Oracle’s Bid For TikTok Could Be Blocked After ByteDance Rejects Sale Of Algorithm: Report

Topline

 Oracle’s reported successful bid to partner with TikTok U.S. faces another potential roadblock after the app’s Chinese owner, ByteDance, said it would not hand over its algorithm in the event of any sale or divestment, the South China Morning Post reports, citing sources familiar with boardroom discussions.

Key Facts

With just hours to go before the Trump administration’s September 15 deadline for the app to be sold to a U.S. company or risk being banned, software firm Oracle, favoured by President Donald Trump, is reportedly set to be announced as a “trusted tech partner” for TikTok U.S., the Wall Street Journal reported on Sunday.

Microsoft, the initial frontrunner to acquire the app’s operations in the U.S., confirmed on Sunday that it was out of the running after ByteDance rejected the firm’s bid.

But Oracle’s partnership could already face obstacles as an unnamed source familiar with discussions told the SCMP that a new algorithm would have to be developed as the existing one would not be handed over, while Chinese state run broadcaster CGTN said ByteDance would not be selling TikTok in the U.S.

“[ByteDance] will not hand out source code to any US buyer, but the technology team of TikTok in the US can develop a new algorithm,” the source told the paper, adding that the bidders had already been told of the decision.

Any rejection of the “no algorithm” condition by Trump would be a dealbreaker, the source told the SCMP.

ByteDance's decision comes almost three weeks after the Chinese government threw a wrench in the negotiations by restricting the export of any artificial intelligence tech like those powering TikTok’s algorithms.

Key Background

Negotiations for the sale of popular video sharing app TikTok have been ongoing for weeks, after President Trump issued an executive order last month threatening to ban it over concerns about national security and the app’s use of U.S. users’ data, part of the administration’s broader attacks on Chinese tech firms. Microsoft’s joint offer with retail giant Walmart appears to have been beaten out by Oracle, a computer software firm owned by billionaire and Trump donor Larry Ellison, however the price of the reported deal, which would see Oracle manage TikTok’s U.S. user data, according to Reuters, has not yet been revealed. Talks have not been without discontent on both sides of the table; TikTok sued the Trump administration last month over another executive order which would ban any U.S.-based transactions with ByteDance, while ByteDance founder Zhang Yiming previously said the firm disagrees with Washington’s push for a sale. Meanwhile, new Chinese export rules introduced last month could mean Beijing will have the last say in the fate of the app in the U.S., which counts 100 million monthly active users nationwide and has spawned millionaire influencers over its two-year presence in the U.S. All will likely be revealed this week, as Trump has refused to extend his September 15 deadline.

Further Reading

TikTok’s algorithm not for sale, ByteDance tells US: source (South China Morning Post)

Oracle Reportedly Wins Race To Acquire TikTok’s U.S. Operations (Forbes)

TikTok’s 7 Highest-Earning Stars: New Forbes List Led By Teen Queens Addison Rae And Charli D’Amelio (Forbes)