Oracle is set to become TikTok’s “trusted tech partner” in the US after the social media app’s Chinese partner company rejected an offer from tech giant Microsoft.
TikTok parent company ByteDance is racing against time to secure a deal with a US company in order to avoid a ban in the country under a Donald Trump executive order which comes into effect at the end of the week.
The President has raised concerns with the large amounts of data captured by the social network company and the potential for this to be handed over to the Chinese government.
The Wall Street Journal reported on Monday that enterprise database software giant Oracle has won the bidding process and will be named as TikTok’s “trusted tech partner” in the US.
According to the report, the deal is unlikely to involve an outright sale of TikTok’s operations in the US, with Oracle to instead serve as more of a cloud service provider.
It’s unclear whether a deal of this nature would satisfy the US government’s concerns over the social network platform.
Oracle, best known for the Java software platform, announced last month that it was interested in a deal with TikTok, and has been working with Sequoia Capital, a ByteDance investor.
Any such deal would require approval from the US government, and Trump initially welcomed the news that Oracle was interested in a deal, labelling it a “great company”.
Oracle chair Larry Ellison is a vocal Trump supporter.
It’s also unclear how the reported deal would impact TikTok users in Australia.
Microsoft’s bid had involved it acquiring TikTok’s operations entirely in the US, along with Canada, Australia and New Zealand. But Oracle appears unlikely to actually acquire any of TikTok’s operations in specific countries, instead hosting the user data it gathers.
Microsoft was the first company to throw its hat in the ring to acquire TikTok and looked to be leading the pack.
But new export restrictions announced by the Chinese government requiring explicit permission for any technology to be transferred away from the country complicated matters, with Microsoft having hoped to get its hand on TikTok’s prized algorithm, used to present videos to users.
Microsoft announced on Monday morning Australia time that its bid had been knocked back by ByteDance.
“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft,” the company said in a blog post. “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 combatting disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.”
Trump’s executive order, which bans any US citizens from doing business with ByteDance, claims that TikTok collects “vast swathes of personal information” from users which “threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information”.
It also said that TikTok could “potentially allow China to track the locations of federal employees and contractors, build dossiers of personal information for blackmail and conduct corporate espionage”.
“TikTok may also be used for disinformation campaigns that benefit the Chinese Communist Party, such as when TikTok videos spread debunked conspiracy theories about the origins of the 2019 novel coronavirus.”
News of the finalised deals comes just weeks after TikTok CEO Kevin Mayer quit the company amid the geopolitical storm.
“In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for,” Mayer said.
“Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company.”