Instead of selling TikTok’s US operations, Beijing-based ByteDance has selected Oracle as its US-based business partner.
Oracle will be “trusted tech partner” of the app in the US and may purchase a large stake in the dance-focused app, according to reports stateside.
Either way, the deal needs sign-off by the White House, with President Trump having previously said the app poses a threat to national security and issued an executive order calling for TikTok to sell its US operations or else it would be blocked in the country.
Although neither the US or Chinese companies have confirmed the Oracle deal, US Treasury Secretary Steve Mnuchin said on Monday that the Committee on Foreign Investment in the United States will review the deal and offer an opinion to the President.
“We did get a proposal over the weekend that includes Oracle as the trusted technology partner," Mnuchin said in a televised CBS interview. “There has always been a critical factor for us driving national security is making sure the technology on American's phones is safe.”
Microsoft issued a statement overnight, saying, “ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.”
The trillion-dollar company confirmed in August that it was in talks to acquire TikTok’s businesses in US, Canada, Australia and New Zealand, with reports from the FT suggesting it could snaffle the entire TikTok operation.
In Sunday's statement, the Redmond, Washington-based software colossus referenced the “significant changes” it had proposed last month, notably adding security, privacy, and digital safety protections to Tiktok’s service, adding: “We look forward to seeing how the service evolves in these important areas.”
Analysts at US broker Wedbush said they believe Microsoft would only buy TikTok with its core algorithm, on which point the Chinese government and ByteDance were not willing to budge.
“Given the need now to get a green light from Beijing after its export rules were changed a few weeks ago, TikTok's days in the US likely are numbered with a shutdown now the next step,” the analysts said. “While Oracle is technically the remaining bidder, without willing to sell its core algorithm we see no TikTok sale on the horizon heading into the September 15 deadline."
“Oracle could be a technology partner, but a sale/divestiture of the US operations for TikTok remains the focus. Unless some last minute changes, ByteDance heads into the White House deadline this week with some dark days ahead as the plug now likely gets pulled on the TikTok app within the US,” they added.