Oracle is buying TikTok’s US assets, beating Microsoft and Walmart to the punch after a fire sale caused by the US government’s market intervention over security concerns.
After months of speculation about national security risks and users’ data being harvested by the Chinese Communist Party, US President Donald Trump banned TikTok in the United States earlier this year. Its use was already banned by the US military.
A number of outlets are reporting the deal, and Microsoft has confirmed it is out of the running. Later reports threw some doubt on the framing of the deal as a sale, alluding to more of a partnership than an outright acquisition.
According to Bloomberg, “A deal with Oracle is narrower, appearing more like a corporate restructuring than an outright sale.”
It had earlier been reported in August that ByteDance — TikTok’s owner — favoured the Oracle bid.
Given the US divestiture was caused by concerns over Chinese espionage, the irony will not be lost on students of IT industry history: Oracle began life as a project in the US Central Intelligence Agency.
Oracle now looks set to become a technology partner with TikTok’s Chinese parent ByteDance, and will assume management of TikTok’s US user data, according to Reuters sources.
A partnership arrangement, rather than a direct sale to a US company, may spare TikTok a US ban while also appeasing the Chinese government which had threatened to shut down the video sharing app rather than let it be part of a forced sale.
It is unclear if President Donald Trump, an ally of Oracle chairman Larry Ellison, will approve the deal, which is also being monitored by a US foreign investment review panel. For the Oracle deal to work, Trump would need to rescind his original order calling specifically for TikTok to be divested.
A new digital giant
R “Ray” Wang, principal analyst for Silicon Valley based Constellation Research Inc, says the Oracle deal is a coup for the cloud giant, giving it another huge workload, a “once in a lifetime” opportunity to create an ad network, and tech diplomacy in the brewing US-China trade wars.
“Oracle’s skill in winning TikTok is a coup on the cloud front, the adtech front, and in the geopolitical trade wards,” Wang writes in a company blog post.
“With over 80 per cent of the top 20 ad networks, portals, creatives optimisers, trading desks, and ad brokers leveraging data from Oracle Data Marketplace, TikTok builds on this lead.”
According to Wang, TikTok could be the piece that allows Oracle to challenge digital giants Facebook, Google and Amazon.