 "Will Oracle run TikTok in the US?")
Is Oracle set to run TikTok in the US?
According to reports, Oracle could be in the lead to take control of the popular social media app’s US operations.
The platform’s fate has been up in the air since a law requiring its Chinese owner ByteDance to either sell it on national security grounds or face a ban took effect on January 19.
US President Donald Trump, after taking office on January 20, signed an executive order seeking to delay by 75 days the enforcement of the law.
Trump last month appointed Vice-President JD Vance and National Security Adviser Michael Waltz last month to oversee the potential sale.
“There will almost certainly be a high-level agreement that I think satisfies our national security concerns, allows there to be a distinct American TikTok enterprise,” Vance said aboard Air Force Two.
But what do we know?
Let’s take a closer look:
What we know
The tech-focused outlet The Information reported Thursday that Oracle is a “leading contender” to run TikTok in the US, with ByteDance preferring it for the role.
According to Politico, the software company is in talks with the White House over a deal to run TikTok.
The outlet quoted three people familiar with the situation as saying that the question of what the app’s Chinese founders would do with regard to operations in the US remains unanswered.
They also said that while Vance and Waltz are spearheading the efforts, some US Senators have asked to be kept in the loop.
A third person described the talks at an ‘advanced’ stage.
The development comes days after The Information reported that Oracle is a “leading contender” for taking control of TikTok.
The tech outlet quoted sources including investors, bankers, and former executives familiar with ByteDance as saying that the firm would prefer Oracle over the other investors.
The report stated that ByteDance wants to have input on TikTok’s day-to-day operations.
As per Tech Crunch, TikTok has since 2022 been keeping the data of US users on Oracle servers.
As per NPR, Bytedance would retain a minority stake in the app.
“The goal is for Oracle to effectively monitor and provide oversight with what is going on with TikTok,” a person directly involved in the talks told the outlet. “ByteDance wouldn’t completely go away, but it would minimise Chinese ownership.”
The outlet quoted a source as saying that Oracle could take a stake in TikTok worth “in the tens of billions.”
Experts remain sceptical on decreasing China’s influence
A person in the know also expressed scepticism that the deal would keep China’s hands off the app.
“If the Oracle deal moves forward, you still have this [algorithm] controlled by the Chinese. That means all you are doing is saying ‘trust Oracle’ to disseminate the data and guarantee there is no ‘back door’ to the data,” a person told Politico.
“The question that has always been difficult to answer is how do you prove a negative? How do you prove the absence of Chinese control of data and the algorithm?” Sarah Kreps, who focuses on technology and foreign policy at the Brookings Institution, told NPR. “You can audit millions of lines of code, but it’s really hard to show one way or the other.”
Interestingly, Oracle was the lead buyer for TikTok during Trump’s previous term when he demanded that ByteDance rid itself of the app.
Oracle, at the time, partnered with Microsoft and Walmart.
However, that deal later fell through with Microsoft co-founder Bill Gates famously calling it a ‘poisoned chalice.’
President Trump has previously thrown his weight behind Oracle as a buyer for the app.
Trump last month denied having spoken to Oracle’s Larry Ellison about buying the app.
“Larry is a friend of mine,” Trump was quoted as saying by NPR. “I never spoke to Larry about TikTok. I’ve spoken to many people about TikTok. There’s great interest in TikTok,” he said.
Asked if he was putting together a deal with Oracle and other investors to save TikTok, Trump said: “No, not with Oracle. Numerous people are talking to me, very substantial people, about buying it and I will make that decision probably over the next 30 days. Congress has given 90 days. If we can save TikTok, I think it would be a good thing.”
However, as per Politico, Trump in January said he would “like Larry to buy” TikTok.
Trump previously said four different groups are bidding on the popular short-video app, which has 170 million American users and is facing shutdown in the US next month if Chinese owner ByteDance does not find an American buyer.
“A lot of people want it, and it’s up to me,” he said on March 9.
While it is not unusual for Washington to meddle in the private dealings of publicly traded companies for strategic reasons, the White House’s direct oversight of the bidding process is extraordinary, said government ethics lawyer Richard Briffault, who teaches at Columbia Law School.
“I’m actually not aware of anything like this,” Briffault said. “This is at the highest levels of the government, and it’s not clear this is a strategically significant company.”
Jeff Yass’ Susquehanna International Group, General Atlantic, Kohlberg Kravis Roberts and Sequoia Capital are among ByteDance’s Us backers.
The sale has attracted interest from other billionaires and entrepreneurs.
Project Liberty founder Frank McCourt is teaming up with Canadian investor Kevin O’Leary and Reddit co-founder Alexis Ohanian on a bid. Social media star Jimmy Donaldson is in talks to join that group, a source familiar with his plans said.
Trump has suggested the US could take a 50 per cent stake in TikTok’s US business.
TikTok’s sale price, the value of which widely varies, will depend on whether it includes its signature algorithm. Some equity analysts estimate it could be worth $50 billion to $100 billion with the algorithm, which captures user data and is seen as the business’s backbone.
ByteDance told employees this month its latest share buyback program values the entire company at over $315 billion, according to two people familiar with the matter.
Trump has suggested the company could be worth as much as $1 trillion.
With inputs from agencies
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