Oracle partners with ByteDance to save TikTok from being banned in the U.S.
In a conclusion that nobody saw coming, Oracle has been chosen by ByteDance as its “trusted technology partner” to avoid having TikTok shut down in the U.S. The news follows weeks of discussions between ByteDance and multiple U.S. companies about a potential acquisition of the U.S. operations of TikTok. Microsoft and Walmart of all companies were the most serious contenders, but even Alphabet at one point considered jumping in.
The Trump administration gave ByteDance until this week to secure a deal; a failure in securing a deal would mean that the ban would go into effect this coming Sunday and force ByteDance to divest itself of TikTok’s U.S. operations by November 12. TikTok, along with WeChat, is accused of threatening the national security of the United States, though ByteDance denies this to be the case, filing a lawsuit challenging the ban back in August. ByteDance did not specifically name Oracle as its partner, only stating that the company “submitted a proposal to the Treasury Department which we believe would resolve the administration’s security concerns.” Oracle itself confirmed it was chosen as the partner, however.
The exact details of the deal between ByteDance and Oracle have not been revealed, but U.S. Treasury Secretary Steven Mnuchin revealed on CNBC that there’s a “commitment” to create TikTok Global as a “US headquartered company with 20,000 new jobs.” Mnuchin said that the U.S. government will need to review the deal before being approved. “I will just say from our standpoint, we’ll need to make sure the code is, one, secure, Americans’ data is secure, that the phones are secure and we’ll be looking to have discussions with Oracle over the next few days with our technical teams,” Mnuchin said on CNBC’s Squawk Box.
The proposed arrangement will allow ByteDance to retain ownership but outsource data management to Oracle, according to The Washington Post. It’s a big win for Oracle’s cloud business and could elevate the company’s business with data on the viewing habits of younger consumers. TikTok draws in more than 100 million monthly active users in the U.S., so the move will no doubt improve Oracle’s mindshare and could potentially attract more cloud business.
As TikTok worked to keep U.S. operations running, a number of competing services have been released. Instagram rolled out Reels to a wider audience, while YouTube today announced they’re testing a new feature in India known as Shorts.