Tech Brief: Oracle Beats Microsoft to Buy TikTok's U.S. Business (Updated)
Database and cloud services provider Oracle has reportedly won a bid to manage TikTok's U.S. cloud operations as a "trusted tech partner." The Wall Street Journal reports that the deal will not be an outright sale.
The development comes as Microsoft revealed it was no longer acquiring TikTok after its offer was rejected by TikTok's owner ByteDance. It's worth noting that Microsoft had been pursuing a deal to buy TikTok's operations in the U.S., Australia, Canada, and New Zealand.
What's more, ByteDance appears to have notified the U.S. authorities and potential bidders for TikTok U.S. operations that it will not sell or transfer TikTok's recommendation algorithm.
"The company [ByteDance] will not hand out source code to any U.S. buyer, but the technology team of TikTok in the U.S. can develop a new algorithm," South China Morning Post reported quoting anonymous sources over the weekend.
Talks of a potential TikTok sale reached a fever-pitch early last month in the wake of the U.S. government passing an executive order on August 6 blocking all transactions with ByteDance and demanding an American company purchase TikTok's U.S. business over concerns that the video-sharing app could pass on data it collects from its users to the Chinese government.
For what it's worth, the precise nature of the U.S. government's "national security concerns" has never been clearly articulated. TikTok, in response, has maintained it hasn't been asked to share data with China and wouldn't do so if asked.
Walmart, which had been working with Microsoft on its bid, said on Sunday it "continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties."
Update on Sept. 14: Oracle has confirmed it is part of a proposal submitted by ByteDance to the U.S. Treasury to become TikTok's "trusted technology provider."
Additionally, CNBC reports that ByteDance is having discussions with both Oracle and Walmart for stakes in the U.S. business and avoid a full sale of its assets in the country.
Update on Sept. 15: ByteDance will spin-off its global business into a new U.S.-headquartered company, with Oracle becoming a minority shareholder to avoid an outright ban, reports The Financial Times.
Update on Sept. 16: Oracle is expected to gain full access to review TikTok's source code and updates in order to make sure there are no backdoors to amass data on the video-sharing app's users, reports Bloomberg.
Update on Sept. 17: Axios confirms "Oracle will have the exclusive ability to oversee all tech operations for TikTok in the U.S.," in addition to ensuring that the app's source code and subsequent updates have no backdoors.
TikTok Global, as the new entity is likely to be called, is also set to come with an independent oversight board and a continuous third-party audit to adhere to security and data privacy commitments.
In a separate development, Instagram co-founder Kevin Systrom is said to have been approached about the possibility of leading the new company, The New York Times reports.
Update on Sept. 19: It's official. Oracle will become TikTok's "trusted technology partner" and will be responsible for hosting all U.S. user data and securing associated computer systems to meet U.S. national security requirements.
The social media platform is also working with Walmart on a commercial partnership as well, with both companies eligible for a collective 20% stake in TikTok Global.
The deal, however, will not entail any transfer of its recommendation algorithm and technologies to Oracle, although as reported before, the company will have the "authority to access the source code of TikTok USA."
The development comes as Microsoft revealed it was no longer acquiring TikTok after its offer was rejected by TikTok's owner ByteDance. It's worth noting that Microsoft had been pursuing a deal to buy TikTok's operations in the U.S., Australia, Canada, and New Zealand.
"The company [ByteDance] will not hand out source code to any U.S. buyer, but the technology team of TikTok in the U.S. can develop a new algorithm," South China Morning Post reported quoting anonymous sources over the weekend.
Talks of a potential TikTok sale reached a fever-pitch early last month in the wake of the U.S. government passing an executive order on August 6 blocking all transactions with ByteDance and demanding an American company purchase TikTok's U.S. business over concerns that the video-sharing app could pass on data it collects from its users to the Chinese government.
For what it's worth, the precise nature of the U.S. government's "national security concerns" has never been clearly articulated. TikTok, in response, has maintained it hasn't been asked to share data with China and wouldn't do so if asked.
Walmart, which had been working with Microsoft on its bid, said on Sunday it "continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties."
Update on Sept. 14: Oracle has confirmed it is part of a proposal submitted by ByteDance to the U.S. Treasury to become TikTok's "trusted technology provider."
Additionally, CNBC reports that ByteDance is having discussions with both Oracle and Walmart for stakes in the U.S. business and avoid a full sale of its assets in the country.
Update on Sept. 15: ByteDance will spin-off its global business into a new U.S.-headquartered company, with Oracle becoming a minority shareholder to avoid an outright ban, reports The Financial Times.
Update on Sept. 16: Oracle is expected to gain full access to review TikTok's source code and updates in order to make sure there are no backdoors to amass data on the video-sharing app's users, reports Bloomberg.
Update on Sept. 17: Axios confirms "Oracle will have the exclusive ability to oversee all tech operations for TikTok in the U.S.," in addition to ensuring that the app's source code and subsequent updates have no backdoors.
TikTok Global, as the new entity is likely to be called, is also set to come with an independent oversight board and a continuous third-party audit to adhere to security and data privacy commitments.
In a separate development, Instagram co-founder Kevin Systrom is said to have been approached about the possibility of leading the new company, The New York Times reports.
Update on Sept. 19: It's official. Oracle will become TikTok's "trusted technology partner" and will be responsible for hosting all U.S. user data and securing associated computer systems to meet U.S. national security requirements.
The social media platform is also working with Walmart on a commercial partnership as well, with both companies eligible for a collective 20% stake in TikTok Global.
The deal, however, will not entail any transfer of its recommendation algorithm and technologies to Oracle, although as reported before, the company will have the "authority to access the source code of TikTok USA."
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