Oracle wins bidding war for TikTok’s US operations

San Francisco/New York | ByteDance has reached a preliminary “technical partnership” agreement with Oracle for TikTok’s US operations that does not include a full sale of the short video app, according to three people with knowledge of the matter.

As part of the deal, Oracle plans to address the national security concerns that the Trump administration has raised over the Chinese company’s ownership of TikTok, said one of the people.

The US technology group chaired by Larry Ellison, one of the few people in Silicon Valley who has publicly supported Donald Trump, is likely to own a minority stake in the US business.

Existing ByteDance investors are also expected to have a stake in the final deal, said one person with knowledge of the discussions, who added that the talks were still fluid and subject to change. Any deal will require the support of the US and Chinese governments.

Oracle did not respond to requests for comment. ByteDance declined to comment.

The developments follow a protracted bidding process that pitted Oracle against Microsoft, which announced in early August that it was discussing the purchase of TikTok’s operations in the US, Canada, Australia and New Zealand.

Microsoft said on Sunday (Monday AEST) that ByteDance had rejected its bid, leaving Oracle as the only remaining suitor. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests,” the company wrote in a blog post.

Walmart, which was working with Microsoft on its bid, said it “continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties”.

The US is continually changing its position, but this deal will show us what their bottom line on security issues really is.
— Zhang Yansheng, Renmin University in Beijing

A deal with Oracle would place TikTok’s US business in the hands of one of Mr Trump’s closest corporate allies in Silicon Valley. While Oracle is best known as an enterprise software provider, its cloud computing business could benefit from gaining TikTok as a customer.

It was unclear whether Mr Trump would approve of a partnership arrangement such as the one ByteDance has discussed with Oracle. The President has called for a full sale of TikTok’s US operations to satisfy national security concerns.

Alex Stamos, former chief security officer at Facebook, said on Twitter: “A deal where Oracle takes over hosting without source code and significant 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.”

The deal talks have also been complicated by Beijing’s imposition of export controls covering “personalised information recommendation services based on data analysis” such as those used by ByteDance.

Zhang Yansheng of Renmin University in Beijing said it would be difficult to reach a deal agreeable to both Washington and Beijing. “The US is continually changing its position, but this deal will show us what their bottom line on security issues really is.”

Mr Trump has threatened to ban TikTok as soon as Tuesday unless a deal is reached, though his executive order had set a legal deadline of September 20 for ByteDance to find a buyer. TikTok sued the Trump administration last month over the order, arguing it was politically motivated and ignored due process.

Also in August, Kevin Mayer resigned as chief executive just months after taking the job, saying the global role he signed up for had been jeopardised by the Trump administration’s desire for a sale of the US business.

In contrast to Microsoft, Oracle has had an antagonistic relationship with China. The company laid off more than half of its R&D team – about 900 staff – in the country, prompting protests from workers who blamed the move on Mr Ellison’s alleged dislike of China.

Oracle had been working with ByteDance investors including General Atlantic, the private equity group, and venture capital firm Sequoia Capital on its bid. Sequoia declined to comment. General Atlantic did not respond to a request for comment.

Asia-Pacific shares and futures linked to US tech stocks rose on Monday as reports of Oracle's TikTok deal fuelled hopes of a resolution to a flashpoint in relations between Washington and Beijing.

Additional reporting by Ryan McMorrow and Yuan Yang in Beijing.

Financial Times