Crystal ball: Here’s what the Oracle deal could mean for Tiktok
Tiktok owner Bytedance is said to have clinched a deal to offload management of the app’s US operations to software giant Oracle, after turning down a widely publicised bid from Microsoft.
US President Donald Trump ordered Bytedance to separate itself from its US arm in August, giving the firm a 45-day deadline to find a buyer.
He later extended that deadline to mid-November, with Microsoft pinpointed as top of the bidding pack — which at various points was rumoured to consist of everyone from Apple to Netflix.
Washington holds concerns that Tiktok could be forced to pass data back to the Chinese government through Beijing-based Bytedance.
Tiktok, known for its viral short-form video format, has more than 100m users in the US alone. Sources have suggested the app could be valued at around $50bn.
What would a deal between Tiktok and Oracle look like?
Sources close to the talks have told US news outlets that Oracle would assume management of Tiktok’s US user data as Bytedance’s technology partner, rather than conducting an outright acquisition.
However people familiar with the matter told Reuters the two are also in talks about a sale of the US wing, which could reportedly involve minority stakes for Silicon Valley venture capital firms such as General Atlantic and Sequoia.
The data is currently stored in cloud services run by Google parent Alphabet.
Though Tiktok has formally rejected Microsoft’s bid, others are still in play. For example, a Walmart spokesperson told reporters that talks with Bytedance leadership and other parties for its own offer are still ongoing.
Analysts at IG said a successful partnership for Tiktok with Oracle may well clear the way for Bytedance to push on with a public listing in the US.
The tech giant’s grey-market value is currently hovering around $110bn, well below the $200bn level seen in June.
Any deal will still need to be approved by US officials before it can go ahead. The Chinese government may also have to provide a thumbs up.
Government interventions
Trump has previously expressed support for Oracle’s bid, labelling its top shareholder — and vocal Trump supporter — Larry Ellison as a “great guy”.
He has also said he thinks Oracle would be a “great company” to take on Tiktok’s US operations.
However the deal may still face hurdles when discussing exactly what parts of the company will be sold, after Beijing last week updated its export controls to include the transfer of algorithms.
Chinese state media today reported the government has already rejected the idea of allowing a sale to Oracle or Microsoft, and would not permit Bytedance to give the source code for Tiktok to any US firm.
“It’s still unclear how the specifics of this are going to develop, including around what exactly is going to be sold,” said Nick Marro, global trade lead at The Economist Intelligence Unit.
“What’s a bit more damning is the confirmation that the links between China’s tech companies and the Chinese state are much more blurred than elsewhere, based on how involved Beijing has gotten itself in these discussions.”