TikTok takeover: Oracle beats Microsoft to buy app’s US operation

The company beat Microsoft, Triller, and others to partner with the viral video app

Adam Smith
Monday 14 September 2020 17:52
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Donald Trump campaign ad accuses China of using TikTok to spy on US
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Oracle has confirmed that it has entered into a deal with TikTok to become its US partner.

“Oracle confirms Secretary Mnuchin's statement that it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend in which Oracle will serve as the trusted technology provider,” it said in a statement.

“Oracle has a 40-year track record providing secure, highly performant technology solutions.”

The proposed deal still needs to be approved by the US government.

“I will just say from our standpoint, we’ll need to make sure that the code is, one, secure, Americans’ data is secure, that the phones are secure and we’ll be looking to have discussions with Oracle over the next few days with our technical teams,” secretary Mnuchin said earlier today.

TikTok faced a ban in the United States due to an executive order from the president, Donald Trump, due to national security concerns.

The viral video app has consistently denied such allegations, and said it would sue the Trump administration.

It is unclear whether that is still the case following this news. The Independent has reached out to TikTok for comment.

This morning, sources close to the deal said that Oracle would be a “technology partner” resulting in a restructuring, rather than a sale.

Other companies, including Microsoft and Triller, were contenders to take over the Chinese-owned app.

However, Microsoft’s application was rejected on Sunday.

“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users, while protecting national security interests,” Microsoft said in its statement.

“We would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting misinformation.

“We look forward to seeing how the service evolves in these important areas,” it concluded.

It is not known whether Oracle will be making similar changes to those that Microsoft proposed.

Some of ByteDance’s existing investors, including the investment firms Sequoia Capital and General Atlantic, will reportedly get a stake in the venture as a part of the deal.

Walmart, which was originally going to partner with Microsoft to take over the app’s US operations, said it “continues to have an interest in TikTok investment and continues discussions with ByteDance leadership and other interested parties”.

Some of ByteDance’s existing investors, including the investment firms Sequoia Capital and General Atlantic, will reportedly get a stake in the venture as a part of the deal.

Walmart, which was originally going to partner with Microsoft to take over the app’s US operations, said it “continues to have an interest in TikTok investment and continues discussions with ByteDance leadership and other interested parties”.

Oracle primarily makes database software, competing with Microsoft and Amazon’s cloud platforms as well as business software companies such as Salesforce.

Earlier today, analysts said that Oracle’s interests in TikTok were odd.

“It doesn't make any sense,” said Jefferies analyst Brent Thill, who compared it to Delta Airlines buying a motorcycle company.

Oracle co-founder Larry Ellison a public supporter of the president, Donald Trump. 

Ellison hosted a fundraiser for him in February at his Rancho Mirage estate.  

Oracle also hired a former top aide to the vice president, Mike Pence; its CEO, Safra Catz, also served on Trump's transition team.

President Trump had said that the US Treasury should receive a cut of any acquisition deal, comparing the relationship to that between landlord and tenant.

“It’s a little bit like the landlord/tenant; without a lease the tenant has nothing, so they pay what’s called ‘key money’, or they pay something,” Mr Trump, who owned numerous properties in New York said. Key money is an illegal practise in the US.

Recently, China had updated legislation that could delay any TikTok deal.

Beijing’s changes affect “personalised information based on data analysis’ and ‘artificial intelligence interactive interface technology”, according to the state news agency Xinhua, and both technologies are used by TikTok.

It is currently unclear what affect this will have on the TikTok deal.

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