Oracle set to win TikTok race as Microsoft's offer rejected

Technology giant Oracle is in the box seat to make a deal with TikTok after Microsoft's offer to buy the viral social media platform's US operations was rejected by its Chinese parent company ByteDance.

ByteDance's rejection of Microsoft leaves Oracle as the sole known remaining bidder for TikTok and The Wall Street Journal reported Oracle is set to be announced as TikTok's "trusted technology partner" in the United States with the deal not likely to be structured as an outright sale.

Microsoft was considered the lead contender in the race to buy TikTok after United States President Donald Trump made an executive order banning the social media platform unless it was sold.

Any sale was also likely to involve TikTok's operations in Australia, Canada and New Zealand.

Oracle's founder and chief executive Larry Ellison is a friend of President Trump and the President has said he supported Oracle's bid to buy TikTok.

TikTok features 15-second videos of users mostly lip syncing, dancing and performing comedic skits and the app's popularity has soared during the COVID-19 pandemic with more than 2 billion downloads globally and an an estimated 1.6 million users in Australia.

Microsoft posted a statement on its website stating that ByteDance had let Microsoft know it 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," the statement said. "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."

Microsoft said it "looked forward" to seeing how TikTok's service evolved in these "important areas".

Dr Belinda Barnet, senior lecturer in media at Swinburne University, said Microsoft was TikTok's obvious purchaser and a sale to Oracle would be a strange outcome.

"Microsoft is quite right they have the deepest pockets and the most experience in privacy and security functionality," she said. "My immediate thought is that Oracle has won because it has close ties to the Trump administration. It is a large company but it has nowhere near the might and power of Microsoft. It is also a completely new direction for the company."

Prime Minister Scott Morrison has previously said there were no plans to ban TikTok in Australia after security agencies found the Chinese company did not pose serious national security concerns.

Oracle and TikTok declined to comment.