as our Ron Miller pointed out, there’s a reason a company like Oracle would crave an app like TikTok: market share.
Oracle has left its database roots and made its way to marketing automation and cloud infrastructure. The company is not just a database manufacturer and provider. It is a massive operation that is monetized with the data. Early in this pandemic, the business data provider partnered with Zoom. If Oracle achieved the same type of partnership with TikTok, it would have landed a great customer.
It is unclear how a deal with Oracle will be carried out or how it will win approval from Beijing, which is clearly not happy with a forced sale. Two weeks ago, the Chinese government updated a set of business rules that could block the export of artificial intelligence technologies such as those used to customize TikTok users’ feeds. The review is widely viewed as Beijing’s move to complicate the sale of TikTok, and ByteDance said at the time that it will “strictly abide by” the law.
Over the weekend, Reuters reported that Beijing would rather see the closure of TikTok in the United States rather than follow Washington’s sell order, which “would make both ByteDance and China look weak under pressure from Washington.”
Some form of transaction may still occur, but it could leave out TikTok’s proprietary algorithms developed by ByteDance’s Beijing office, a source told the South China Morning Post. That means TikTok’s operations in the United States or the future owner would have to rewrite the same codes that have propelled the app to global dominance.
After all, Oracle could end up as a minority shareholder rather than an owner of TikTok, according to CNBC. An investment link could be strong enough to link Oracle’s cloud services to TikTok, which has more than 100 million users in the US market alone.
Whether a sale takes place or not, getting caught up in geopolitical tensions is probably the last thing Zhang Yiming, the ambitious Chinese founder of ByteDance, would want for his creation.
Oracle soars 10% this Monday
Oracle rose as much as 10% in early trading on Monday after multiple media outlets reported that the company won the tender to partner with the US division of TikTok.
The news follows an intense race among major tech companies to take the social media giant under their wings. Microsoft, which planned a joint offering with Walmart, posed the biggest threat to Oracle’s effort.
Oracle will be considered TikTok’s “trusted technology partner” in the United States, The Wall Street Journal reported Sunday. The deal is unlikely to involve a sale, although Oracle is expected to take a stake in the ByteDance-owned company.