TikTok users rejoice! Microsoft may no longer be involved in taking over TikTok’s U.S. operations, but another tech heavyweight is stepping in. Silicon Valley-based Oracle Corporation confirmed on Monday that it is a part of the proposal submitted to the U.S. Treasury Department to run TikTok Stateside. Treasury Secretary Steve Mnuchin said he will make a recommendation on Oracle taking the role as TikTok’s “trusted technology partner” over the next week. The deal with Oracle includes making TikTok a U.S. headquartered company and providing 20,000 new jobs, Mnuchin told CNBC. “We need to make sure that the code is, one, secure, Americans’ data is secure, phones are secure, and we’ll be looking to have discussions with Oracle over the next few days with our technical team,” Mnuchin said.
The Trump administration ordered the hugely popular social media app TikTok to be banned in the U.S. on September 20, unless a U.S. company can take over its local operations. TikTok’s parent company ByteDance is based in China, and the Trump administration has raised concerns about the security and privacy of U.S. users data. Microsoft confirmed in August that it had entered into discussions to buy TikTok, though the Chinese government pushed back on those plans. “ByteDance let us know today they would not be selling TikTok’s U.S. operations to Microsoft,” Microsoft said in a statement on Sunday. “We are confident our proposal would have been good for TikTok’s users while protecting national security interests.” The pushback on the Microsoft deal seems to have come from the Chinese government which raised concerns over exporting key algorithms to other countries. As such, both the Trump administration and the Chinese government have to approve a deal for TikTok’s U.S. operations.
While both governments seem to be supportive of Oracle’s bid that is backed by current Bytedance investor Sequoia, analysts are struggling to understand why Oracle is interested in the deal. Anurag Rana is a Tech analyst with Bloomberg Intelligence. “Oracle’s potential win in the TikTok saga could provide a minor boost to its cloud infrastructure services, as the software company looks to become a credible player in a market dominated by Amazon and Microsoft,” Rana said. “However, Oracle has a long way to go before it becomes even a top-five player in the space, given its late entry.”
ByteDance founder Yiming Zhang was closely involved in the decision to go with Oracle’s proposal over Microsofts, according to a report by Reuters. “Concerns among major ByteDance backers such as Sequoia and General Atlantic over the financial hit of selling the popular short-video app in the United States for less than what it is worth led Zhang to opt for the sale of only a stake to Oracle, rather than an outright divestment,” Reuters reports.
Another thing Oracle has going for it, is a strong relationship between its founder Larry Ellison and President Trump. The President called him a ‘terrific guy’ recently. Peter Navarro, an economic adviser to Trump appeared on Fox News in August and discussed the advantages of Oracle taking on TikTok’s U.S. operations. “If you look at Microsoft versus Oracle, the one thing that separates the two companies with respect to national security is that Microsoft has a large footprint in China,” Navarro said. “Oracle on the other hand has a strong reputation of really putting a great firewall between its operations and China and that’s an important thing.”