Commentary

Oracle Enters The Race For TikTok's U.S. Operations

Larry Ellison’s Oracle Corp. has reportedly joined the highly politicized fray to acquire a large bite of China’s ByteDance Ltd.’s TikTok — and yesterday acquired President Donald Trump’s blessing to do so.

Oracle is “seriously considering” making a deal for the app’s operations in the U.S., Canada, Australia and New Zealand, sources tell  Financial Times’ James Fontanella-Khan and Miles Kruppa, who broke the story Monday. 

“Oracle was working with a group of U.S. investors that already own a stake in ByteDance, including General Atlantic and Sequoia Capital, the [sources] added,” they write.

“Microsoft has been the lead contender to buy TikTok since it publicly said in early August that it had held discussions to explore a purchase of the app’s U.S., Canada, Australia and New Zealand businesses. Microsoft has also seriously considered a bid to take over TikTok’s global operations beyond the countries it outlined this month, people briefed on the company’s thinking have said,” Fontanella-Khan and Kruppa add.

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“Trump has said he would support an effort by Microsoft to buy TikTok’s American operations if the U.S. government got a ‘substantial portion' of the proceeds, but he has also said there are other interested potential buyers. He has given ByteDance 45 days to agree to a sale of TikTok, before transactions with either TikTok or ByteDance are prohibited,” Reuters’ Echo Wang and Joshua Franklin remind us.

“Twitter Inc. has also approached ByteDance to express interest in acquiring the U.S. operations of TikTok, though its chances are seen as remote because of its smaller size and the antitrust scrutiny for such a combination, sources said earlier this month,” Wang and Franklin add. 

“TikTok has more than 100 million users in the U.S. When the company separates its technology from ByteDance, it will need to find new places to store the huge amount of data generated by these users. The app could be an anchor tenant for Oracle’s Cloud Infrastructure unit, which hosts client information, but has struggled to keep up with rivals Amazon.com Inc. and Microsoft. Oracle has seven data-center regions for businesses across North America and Australia. The company has declined to comment on its potential interest in TikTok,” Bloomberg’s Nico Grant writes  for The Economic Times.

“Oracle is ‘one of the other players with the infrastructure to support an ecosystem and user base as massive as TikTok,’ said Daniel Elman, an analyst at Nucleus Research. Forgoing payments to external cloud vendors could save TikTok ‘billions annually,’ he said,” Grant adds.

“Oracle has closer ties to the White House than most other parties involved in the bidding. Larry Ellison, the company’s co-founder, chairman and largest shareholder, earlier this year threw a fundraiser at his house for the president. Chief executive Safra Catz also worked on the executive committee for the Trump transition team in 2016,” Aaron Tilley and Georgia Wells report  for The Wall Street Journal.

“Asked Tuesday if Oracle would be a good buyer for TikTok, President Trump said, ‘Well I think Oracle is a great company and I think its owner is a tremendous guy, a tremendous person. I think that Oracle would be certainly somebody that could handle it.’

“The Trump administration has said TikTok represents a threat to national security because it is owned by a Chinese company. ByteDance has repeatedly disputed U.S. claims that it would share information on U.S. users with the Chinese government,” Tilley and Wells add.

“During the pandemic, TikTok usage has surged past its rivals, with a recent report saying its users spent an average of 58 minutes on the platform per day, above Instagram and Snapchat. Two weeks ago, with TikTok facing shutdown in the U.S., Facebook launched a rival, Reels, in 50 countries,” Tom Grater writes  for Deadline.

“Despite the presidential order requiring its sale, TikTok has not given up the fight for its reputation in the U.S. On Monday, the company launched a new ‘information hub’  and Twitter account to ‘correct the record’ and respond more quickly to allegations of censorship, surveillance and state control,” Alex Hern writes  for The Guardian.

“‘With rumors and misinformation about TikTok proliferating in Washington and in the media, let us set the record straight,’ the company said. ‘TikTok is not available in China. Its U.S. user data is stored in Virginia with a backup in Singapore and strict controls on employee access. TikTok has never provided any U.S. user data to the Chinese government, nor would it do so if asked. Any insinuation to the contrary is unfounded and blatantly false,’” it added.

“TikTok went on to provide links to supportive comments from ‘industry experts’ in cybersecurity, media and academia,” Hern adds.

The TikTok website is titled “The Last Sunny Corner of the Internet.” Oh, well. Who needs the internet when we have a presidential campaign to cheer us up.

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