TikTok has chosen Oracle as U.S. ‘technology partner,’ rejecting Microsoft’s bid.
Oracle emerged as a possible victor in this potential deal, although it is unclear what it’ll win or if the Trump administration will sign off on it. Oracle emerged surprise victor on Sunday as the in wooing short-term video app TikTok, which is proposing a compromise to the Trump administration allowing it to potentially keep its current ownership, as per people familiar with the discussions.
The people, who spoke on the condition of anonymity to deliberate freely, said that TikTok recently suggests a proposal to the U.S. government that might allow its Chinese parent company, ByteDance, to retain ownership but outsource cloud data management. TikTok chose Oracle as its U.S. “technology partner” on Sunday afternoon and that the organizations brokered the deal in an effort to satisfy regulator concerns, said one of the people.
The other possible element of the proposal is that the ByteDance could move its headquarters outside of China to alleviate concerns that the parent company would be subject to Chinese laws that need firms, if directed, to share data in their systems with the government, according to one of the people.
Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, who spoke late last week, are ready to hear the offer, said a senior administration official, speaking on the condition of anonymity due to the matter’s sensitivity.
“The deal, if it happens, is going to have to address our underlying national security concerns,” the official said.
But a former U.S. official said that while such an approach might address a number of the concerns in terms of security, “it’s well short of a U.S. organization taking over the asset and the algorithm, and politically, it would be a massive climb-down from what the president said he was going to accomplish with this.”
“It’s not a climb-down,” the administration official said. Any deal would need to be approved by an interagency group tasked with ensuring that national security concerns are mitigated, the official said. “All the details are not out,” the official said.
As Oracle’s administration has close ties with the president, and the organization could also be well-positioned to satisfy Trump’s expectations after the president took an active role in raising concerns about TikTok. The ongoing deal will involve Oracle, a business software giant best known for selling database technology to corporations to assist in running their operations, taking a stake in the organization, one among the people said.
President Trump previously issued an order that might ban the app within the United States beginning Sept. 20. He followed that with a second-order that will essentially require parent company ByteDance to divest from its operations in the United States.
TikTok has repeatedly insisted that it’s not a national security threat and it doesn’t share any U.S. customer information with the Chinese government.
Oracle and Microsoft were involved in bidding for the business, which has led to a surged in popularity, particularly with young users. TikTok had 91.9 million monthly active users within the United States in June, up from 26.7 million in February 2019.
Microsoft said at a blog post-Sunday that its acquisition offer of TikTok‘s U.S. operations was rejected. The first company to confirm was Microsoft in courting TikTok this summer as Trump threatened to ban the app over national security concerns.