ByteDance has reached a preliminary "technical partnership" with Oracle to manage TikTok's US operations, a decision that comes as a deadline for a ban of the popular app draws near. Earlier on Sunday, ByteDance rejected Microsoft's offer to take over the US operations of its short-video app, leaving Oracle the sole bidder.
However, the partnership does not include a full sale of the short-video app, according to some people with knowledge of the matter, as ByteDance has decided TikTok's algorithm won't be included as part of any sale. This thus makes Oracle TikTok's "trusted tech partner" in the US, and not the outright owner.
Sigh of Relief for ByteDance
ByteDance has chosen Oracle over Microsoft as TikTok's preferred partner on Sunday thus putting an end to speculation over the app's survival in the United States. President Donald Trump had set a September 20 deadline ordering ByteDance to either sell TikTok to a US company or see the service banned from the US market. Naturally, the deal will bring some respite for ByteDance.
Although BydeDance didn't make an official announcement, a The South China Morning Post reported on Sunday, citing unnamed source, that ByteDance has decided TikTok's algorithm won't be included as part of the sale. The media outlet says the source was briefed on the Chinese company's boardroom discussions.
Given the arrangement, Oracle as a "trusted tech partner" is likely to help run TikTok's US operations with its own cloud technologies. However, even though it won't be structured as a sale, the deal will still require the US government's approval.
Existing ByteDance investors are also expected to have a stake in the final deal, said one of the industry insiders with knowledge of the discussions, adding that the talks are still fluid and subject to change. However, things need to be finalized fast given that the deadline is nearing.
End to Problems?
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, which continues to be the primary reason behind this partnership. But the issue is far from resolved. Trump had been stressing for a full sale, which hasn't happened. Instead, a ByteDanec and Oracle have just entered into a management partnership.
ByteDance, till last week, was discussing with the US government various possible arrangements that would allow TikTok to avoid a full sale of its US operations after the Chinese government had put in place steps designed to make a sale to a US company more difficult, if not impossible. News of a deal with Oracle comes just an hour after Microsoft revealed it was no longer acquiring TikTok after its bid was rejected by ByteDance.
Microsoft had announced in early August that it was discussing the purchase of TikTok's operations in the US, Canada, Australia and New Zealand. The company officially confirmed that it was out of the running for TikTok earlier on Sunday, with a short message posted on the its blog: "ByteDance let us know today they 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."
However, Walmart, which had been working alongside Microsoft on its bid, said on Sunday that it "continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties". That said, it's still unclear whether Trump will approve of a partnership and not full sale of TikTok's US operations, although a deal with Oracle would place the short-video app's US business in the hands of one of Trump's closest corporate allies in Silicon Valley.