Oracle wins TikTok US bid, but not for 'full sale'
After months of discussions and complications, Chinese giant ByteDance is finalizing a deal for the US business of TikTok. The company has reportedly chosen the bid submitted by enterprise provider Oracle over that of a consortium led by Microsoft. However, this will not be structured as a full sale of the hit video service. Here are more details.
Oracle chosen as 'technology partner'
Under the agreed terms, Oracle will be announced as ByteDance's 'technology partner' for TikTok in the US. As part of this, the American company, Reuters' sources report, will be taking control of TikTok US users' data as well as a stake in the platform. ByteDance's top US-based backers, including General Atlantic and Sequoia, will also take minority stakes in TikTok US.
Goal to allay US government's concerns
With this arrangement, ByteDance hopes to allay the concerns of the US government, which has repeatedly alleged that the personal data collected by TikTok could be handed over to the Chinese government, posing a threat to national security. Even though ByteDance explicitly denied the claims, the Trump administration imposed 'sell-or-close' orders to get the US assets of TikTok divested to a credible American company.
But, will this be approved?
Even though Oracle fits the description of a credible American company, the deal that appears to be moving ahead is not that of an outright sale of TikTok US. It remains to be seen whether the US government agrees to this arrangement and allows the video-sharing platform to operate, with Oracle running operations as a partner, or issues an order for its shut down.
This also appeases the Chinese government
Meanwhile, the move to go for a partnership, instead of full divestment, will also help ByteDance appease the Chinese government, which has opposed the 'forced sale' - so much so that it was ready to see TikTok getting banned. China had even added technologies such as those used by TikTok to its review-mandated tech export list to throw a wrench in the sale plan.
AI tech might not be transferred
Having said that, this partnership, which is yet to be made official, might not include the ByteDance-developed AI technologies added to China's export list. This means that Oracle might have to write the algorithms for the US feed recommendation system of the video service. Notably, in the US alone, TikTok boasts more than 100 million users.