Oracle becomes TikTok-US’ technology partner; Microsoft out of the league?

By : |September 14, 2020 0

It is September 14; a day before US Prez Donald Trump set a deadline on Bytedance. He had asked Bytedance to sell TikTok US to an American tech or face ban (much like India). Earlier, Microsoft has assumed the role of buyer for TikTok US. But that has now changed. Thus, in a recent development, we see Oracle taking the front seat. It will be ‘technology partner’ for US businesses of Bytedance.

Bytedance will not sell TikTok’s US operations to Microsoft, the US tech-giant said in a statement. The tech giant also said that it has instead picked a consortium led by Oracle as a “technology partner”.

Why not Microsoft?

As one of the biggest tech firms in the world, Microsoft was seen as the American technology firm with the deepest pockets to buy TikTok’s U.S. operations. “ByteDance let us know today they would not be selling TikTok’s U.S. operations to Microsoft,” Microsoft said in a statement. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests,” it added.

Similar to before, it released a statement regarding the bailout. It also said that to buy TikTok, it would have made “significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation”. The statement added, “We look forward to seeing how the service evolves in these important areas.”

Both Bytedance and Oracle haven’t said anything on the matter. But last month, China issued new regulations that would bar TikTok from transferring its technology to a foreign buyer without explicit permission from the Chinese government. This way, if China does not intervene, there are chances that US fuels a geopolitical war with China.

What does Technology Partner mean?

As far as the terms of the contract are concerned, there is nothing much in public yet. Alsthough, the Washington Post reported that Bytedance had chosen Oracle as a ‘“technology partner” to allay US concerns. Further, Reuters quoted a source as saying it would be a restructuring rather than a sale, with Oracle handling TikTok’s US user data. The source did not disclose how much of TikTok’s US operations ByteDance and its investors would continue to own.

A person in the know of the matters hasn’t provide details. But according to reports, Oracle offers a better package and would provide “confidence” that the company’s changes will meet the administration’s demands. Further, Oracle can provide TikTok with cloud infrastructure. But the company is not a leader in that market.

ByteDance will need approval for the deal from both Washington and Beijing (due to the aforementioned law). It is not news that Oracle CEO Larry Ellison has close allies with the Republicans, thus the matter closes on how Trump will view this deal. In fact, a few days ago Trump had said that he believed Oracle is a good company.

Oracle? Really?

And its not just me. The question has been looming all day today on various social media portal. The fact that Oracle “won” over Microsoft is indigestible by many. A user tweeted his opinion, “Doesn’t make sense. What value could TikTok bring to Oracle? Their businesses are so different.” Stating the possibility of a political matter, another user said, “A guy who hosted a Trump party, now fundraises over tech-giant Google? This is political leverage.”

“I think that Oracle would be certainly somebody that could handle it,” Trump had said. Thus, the connection seems plausible. But for all the bugging, Oracle did add TikTok US to its portfolio, so the app won’t be banned but scrutinised.

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