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The Daily News Box

News and Entertainment

TikTok chooses Oracle over Microsoft in a Trump-forced sale offer

ByReiss Bowler

Sep 14, 2020

The owner of TikTok has chosen Oracle over Microsoft as its preferred suitor to buy the popular video-sharing app, according to a source familiar with the deal and not authorized to speak about it publicly.

Microsoft announced on Sunday that its bid to buy TikTok had been rejected, removing a prominent admirer for the Chinese app a week before President Donald Trump promises to go ahead with a plan to ban it in the US.

The Trump administration has threatened to ban TikTok by September 20 and ordered ByteDance to sell its US operations, claiming national security risks from its Chinese ownership. The government is concerned that user data is being channeled to the Chinese authorities. TikTok denies that it poses a risk to national security and is suing to stop administration of the impending ban.

TikTok declined to comment on Sunday. Oracle did not return a request for comment, but has previously declined comments.

Microsoft said in a statement Sunday that TikTok’s parent company, Bytedance, is “informing us today that they would not sell TikTok’s US operations to Microsoft.”

Walmart planned to partner with Microsoft on the deal. It’s not clear whether Walmart was still interested before Microsoft was notified of the rejection on Sunday.

Microsoft said on Sunday that it was “confident that our proposal would have benefited TikTok users while protecting national security interests.” The company said it “would have made significant changes to ensure that the service met the highest standards for security, privacy, online safety and combating disinformation.”

TikTok, which claims to have 100 million US users and about 700 million worldwide, is known for its funny, crazy videos of dancing, lip syncing, jokes and jokes. It has recently become home to more political content, such as the comedian Sarah Cooper, who drew large audiences by synchronizing Trump’s own, often disjointed statements from public appearances.

But the app has also raised concerns from its Chinese owner, ByteDance. The White House has cracked down on a range of Chinese companies, including telecom equipment manufacturers Huawei and ZTE and messaging app WeChat, over concerns that Chinese authorities could obtain US user data as a result. Republican and Democratic lawmakers have also raised concerns about censorship and children’s privacy.

TikTok denies that it has shared or would share user data with the Chinese government if requested to do so. The company says it has not censored videos at the request of the Chinese authorities and insists it is not a threat to national security.

TikTok has sued to stop the ban, but not the sell order. The sales situation is complicated by several factors, including Trump’s repeated demands that the US administration get a “discount” on every deal, a determination and role for the president that experts say is unprecedented. In addition, the Chinese government got involved in the process at the end of August by unveiling new regulations that limit technology exports, including the system TikTok uses to choose which videos to send to its users. That means ByteDance would have to get a license from China to export all limited technologies to a foreign company.

The deal came about quickly after the government stepped up its threats against TikTok this summer, despite TikTok’s efforts to distance its app from its Chinese property. It installed former Disney CEO Kevin Mayer as its US CEO, but he resigned in August after only a few months on the job, saying the “political environment has changed a lot.”

Both Microsoft and Oracle are known more for their business software offerings than for consumers.

Oracle mainly makes database software. It competes with tech giants such as Microsoft and Amazon who provide cloud services, and with enterprise software specialists such as Salesforce.

Some analysts consider Oracle’s interest in a consumer company misplaced. Oracle should focus on corporate market acquisitions and not invest in a consumer app like TikTok that doesn’t fit the rest of its business, said Jefferies analyst Brent Thill, comparing the idea to Delta Airlines buying a motorcycle company. “It doesn’t make any sense,” he said.

Thill suggested that TikTok competitors such as Facebook and Snapchat should encourage Oracle as a buyer because Oracle wouldn’t “add much value to the app.”

Oracle co-founder Larry Ellison is unusual among tech executives for his public support of President Donald Trump, who organized a fundraiser for him in February at his Rancho Mirage, California estate. The company also hired a former top assistant from Vice President Mike Pence; the CEO, Safra Catz, was also part of Trump’s transition team.

The president said on August 18 that Oracle was “a great company” that TikTok could “handle”. He declined to express his preference between Oracle and Microsoft as buyers.

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