Oracle has apparently won the competition to handle Ticketok’s US operations. Microsoft revealed on Sunday that Tiktok’s Chinese owner, ByteDance, rejected Microsoft’s rival bid earlier in the day.
The Wall Street Journal reports that the deal will not be a direct sale. Instead, Oracle ByteDance will become a US “tech partner”. Details of the transaction have not yet been made public, but they will soon be presented to US regulators for their approval.
This is a win for Larry Ellison, president of Oracle and one of the few technology tycoons who have been openly supportive of Donald Trump. Ellison held a fundraiser for Trump in February.
In August, a reporter asked Trump about the possibility of an Oracle Tiktok deal. Trump had a favorable response.
“I think Oracle is a great company, and I think its owner is a tremendous man,” Trump said. “He is a tremendous person. I think Oracle would definitely be someone who could handle it.”
ByteDance is in a difficult situation
The major challenge facing BiteDans is the need to meet the potentially conflicting demands of the US and Chinese governments. The US government has threatened to shut down TickTalk over concerns that the Chinese government would compromise Americans’ privacy or undue influence on the content Americans viewed. Transferring Tiktok’s American campaigns to an American company may allay those concerns.
But the Chinese government is not happy about the prospect of the US government essentially forfeiting a key Chinese technology asset for the benefit of an American competitor. At the end of last month, Beijing announced new export control rules, which prohibit the sale of artificial intelligence technology – rules that explicitly apply the algorithm TikTok uses to recommend videos to its users . This means that Bytdance will need the approval of the Chinese authorities as well as the Trump administration – before any deal can be reached.
Rumors have suggested that Chinese authorities may prefer to shut down TickTock than create a precedent for foreign governments to seize control of Chinese technology platforms. Bytdance’s decision to reduce the Oracle deal to a one-time sale may be an attempt to honor the Chinese government’s sensitivity.
But efforts to tamper with the Chinese government could easily deter US regulators on any deal. And if the Trump administration disapproves of the proposed deal for ByteDance, there is a significant chance that Ticketock will shut down and ByteDance will get nothing.
So if ByteDance believes that Larry Ellison can use his personal relationship with Trump to approve the deal, it would be a compelling reason to choose Oracle.