TikTok to partner with Oracle in the US, as opposed to Microsoft

ByteDance to retain stake in its TikTok US entity while working with Oracle and declining the bid from Microsoft.

Over the past few weeks, ByteDance has been facing the strong arm of Donald Trump. The company was given an ultimatum to sell the rights of its population video-sharing app, Tiktok, to an American company in order to continue its operations or been banned completely from America. On August 6, Trump signed an executive order, giving ByteDance 45 days to find an American-based buy. This deadline was eventually extended to 90 days, a week later.

Microsoft swooped in to offer a deal, assuring the President that it would carry out extensive security checks to ensure the protection of the country’s data. The company looked like the potential winner in a seemingly uncontested race for TikTok.

However, surprising news recently surfaced that ByteDance has declined Microsoft’s offer. In the rising news, Oracle triumphed Microsoft in talks for TikTok’s continued operation in America. Oracle Corporation is a computer technology company that provides software for businesses, such as database management systems and cloud-engineered applications.

According to Bloomberg, the offer between Oracle and ByteDance "will look more like a corporate restructuring than the outright sale Microsoft had proposed". It means that ByteDance would still own a stake in TikTok, and Oracle would be a technology partner, rather than its new owner.

Oracle confirmed this news in the morning of September 14, 2020 “it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend.” The Wall Street Journal revealed that the US Treasury would review the deal between Oracle and ByteDance to ensure compliance and avoid banning TikTok in America.

For now, finer details about the specifics of the deal is currently unknown. Stay tuned for more updates.

It is also important to note that the clamp down on the popular video-sharing app by the American government is believed by some to be a political jab at the flourishing Chinese company in America amidst the increasing tension between America and China.

Update, The Financial Times reported that the new deal would see ByteDance move TikTok’s global business operation to the US. Reuters reported that American investor would have a majority stake in TikTok, with Oracle having a 20% stake. It also reported that Walmart Inc. would have a seat at the table, but its share isn’t known at this time.

The deal between Oracle is far from what Trump had intended when he signed the executive order; an executive order that strong-armed TikTok into considering a deal with Microsoft. Although Oracle’s deal isn’t an outright sale as Trump wanted, TikTok might not be banned.

A report from CNN shows Trump saying he expects to be briefed on the proposal. "It has to be 100% as far as national security is concerned, and no, I'm not prepared to sign off on anything. I have to see the deal."

This level of involvement by a sitting President of America on the affairs of a foreign organisation in the US is unprecedented. It only increases sceptics' belief that it is nothing but a show of political power.

China recently updated its export rules, which gave the government a say in the transfer of technology out of the country. The new update added 23 items, including technologies, to list that would require gaining a license if it intends being sold to an international organisation.

This update is believed to have affected ByteDance’s deal with Microsoft: their deal would see ByteDance transfer control to Microsoft. However, it favoured Oracle’s proposition, since it allows ByteDance to remain a stakeholder in TikTok.