ByteDance selects Oracle as TikTok’s US technology partner, rejects Microsoft

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TikTok taps Oracle as new US tech partner.
Image: Unsplash | Kon Karampelas

The TikTok saga is finally coming to an end. On Sunday, The Wall Street Journal reported that the short-form video service has tapped Oracle as its U.S. technology partner. It is a somewhat surprising decision considering that many believed Microsoft would ultimately purchase the booming platform.

Interestingly, the TikTok deal likely won’t be a sale at all. Oracle will instead become a “trusted tech partner” and handle the app’s cloud technologies within the U.S.

The final-hour deal came just days before a Trump administration ban was set to go into place, effectively shutting down TikTok in the U.S. due to national security concerns.

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Oracle Comes Out on Top

The past several weeks were a flurry of bidding and rumors. Many of America’s Big Tech firms have been vying for ownership of TikTok. Although Oracle was rumored to be part of the process it’s surprising to see the company emerge as the victor.

The culmination of the war for TikTok was first signaled when Microsoft announced that its bid was rejected by ByteDance—the company behind the popular social media app. At the time, the company said, “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.”

Until then, Microsoft was working on a deal that would have given it control over TikTok’s operations in the U.S., Australia, Canada, and New Zealand.

Oracle’s victory gives TikTok some stability moving forward. It also makes a lot of sense for the social media platform. Holger Mueller, an analyst at Constellation Research, says that Oracle teaming up with TikTok “will add plenty of load to their infrastructure service.”

For an app growing at the rate that TikTok is, infrastructure is extremely important. Mueller says, “That’s what matters to them… If Microsoft gets TikTok it could boost their usage by between two and five percent, while for Oracle it could be as much as 10 percent.”

In this way, the deal works for both parties. TikTok will get a boost to its U.S. infrastructure. Meanwhile, Oracle stands to cash in a significant payday for its services.

Questions Remain

The news of TikTok’s Oracle partnership is certainly positive. However, it likely won’t be the last we hear about the embattled app. Over the weekend, reports emerged that Beijing would rather see the app shut down in the U.S. than be sold. The Chinese government claims that it would make both ByteDance and China look weak against pressure from the U.S.

One point of contention is TikTok’s powerful algorithm. It serves users content based on their interests (and undoubtedly the data that has been collected on them). If the Oracle deal includes the algorithm, it will still need approval from Beijing—which it may or may not get.

Meanwhile, U.S. regulators also need to greenlight the deal. It remains to be seen if the new ties to Oracle are enough to negate the security concerns associated with TikTok.

This will likely be a very fluid situation over the next several days. Oracle, ByteDance, and both the U.S. and Chinese governments must work out the details of the agreement.

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