By The Biz Team (Nicholas)
Recently, TikTok was threatened with forced closure of its American operations. Since the threat, President Trump has embarked on a matchmaking exercise, to link the social media giant with any willing party from Silicon Valley who will buy it. The latest in the line of suitors that began with Microsoft, is Oracle. Their preliminary interest in making a bid for TikTok seems like an awkward fit, to say the least. The software firm is best known for creating legacy databases, so it may seem misaligned with the music video sharing application. Oracle's potential pursuit of a deal with the social network does make some sense, considering the database firm has been trying to expand on cloud computing and consumer data business. The connection seems more obvious when one considers the close ties Trump has to Oracle co-founder, Larry Ellison.
Sequoia and General Atlantic tried to buy a majority stake in the company, believing that doing so would save it from coerced divestment. ByteDance rejected offers, because of the implicit valuations that were far below the social media firm's estimated worth. Analysts are claiming the U.S.'s TikTok branch could be worth between twenty and fifty billion dollars.
Microsoft was depicted to be the front runner in the race to acquire the music sharing app's U.S. assets. It is also the only firm to publicly confirm talks with ByteDance. Microsoft and Oracle were founded during the 1970s, but Microsoft saw a surge in its success, particularly in cloud computing. On the other hand, Oracle went through a period of reduced relevance and sales after a very promising start. The opportunities provided by Cloud computing are becoming increasingly crucial in the tech world, and Oracle is aiming to take advantage and regain its former status.
TikTok may spearhead resurgence for the division, provided Oracle's information on consumers that would be useful to advertisers. It would also allow a platform where the customers would run their ads, dramatically simplifying the process. ByteDance would still control the other parts of the business, such as the Asian and European branches, so Oracle would not need to concern itself with GDPR. However, it would face the challenges of running a social media platform, such as limiting violent or controversial content, and reassuring the legislature about consumer privacy and disinformation.
TikTok boasts an estimated customer base of 100 million users in the United States. When it separates from its parent firm, the social media company needs to find new foundations where it can store the data generated by the users. It could then become the anchor tenant for the Oracle's cloud Infrastructure unit for client information. That will give it a significant edge against rivals like Amazon and Microsoft. However, these are still suppositions at present, considering Oracle has declined to comment on its potential interest in TikTok.
Oracle does have time on its side because of the 90-day deadline for sale, meaning the options for lengthy discussions with several firms are not there. The political connections between Larry Ellison and the president have also sponsored the potential acquisition. President Trump recently indicated that he thought Oracle would be a great candidate to handle the company. He declined to say whether he believed Oracle was the better fit compared to Microsoft.
Incidentally, Ellison is not the only member of the company affiliated with the Trump administration. Safra Catz, the chief executive officer at Oracle, was a member of the president's transition team, when Ellison hosted a fundraiser in early 2020. Oracle has also had its share of winnings in Washington during the Trump administration. After years of arguing, the bidding process for a ten billion dollar contract at the Pentagon was rigged to favor Amazon, the Defense Department opted to give it to Microsoft. In 2020, the Trump administration backed the company's position in an ongoing copyright conflict with Google.
These are some of the connections that might enable Oracle to negotiate an excellent price for the company, considering its deep interest in the Trump administration. In early August, the president said that the U.S. ought to get a cut of the proceeds that came from the deal. This news was received with outrage, as this was previously unheard of when it came to multinational firm acquisitions and mergers. He compared it to "key money," which is a bribe that is paid under the table, by a prospective tenant to a landlord when securing a lease.
Despite the presidential order which required its sale to a US firm, TikTok has not yet given up the struggle for its reputation in America. It launched a new information hub, as well as a Twitter account, to respond faster to allegations of censorship, surveillance, and state control. TikTok released a statement saying that misinformation and rumors had been trending in Washington and the media, so it wanted to set the story straight. The company is not available in China. The customers' user data in America is stored in Virginia, and the backups are in Singapore. TikTok also categorically stated that they have never provided any U.S. customers' data to the Chinese government, and it would not comply if asked to do so.
These claims have fallen on deaf ears, at least as far as the political elite are concerned. The Trump administration accused the company of sharing its U.S. customer data base with the Chinese, thereby threatening national security. Officials suggested that these applications provided a way for Beijing to capture American citizens' data for their interests.