By Matt O’Brien and Tali Arbel
Oracle said Sept. 14 that the Chinese owner of TikTok has picked the U.S. company to be its “trusted technology provider,“ beating out rival Microsoft in a deal that could help keep the popular video-sharing app running in the U.S.
Oracle spokeswoman Deborah Hellinger said she was confirming remarks made by U.S. Treasury Secretary Steven Mnuchin, who told CNBC that TikTok’s parent company, ByteDance, submitted its proposal to the U.S. government for approval.
“We did get a proposal over the weekend that includes Oracle as the trusted technology partner with Oracle making many representations for national security issues,“ Mnuchin said.
Mnuchin said there’s also a commitment to make TikTok’s global operations a U.S.-headquartered company with 20,000 new jobs.
TikTok said in a Sept. 14 statement that its proposal to the Treasury Department should “resolve the Administration’s security concerns’’ and emphasized the importance of its app to the 100 million users it claims in the U.S.
President Donald Trump’s administration has threatened to ban TikTok by Sept. 20 and ordered owner ByteDance to sell its U.S. business, claiming national security risks due to its Chinese ownership. The government worries about user data being funneled to Chinese authorities. TikTok denies it is a national security risk and is suing to stop the administration from enacting the threatened ban.
If the arrangement is approved by the U.S. government, TikTok would be allowed to continue operating.
Microsoft said in a Sept. 13 statement that ByteDance “let us know today they would not be selling TikTok’s US operations to Microsoft.’’ Microsoft added it was “confident our proposal would have been good for TikTok’s users, while protecting national security interests.’’ The company said it “would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combating disinformation.’’
TikTok, which says it has 100 million U.S. users and about 700 million globally, is known for its fun, goofy videos of dancing, lip-syncing, pranks and jokes. It’s recently become home to more political content such as the comedian Sarah Cooper, who drew a large audience by lip-syncing Trump’s often-disjointed statements from public appearances.
The deal had come together rapidly after the Trump administration ramped up its threats against TikTok this summer, despite TikTok’s efforts to put distance between its app and its Chinese ownership. It installed former Disney executive Kevin Mayer as its American CEO, but he resigned in August after just a few months on the job, saying the “political environment has sharply changed.’’
Oracle primarily makes database software. It competes with Microsoft and Amazon that provide cloud services as well as business-software specialists like Salesforce.
Some analysts see Oracle’s interest in a consumer business as misguided. Oracle should focus on enterprise-market acquisitions and not invest in a consumer app like TikTok that doesn’t fit with the rest of its business, said Jefferies analyst Brent Thill, who compares the idea to Delta Airlines buying a motorcycle company. “It doesn’t make any sense,’’ he said.
Thill suggested that TikTok competitors like Facebook and Snapchat should be “cheering on Oracle’’ as a buyer, because Oracle wouldn’t “add a lot of value to the app.’’
Oracle co-founder Larry Ellison is unusual among tech executives for his public support of Trump, hosting a fundraiser for him in February at his Rancho Mirage, California, estate. The company also hired a former top aide to Vice President Mike Pence; its CEO, Safra Catz, also served on Trump’s transition team.
The president said on Aug. 18 that Oracle was “a great company’’ that “could handle’’ buying TikTok. He declined to state his preference between Oracle and Microsoft as buyers.
“We have a lot of confidence in both Microsoft and Oracle,’’ Mnuchin said. “They’ve chosen Oracle.’’