Oracle and TikTok in Reported Deal

Multiple news outlets are reporting that Oracle has partnered with TikTok‘s Chinese parent company ByteDance. According to CNBC, Oracle has confirmed that it will “serve as the trusted technology provider.” Presumably, this will satisfy U.S. regulators and allow TikTok to continue operations in the face of data security concerns.

It appears Oracle has overtaken Microsoft as the leading contender to take over the U.S. reins from TikTok. Oracle is the latest and perhaps the most unlikely suitor for TikTok. As an enterprise software company, Oracle has no obvious affinity for a social content business like TikTok. This stands in contrast with Microsoft which at least has some content and gaming operations.

TikTok has been under pressure from the Trump administration to unwind itself from Chinese control. Of course, the main issue is the administration’s concerns that TikTok’s owners would hand over customer data to Chinese authorities if asked. For its part, ByteDance has insisted it wouldn’t do this. And it also points out that its customer data is stored outside China.

According to a report yesterday in Axios, the talks originally centered around acquiring all of TikToks operations in the United States, Canada, Australia, and New Zealand. However, this may now only involve the U.S. operations. A possible wrinkle also comes from China’s export regulations, according to Axios. As a result, ByteDance will not transfer TikTok’s algorithm.

Oracle, Really?

So why Oracle? Axios cites a couple of potential reasons why Oracle would win out over Microsoft, which has deeper pockets and much more consumer tech expertise. Axios reports Oracle has relationships with some exciting ByteDance shareholders. This may increase Beijing’s comfort level with the deal. In addition, Oracle’s reported ties to the Trump administration could also be a factor. Oracle founder and executive chairman Larry Ellison has raised money for Trump and current CEO Safra Catz was a member of Trump’s transition team.

Oracle may see TikTok as an avenue to boost its cloud infrastructure business, as well as offering inroads to younger consumers. TikTok reportedly has more than 100 million users in the United States, with a demographic that skews younger.

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