Oracle wins the race for US TikTok business

The technology company negotiates an association agreement with the Chinese firm, which rejects Microsoft’s offer

TikTok

Bytedance, the Chinese company that owns the popular video social network TikTok, has refused to sell its business in the United States to the giant Microsoft and finalizes negotiations with Oracle, according to the American media this morning. The alliance with Oracle, as highlighted by The Wall Street Journal or Reuters, will not consist of a standard sale but rather of becoming a technological partner of the firm and assuming the management of the data. Meanwhile, Microsoft has confirmed that Bytedance rejected its purchase offer.

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The Chinese public television CGTN, for its part, has assured that Bytedance will not sell the operations in the country to Microsoft or Oracle and that it will not provide a potential buyer with the source code of its video platform, without giving more details.

US President Donald Trump had given ByteDance a deadline that expires on September 15 to sell its US operations to a local company or leave the country. The White House considers TikTok a threat to national security for being owned by a Chinese company and capturing data from its 100 million users in the country. ByteDance has rejected US allegations that it shares this information with the Chinese government.

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The sale negotiations were further interrupted by the update of the export control rules by China rules last month. Specifically, it established vetoes for the sale of certain artificial intelligence technologies. The Chinese government would rather see TikTok shut down in the United States than allow a forced sale.

Trump already showed in August his interest in having Oracle, which maintains close ties with the White House, takes over TikTok’s operations in the United States. Oracle Chairman Larry Ellison is one of Trump’s big tech entrepreneurs. His business, however, has little to do with TikTok: Instead of viral teen videos, his business relies on storing and managing corporate customer data.

In any case, it will be precisely the control of the data that the US officials will supervise. The Committee on Foreign Investment in the United States (CFIUS), a US government panel that reviews trade agreements and potential national security risks, is monitoring the talks. ByteDance plans to argue that the CFIUS approved the purchase of insurer Genworth Financial by China Oceanwide Holdings two years ago. In that agreement, China Oceanwide agreed to use a US-based third party as a service provider to manage the data of Genworth policyholders in the United States.

Technological war

The technology sector is the last battleground between China and the United States. Trump signed two executive orders last month targeting TikTok and ByteDance. The first prohibits US companies from transacting with them and takes effect on September 20. The second called for the sale of TikTok’s American business. If you accept the agreement with Oracle, you must terminate the latter.

The White House has stepped up its efforts to purge what it considers “untrustworthy” Chinese applications from US digital networks. Beyond TikTok, Trump also issued an order prohibiting transactions with the WeChat messaging app. Months ago he forced the sale by the Chinese firm Kulun Tech of the dating application Grindr, aimed at the gay public.

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