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Summary
- ByteDance owned TikTok, which was poised to miss the US deadline for sale of TikTok took everyone by surprise, when it picked Oracle as a bid winner instead of Microsoft.
- Initially at first glance, Oracle’s possible pursuit of a deal for the jazzy filter and lip-syncing video app, TikTok looked like an inappropriate fit considering the fact that Oracle is well known for its legacy corporate databases.
- However, the deal makes more sense in the light of Oracle’s intention to establish its own cloud computing, as well as consumer data businesses.
- The snubbed bid of Microsoft (on 13 September 2020) demonstrates a symbolic loss for the tech giant as it has its own advertising business, and TikTok is noted to generate revenue via showcasing of advertisements to its user base while scrolling through videos in the application.
- The proposed deal completion is subject to approval by the US President Donald Trump.
The week commenced on a good note for Oracle Corporation, ahead of the 20 September 2020 deadline for the deal to be closed by ByteDance.
The Trump administration had threatened to ban TikTok by 20 September 2020 following the issuance of the executive order on 6 August 2020, and ordered ByteDance to sell its US business, within 45 days citing national-security risks and funnelling of users personal and proprietary information to the Chinese government.
However, the Company denied the fact that it had shared its users’ data with the Beijing Government or that it would do so if asked by them.
Related read; Are the tides turning against Chinese tech companies?
According to media reports, ByteDance (owner of TikTok, a short video-sharing platform) picked Oracle over Microsoft as its technology partner in the US. Oracle is believed to take a considerable stake in TikTok’s business.
The Chinese owner of TikTok rebuffed Microsoft’s previous bid to buy the US assets of TikTok and unfastened the Washington-headquartered tech giant from the running, days before the US President Donald Trump to follow through with a plan of an injunction for a ban against Chinese technology companies over concerns of jeopardising national security concerns.
Related read; Cyber Espionage Campaign: Strings that tie China, Australia and the US
Furthermore, the bid of Microsoft, the front-runner for the acquisition of TikTok was snubbed as announced by Microsoft in one of its blog post, dated 13 September 2020, wherein it stated that, the Chinese Company, ByteDance disclosed their decision of non-selling of TikTok’s US operations to them.
Must read; The TikTok Talk: Microsoft's Efforts around Pocketing a Big deal
Microsoft also added that, they were confident that their proposal would have been advantageous for TikTok’s users along with safeguarding national security interests.
Furthermore, to put it into action, Microsoft would have made considerable changes fortifying the services to endure the highest standards for privacy, online safety security, privacy, and any disinformation.
The non-selling of TikTok’s US operations to Microsoft, demonstrated a symbolic loss for Microsoft as it has its own advertising business, inclusive of Bing search engine and TikTok is noted to generate revenue via showcasing of advertisements to its user base while scrolling through videos in the application.
A quick read; US-China clash and TikTok controversy
Both TikTok and representatives of Oracle, an enterprise software giant have not made any comments on the deal.
Moreover, Safra A. Catz, CEO of Oracle held Q12021 earnings call conference on 10 September stating that, before she began, she wanted to make sure the individuals understood that no comments would be made in relation to the press reports about TikTok.
Furthermore, as per numerous media sources, the deal is likely to emerge as a corporate restructuring instead of an outright sale.
You must be wondering, what’s in it for the US based software giant, Oracle?
Initially, at first glance, Oracle’s possible pursuit of a deal for the video sharing platform looked like an inappropriate fit considering the fact that Oracle is well known for its legacy corporate databases, and TikTok, a jazzy filter and lip-syncing video app seemed different to the existing line of business of Oracle.
However, the prospective deal makes more sense in the light of Oracle’s intentions to establish its own cloud computing, as well as consumer data businesses.
Also, TikTok stores humongous amount of data and is a big customer of cloud services run by Amazon Web Services and Google, currently.
It is worth noting that TikTok could forefront a rejuvenation for the division, furnishing Oracle with a trove of user information, which would be beneficial to advertisers and would also offer a platform for its clients to run their advertisements.
In a nutshell, it would assist Oracle in boosting its advertising business.
When we look at Oracle’s Q12021 financial results for the period ended 31 August 2020, the Company possesses cash and cash equivalents of US$27,276 million, and marketable securities stands at US$15,003.
Furthermore, the proposed deal completion between Oracle and TikTok is subject to approval by the US President Donald Trump, who wants a US technology company to own TikTok’s business in the US, with the storage of data within the country boundaries.
Also read; President Trump goes vocal on the US-China decoupling
