Oracle beats Microsoft in race for TikTok US2 min read . Updated: 15 Sep 2020, 05:47 AM IST
- Firm may take a stake in biz and serve as TikTok’s US tech partner
- US treasury secretary Steven Mnuchin says the administration has received TikTok’s proposal
Oracle Corp. edged out rival Microsoft Corp. in negotiations over the weekend for the US operations of TikTok, moving closer toward a deal for the Chinese-owned music-video app that could thwart a threat by US by President Donald Trump to shut it down.
A deal between TikTok owner ByteDance Ltd and Oracle will look more like a corporate restructuring than the outright sale Microsoft had proposed, though it is likely to include a stake in a newly configured American business, according to a person familiar with the negotiations who asked not to be identified as the information isn’t public.
The terms being discussed with Oracle are still evolving, one person familiar with the talks said. One of the options being explored is that Oracle could take a stake in a newly formed US business while serving as TikTok’s US technology partner and housing the video app’s data in Oracle’s cloud servers. Early offers from both parties valued the US business at about $25 billion, but that was before Chinese officials weighed in with new rules imposing limits on technology exports, said people with knowledge of the matter.
In a statement Monday morning, Oracle confirmed “it is part of the proposal submitted by ByteDance to the treasury department over the weekend."
Oracle shares gained 6.5% at 10.29am in New York Monday.
The sale of TikTok—forced by a Trump administration ban on grounds of national security—is one of the issues at the heart of the fraying Washington-Beijing relationship. Any deal still requires signoffs from both sides. Early on in the discussions, Trump had voiced support for a bid from Oracle, calling it a “great company" and co-founder Larry Ellison “a great guy". Ellison is also one of the few Silicon Valley moguls to openly support Trump.
Microsoft, which was working with Walmart Inc., had been seen as the likely winner but talks cooled in recent days, one person said. Microsoft wasn’t asked to make revisions to its initial offer in the face of recent signs of opposition to a deal from Chinese government officials, the person added.
US treasury secretary Steven Mnuchin confirmed on Monday that the administration received a proposal from TikTok that includes Oracle as the app’s “trusted technology partner". He said he’ll be reviewing the proposal this week and making a recommendation to Trump, reiterating that a deadline to make a deal remains 20 September.
China’s government on Monday declined to comment on the prospect of a ByteDance-Oracle tie-up.
“China has talked about its position on TikTok many times. The US is now encircling TikTok. This is a typical coerced transaction by the government," foreign ministry spokesman Wang Wenbin said at a briefing in Beijing.
The progress in the talks with Oracle ignited celebrations among TikTok’s mostly young devotees.
The app, which lets people record and edit short video clips ranging from lighthearted lip-syncs to more serious political statements, gained popularity during the global pandemic that’s kept many people cooped up indoors.