TikTok prefers Oracle over Microsoft for a deal in US
14 September 2020
Oracle is reported to have emerged winner in its bid to acquire the US operations of Chinese lip-sinking app, TikTok, pipping Microsoft, under a forced sale prompted by President Donald Trump’s orders.
While ByteDance the owner of TikTok, got a buyer for its US operations, the sale may not be easy considering China’s opposition to any forced sale of Chinese businesses. China would rather see TikTok’s US operations shut down than go through a forced sale.
And, with China erecting new regulatory hurdles, the situation looks very complicated. Considering China’s new regulations on the export of AI, a sale of the popular algorithm may not be realised.
Also, President Donald Trump had issued an executive order setting a deadline of 45 days ending 20 September for any US-based firm to complete a deal for TikTok.
There is then a likelihood of time running out for the deal, unless the US regulators extend the time for completing a deal.
Microsoft issued a statement saying that ByteDance has rejected its bid to acquire TikTok: “ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. 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 combating disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.
Microsoft was the first US tech major to express interest in taking over the app’s operations in the US, Canada, Australia, and New Zealand.
This was followed by an executive order by President Donald Trump setting a deadline of 45 days ending 20 September for any US-based firm to complete a deal for TikTok.
China fired back with a new regulation banning export of any AI-linked technology, that would rather see TikTok’s US operations shut down than go through a forced sale.
Reports, meanwhile, said Oracle is set to be announced as TikTok’s “trusted tech partner” in the US, and the deal is likely not to be structured as an outright sale.
It would then go to the White House and the Committee on Foreign Investment in the US for approval. Both Oracle and ByteDance claim the agreement satisfies the concerns around data security that have been previously raised by the US government.
On Monday, Treasury Secretary Steven Mnuchin confirmed that his office received a bid proposal from Oracle for TikTok’s operations over the weekend and said that the Treasury-led Committee on Foreign Investment in the US would review it this week.
“We will be reviewing that at the CFIUS committee this week and then will be making a recommendation to the president and reviewing it with him,” Mr. Mnuchin said on CNBC. “From our standpoint, we’ll need to make sure that the code is, one, secure, Americans’ data is secure, that the phones are secure and we’ll be looking to have discussions with Oracle over the next few days with our technical teams.”
The situation is very complicated, and with time running out, there’s no clear outcome at the movement. Oracle must move rapidly if it wants to complete a deal this week.