TikTok has reached a landmark deal that, if approved, would safeguard its operations and future in the U.S. Oracle Corporation (NYSE:ORCL), and ByteDance have reached an agreement that will see TikToKs operations merged with Oracle. However, the viral video sharing app will not be acquired outright as initially thought.
ByteDance has already confirmed it will not be selling TikTok but seeking a partnership with the enterprise giant Oracle. The proposal has already been submitted to the U.S Treasury Department for scrutiny awaiting approval by the administration.
Treasury Department will now have to ascertain whether the proposed partnership will help alleviate security concerns initially raised by the administration. President Trump had issued an executive order that required TikTok to be acquired by a U.S company citing the app’s close ties to the Chinese government via parent company ByteDance.
Oracle- TikTok Offer
While Walmart Inc. (NYSE:WMT) and Microsoft Corporation (NASDAQ:MSFT) were believed to be the front runner in the acquisition race of the viral video sharing app asset’s in the U.S, it is Oracle’s bid that appears to have sailed through. It has since emerged that ByteDance accepted Oracle proposition as it calls for a tech partnership rather than an outright acquisition.
However, the Oracle proposal would have to be approved by the Trump administration for the app to continue operating in the U.S come to the September 20th deadline. Under the proposed deal, Oracle is to assume the management role of TikTok U.S operations focusing on user data protection. Currently, user data on the TikTok app is stored in the Alphabet’s cloud.
It has also emerged that the U.S Company is seeking to acquire some stakes in TikTok U. S. if successful, Oracle will join General Atlantic and Sequoia that have also won some stakes in the Chinese viral video sharing platform.
TikTok U.S Prospects
Approval would allow TikTok to continue supporting the more than 100 million users in the U.S who use the app for connection and entertainment. The app has also found great use among small business owners in the U.S that use it to connect with millennial customers as well as build meaningful careers.
However, it is unclear as to whether Trump will approve the proposed Oracle –TikTok partnership. The administration has always insisted on a U.S company owning all of TikTok operations in the U.S to alleviate national security concerns.
ByteDance is banking on the approval of the China Oceanside Holdings Group deal for U.S insurer Glenworth Financial Inc. two years ago to get its Oracle partnership deal approves. In the deal, China Oceanside agreed to use U.S cloud services to host policyholder data. In the current deal, Oracle is to become the official custodian of customer’s data on the TikTok app.
Regulatory approval in the U.S is not the only hurdle standing in the way of the deal. The Chinese government is also watching the deal closely. Beijing has always insisted that it must be consulted on the sale of any entity that involves technology developed in China. Likewise, the sale of TikTok might not involve the sale of the app’s sophisticated Artificial intelligence-powered algorithm seen as the secret ingredient that has propelled it to stardom.