Oracle, a software and cloud-computing operation with almost no experience running a social-media platform, won the bid for TikTok U.S. operations, beating Microsoft in its quest to partner with the hugely popular China-based video-sharing app.
The sale was forced by U.S. concerns over data security issues after President Donald Trump threatened to shut down TikTok in the U.S, Wall Street Journal reported. The Trump administration said the short-form video-sharing app posed economic and national-security threats to U.S. interests and its U.S. operations needed to be owned by a U.S. buyer. The White House gave Tik Tok owner ByteDance a 45-day deadline on Aug. 6 to sell itself or be banned.
Tik Tok has 100 million monthly U.S. users, up from about 11 million in early 2018.
Oracle has close ties to the Trump administration. CEO Safra Catz worked on Trump’s transition team executive committee in 2016. Co-founder Larry Ellison threw a fundraiser at his house for the president earlier this year.
“Ellison is one of the tech world’s few Trump supporters,” Reuters reported.
In March, Oracle was eager to help the White House with a planned study on releasing malaria drug hydroxychloroquine to treat covid-19 despite warnings from medical experts that it had dangerous side effects, Vanity Fair reported.
In August, Trump talked about an Oracle-TikTok deal. “Well I think Oracle is a great company and I think its owner is a tremendous guy, a tremendous person,” he said. “I think that Oracle would be certainly somebody that could handle it.”
Oracle positioned to have Trump’s ear, Axios reported in 2019. Its early ties with him served Oracle well, helping it win policy battles and influence. “Safra Catz in particular would have very good access, and different from the rest of the tech industry,” a former administration official told Axios. “She was for Trump before a lot of other people, and a lot of the tech industry is still not for Trump. She gets meetings, she gets access.”
Oracle’s fledgling cloud-computing business is far behind market leaders Amazon.com and Microsoft, people familiar with the matter told WSJ. That’s what drove Oracle’s interest in TikTok.
Oracle is mainly focused on serving business clients and has almost no experience running a social-media platform or consumer-facing business. Microsoft is a bigger player in business computing and owns the LinkedIn social-media site and the Xbox videogame business. It also has about three times more cas on hand ($136 billion) than Oracle.
Microsoft’s plans were more ambitious than Oracle’s, WSJ reported. Owning TikTok would help Microsoft have more presence with everyday consumers and provide coveted data on young and mostly female users — an area it doesn’t have much insight into.
The deal will likely not be structured as an outright sale and is pending review by the Trump administration, people familiar with the matter told the Wall Street Journal.
“I will just say from our standpoint, we’ll need to make sure that the code is, one, secure, Americans’ data is secure, that the phones are secure and we’ll be looking to have discussions with Oracle over the next few days with our technical teams,” U.S. Treasury Secretary Steven Mnuchin told CNBC on Monday.
Few tech companies have as much to gain as Facebook in a TikTok sale, the Washington Post reported.
Facebook founder and CEO Mark Zuckerberg has tried to raise concerns about TikTok and its Chinese owner, ByteDance. In a private dinner at the White House in October, he told Trump that Chinese internet companies should be a bigger concern to the U.S. than regulating Facebook.
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Zuckerberg told Georgetown students that TikTok doesn’t share Facebook’s commitment to freedom of expression, and is a risk to U.S. values and tech supremacy.
And Zuckerberg talked about TikTok in October meetings with Sen. Tom Cotton (R., Ark.) and Sen. Chuck Schumer (D., N.Y.). The government began a national-security review of the company shortly after, and by the spring, Trump was threatening to ban TikTok.
“Silicon Valley is out here stealing companies in broad daylight, working w/Trump. So Trump’s transition team gets US Tik Tok in a forced sale while Zuckerberg contributed to the Chinaphobia environment. This Tik Tok deal is going to become a bigger scandal,” The Moguldom Nation CEO Jamarlin Martin tweeted.
