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Bytedance, the Chinese owner of TikTok, has reportedly chosen Cloud major Oracle over Microsoft to run its US operations as a ‘trusted tech partner’, multiple media reports revealed on Monday while an official announcement was still awaited.
According to The New York Times, ByteDance rejected the acquisition offer from Microsoft. However, it was unclear whether TikTok's choice of Oracle as a technology partner would mean that "Oracle would also take a majority ownership stake of the social media app".
This is different from an outright sale and appears to suggest Oracle will help run TikTok's US operations with its Cloud technologies.
In an official statement, Microsoft said its bid for TikTok operations in the US was rejected.
"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," Microsoft said.
"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," the tech giant added.
ByteDance has reportedly decided not to sell or transfer the algorithm that is behind TikTok to any other company. This was reported by South China Morning Post quoting sources as saying that while ByteDance will not give its source code to any bidder in the US, its tech team can develop a new algorithm in the US. The company has reportedly informed the same to authorities and potential bidders in the US.
According to NYT, Oracle has cultivated close ties with the Trump administration.
"Its founder, Larry Ellison, hosted a fund-raiser for Trump this year, and its chief executive, Safra Catz, served on the president's transition team and has frequently visited the White House".
Trump said last month that he would support Oracle buying TikTok.
"I think that Oracle would be certainly somebody that could handle it," he told reporters. Trump maintained there will be "no extension of the TikTok deadline".
Riding on new customer wins in both Cloud applications and infrastructure businesses, Oracle posted better than expected results for its FY21 first quarter results last week, generating $9.4 billion in revenue which was up 2 per cent compared to the same period last year.
Meanwhile, China said the Trump administration's deadline for TikTok sale is tantamount to "coercive robbery".
"The tricks of economic bullying and political manipulation that the US played on non-American companies are tantamount to coercive robbery," said a Chinese Foreign Ministry spokesperson over the weekend.