In a twist that was anticipated but never seriously expected, enterprise major Oracle has reportedly outbid Microsoft to snap TikTok. The deal comes to light via a WSJ report, that states that Oracle is set to be announced as TikTok’s “trusted tech partner” in the U.S., and the deal is likely not to be structured as an outright sale.
The deal will now go to the White House for a formal approval, which is more of a formality considering Trump administrations never-seen-before, deep involvement in a business deal of this magnitude. According to the government sources that WSJ has talked to, both Oracle and Tiktok-owner Bytedance, believe that the proposed deal structure satisfies the concerns around data security that have been previously raised by the U.S. government.
It is an interesting turn of events for many reasons.
To start with, most had expected Microsoft to come through with this deal. Looking at how Microsoft has some experience in direct-to-consumer digital offerings, it looked like the best fit for the struggling short form video platform. Oracle, which has been struggling off late to get its enterprise game going, was seen more of a latent bidder. In fact, it was Microsoft that had publicly stated its “commitment to acquiring TikTok” within the White house set timeline.
With Oracle, the deal does not make a lot of sense, specially considering the extremely enterprise-driven business of the company. The deal, if true and if it materialises, could be a big win for Oracle, that is otherwise struggling against the likes of AWS, Google Cloud and Microsoft Azure in its enterprise space.
The structure of the deal is not exactly known at this point of time, but it is not going to be a plain acquisition. WSJ further reports, that the deal may well be called a ‘partnership’ rather than an outright acquisition. People familiar with the matter state that there may not be any significant exchange of assets. In fact, key investors with Bytedance, such as Sequoia Capital, will continue to hold equity in the company.
Later in a statement on Sunday, Microsoft, which had partnered up with Walmart to get through this deal, said that it was notified earlier in the day of the decision by ByteDance. The Redmond giant said, “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 combating disinformation, and we made these principles clear in our August statement.”
Talks for TikTok’s US business (and possibly other geos) acquisition began when Trump issued an executive order, barring TikTok in the US, along with WeChat. The order provided Tiktok a window of 45 days, that is supposed to end on September 15th, to complete a sale or face absolute shut down in the country.
Prior to this, the first big setback for TikTok came in the form of a ban issued by the Indian government, citing national security concerns and inadequate user data privacy options. India was TikTok’s largest market prior to the ban. The ban came days after Indian and Chinese armies confronted each other in a deadly border clash, with China crossing along the Indian side in violation of previously set international rules. Later, India also announced a ban on the wildly popular battle royale game, PUBG.