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TikTok sale: Oracle goes head-to-head with Microsoft in the race to buy US-arm of the social app

Oracle has entered the race to buy the US arm of social video app TikTok from Chinese owners ByteDance – along with Microsoft and Twitter, insiders claim.

The software giant has held talks with ByteDance, and is seriously considering buying the app’s operations in the US, Canada, Australia and New Zealand, according to the FT. 

The race to take control of TikTok in the US follows a threat from President Donald Trump to shut it down unless an American firm takes ownership by mid-November.

Trump claims there is ‘credible evidence’ that TikTok poses a security threat, something the firm flatly denies, calling the claim ‘rumours and misinformation’.

Microsoft is thought to be the current frontrunner to buy the app from its Chinese owners – with the possibility of them taking control in Europe and India as well. 

No financial details have been revealed about the sale, but it is thought the Microsoft deal – which could include all global TikTok operations – may be worth $50 billion. 

TikTok is currently the fourth most popular app on the Apple App Store, the sixth most popular on the Google Play Store and the 7th most downloaded app of the last decade despite not launching until 2016. 

Oracle are believed to be working with US investors including General Atlantic and Sequoia Capital – both of which already have a stake in TikTok owner ByteDance.

TikTok expert Timothy Armoo, the 25-year-old CEO of Fanbytes and founder of the first UK TikTok influencer house, says Oracle buying the service makes no sense. 

‘The deal makes zero sense when seen from a business lens but starts to make more sense when you consider Larry Ellison [Oracle chairman and chief technology officer] is an open Trump supporter and a friend of the President,’ Armoo said.

He said as Oracle is an enterprise company there will be some wins in terms of access to data and cloud solutions – but nobody in the Oracle senior team had likely ever thought or cared about TikTok.

‘This rumour has little commercial sense behind it,’ Armoo said, adding that the two firms serve massively different demographics and cultures.

ByteDance is said to be opposed to selling any assets beyond those in the US, Canada, Australia and New Zealand, insiders claim. 

Twitter also held early-stage discussions with ByteDance but there were concerns over whether they could finance any deal for the popular app, the FT reported.

Mr Trump vowed to ban TikTok in the US after a recommendation from the Committee on Foreign Investment – a panel that vets foreign transactions in the US.

The move would require ByteDance to divest TikTok’s US operations within 90 days.

The president claimed the US has ‘credible evidence’ that Chinese-owned ByteDance was using TikTok to breach US security – something the firm has denied. 

TikTok has stepped up its defence against US accusations that the popular video app is a national security threat, denouncing what it called ‘rumours and misinformation’ about its links to the Chinese government.  

On a web page titled The Last Sunny Corner of the Internet TikTok maintained it was setting the record straight about the platform.

‘TikTok has never provided any US user data to the Chinese government, nor would it do so if asked,’ the company said in the post.

‘Any insinuation to the contrary is unfounded and blatantly false.’

It adds that US user data is stored in the US with a backup in Singapore.

As tensions soar between the world’s two biggest economies, Trump has claimed TikTok could be used by China to track the locations of federal employees, build dossiers on people for blackmail, and conduct corporate espionage.  

TikTok said the US action ‘risks undermining global businesses’ trust in the United States’ commitment to the rule of law, which has served as a magnet for investment and spurred decades of American economic growth.’

TikTok also repeated its intention to ‘pursue all remedies available to us in order to ensure that the rule of law is not discarded.’ 

ByteDance is also reportedly planning to sue the Trump administration over the president’s executive order banning the Chinese app from the US – but nothing has been filed with any US court to date.

Separating the US, Australia, Canada and New Zealand TikTok operations from the global system won’t be an easy problem to solve, according to ByteDance insiders.

This is in part because they all share a single back-end system, so would require that to be split off while still allowing global TikTok users to connect.

There would also need to be an audit of all of the code and servers that run TikTok – something that could take months or even years to complete, experts claim.

The other major problem facing any potential sale is that ByteDance shares code between TikTok and other products it publishes – so that would need to be unwound.

‘The details of a potential split would be complex to say the least. Microsoft, or whoever purchases TikTok, would need to audit all of the code, servers, business contracts, processes, and even employees before they make any substantial changes,’ security expert Patrick Jackson told the South China Morning Post. 

No details of pricing, or how any deal with a US firm will work, have been revealed. 

Oracle are said to be interested in taking the US, Canada, Australia and New Zealand operations – enough to meet Mr Trump’s requirements and satisfy ByteDance.

Oracle founder Larry Ellison has openly supported Donald Trump, and his decision to enter the race for TikTok has given ByteDance an alternative to Microsoft.

The app, which has had two billion downloads in 2020 alone, has become one of the most important platforms for influencers and content producers – with many brands also now using the social media app to promote their products.   

Sources have suggested ByteDance could choose to just ‘walk away’ from the US market and remove TikTok operations completely. 

This is based on the understanding that China-only sister app Douyin earns the bulk of revenue for ByteDance – rather than the global TikTok.

However, it is believed that ByteDance CEO Zhang Yiming is reluctant to take that action as it could significantly slow the global growth of TikTok.

The US isn’t the only country investigating the Chinese-owned service. India has banned TikTok from operating in the country and France has launched a probe into how it collects data.

While Microsoft is the frontrunner to buy the social media service, its employees aren’t thrilled at the idea, with a majority calling the move ‘unethical’.

A survey of staff which asked them for their opinions on the merger found 63 per cent were opposed with just 18 per cent in favour. 

Posting on an internal company social network called Yammer, staff said it feels like ‘we’re not doing the right thing’ by entering into the negotiations.

No specifics have been revealed about the Oracle deal, beyond that the firm is in talks to buy the US, Canada, Australia and New Zealand operations.

China slammed Washington for using ‘digital gunboat diplomacy’ in the TikTok case.

Chinese foreign ministry spokesman Zhao Lijian on Monday said TikTok had done everything required by the US, including hiring Americans as its top executives, hosting its servers in the US and making public its source code.

But the app has been ‘unable to escape the robbery through trickery undertaken by some people in the US based on bandit logic and political self-interest,’ Zhao said at a regular press conference. 

TikTok is still working to expand and offer new services – it announced an alliance with music distribution platform UnitedMasters.

The deal to integrate UnitedMasters into TikTok promised to build on a trend of the platform being a way for musicians to be discovered by posting short-clip videos.

It will allow creators on the Chinese video sharing app to directly distribute their music to streaming platforms like Spotify and Apple Music. 

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