TikTok rejects Microsoft, proposes to make Oracle ‘trusted technology partner.’ Will Trump be satisfied?
ByteDance, wary of political risk after Beijing designated parts of its algorithms as “sensitive technologies,” will not sell TikTok to Microsoft or anyone else. Instead, the company is proposing to partner with Oracle, a Silicon Valley company with Trump-friendly executives.
ByteDance, the Beijing-based owner of TikTok, said yesterday that it “would not be selling TikTok’s U.S. operations to Microsoft,” a short notice from that company read.
- TikTok’s source code is not for sale to any company, Chinese state broadcaster CGTN soon reported. A source told the South China Morning Post: “The car can be sold, but not the engine.”
- This follows new rules from Beijing in late August that appeared to designate core parts of TikTok’s algorithm as “sensitive technologies.” A Caixin report (in Chinese) — apparently since deleted — said that ByteDance had “given up” selling TikTok, and this was “related to the difficulty of getting past the Chinese government’s examination.”
Instead of a sale, ByteDance has chosen Oracle as its “trusted technology partner,” the California-based company said in a statement today, confirming reports from yesterday. TikTok confirmed to NPR that it, along with Oracle, had “submitted a proposal to the Treasury Department which we believe would resolve the Administration’s security concerns.”
How would this work?
- It will “look more like a corporate restructuring than the outright sale Microsoft had proposed,” Bloomberg reports, though it is “likely to include a stake in a newly configured American business.”
- Oracle might host the data from TikTok videos on its own servers, Bloomberg says.
- “TikTok will also partner with retail giant Walmart in e-commerce,” Caixin adds.
Why Oracle?
The company’s executives are very cozy with Trump. Per the New York Times:
Unlike many other technology companies, Oracle has cultivated close ties with the Trump administration. Its founder, Larry Ellison, hosted a fund-raiser for Mr. Trump this year, and its chief executive, Safra Catz, served on the president’s transition team and has frequently visited the White House…
Oracle’s relationship with the administration has drawn scrutiny. In August, a Department of Labor whistle-blower said that Mr. Trump’s labor secretary, Eugene Scalia, had intervened in a pay discrimination case involving the company.
If ByteDance is avoiding a direct sale of its technology, Beijing is less likely to object as loudly as last month, and Trump is the far more important party to please.
The irony: Trump already rejected anything less than a complete sale last month. Per New York Times columnist Andrew Ross Sorkin:
ByteDance originally was going to make Microsoft its “tech partner” (cloud host) w/minority interest early this summer. Trump administration said ByteDance needed to sell full control of U.S. business.
That doesn’t mean Trump couldn’t change his mind, especially if some of his only high-profile public supporters in Silicon Valley stand to benefit.
See also:
- Mnuchin says Trump administration will review Oracle’s TikTok proposal this week / Reuters
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Would a TikTok ban make the app disappear? Oracle bid could mean a reprieve / WSJ (paywall)
“Unlike in India, which banned TikTok and other Chinese apps through government authority that can force internet service providers to prevent users from accessing certain websites, no such authority exists in the U.S., experts say.” - ByteDance’s need for a TikTok-Oracle deal: China is slowing / NYT (porous paywall)
- Huawei and ByteDance look to Singapore as U.S. restrictions loom / The China Project
