Oracle and TikTok will reportedly become “technology partners” in the US after Chinese owner ByteDance rejected an offer from Microsoft to acquire the video-sharing app’s US operations.
The exact details of an Oracle-TikTok partnership remain unclear, but it could see Oracle handle TikTok’s US user data.
US President Donald Trump has given TikTok until the 15 September to divest its US business or face a ban, citing national security concerns. TikTok has rejected these claims, while Chinese officials say they would rather TikTok exit the US market than sell to an American company.
A Chinese export control restricting the sale of artificial intelligence technology, such as the algorithm TikTok created to suggest tailored content, has cast further doubt on a sale to a US firm.
Reports from Chinese media suggest TikTok would not sell or transfer its algorithm to a US company. ByteDance and Oracle have declined to comment.
TikTok buyer speculation
Since August speculation has surrounded TikTok’s future in the US, where it has more than 100 million monthly users. Microsoft, with backing from retailer Walmart, had been one of the lead contenders.
In a statement on Sunday, the US tech giant said: “ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.
“To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement.”
It is unclear whether the White House and Beijing will approve an Oracle-TikTok partnership. But with sources telling Reuters the partnership will be a restructuring rather than a sale, it may allow each side to claim victory.
Some experts have said Trump’s pressured sale of TikTok is part of a wider political dispute with China, rather than in the interests of national security.
Alex Stamos, the former chief security officer at Facebook, said via Twitter: “A deal where Oracle takes over hosting without source code and operational changes would not address any of the legitimate concerns about TikTok, and the White House accepting such a deal would demonstrate that this exercise was pure grift.”
Oracle-TikTok partnership has risks
Oracle, which sells enterprise cloud and database technology, raised eyebrows when it entered the running to acquire TikTok. However, Oracle chief technology officer Larry Ellison’s open support of Trump may prove to be an advantage to the company he co-founded.
Yuval Ben-Itzhak, CEO of social media marketing company Socialbakers, said a partnership between TikTok and Oracle looked “very promising at a first glance”.
“Having Oracle’s expertise in cloud and data technologies at an enterprise scale can certainly support TikTok’s backend needs and phenomenal growth,” he said.
“The only risk that such a partnership may present would be if Oracle tries to change TikTok’s DNA into a traditional operation, instead of focusing its efforts on building out the technology infrastructure and leaving the TikTok business to do what it does best, acquire and engage users authentically at scale.”