Will Trump Approve Oracle’s ‘Trusted Partnership’ With TikTok?

Photo Credit: Kon Karampelas

Oracle has confirmed that it’s reached an agreement to become ByteDance and TikTok’s “trusted technology provider,” but some are questioning whether the proposed arrangement will receive approval from government officials.

To recap, Digital Music News reported yesterday that Beijing-headquartered ByteDance had rejected Microsoft’s bid to acquire TikTok – just 48 hours before the short-form video-sharing app’s U.S. shutdown deadline.

On August 6th, President Trump signed an executive order calling for ByteDance to sell its ultra-popular platform to an American buyer or face an outright ban in the States. Redmond, Washington-based Microsoft had been considered a frontrunner to close the deal.

However, Beijing added another layer of difficulty to a decidedly time-sensitive negotiation process by introducing new export restrictions on AI technology – including TikTok’s proprietary algorithms – earlier this month. Microsoft opted not to alter the terms of its suggested TikTok acquisition in the face of these latest regulations, and ByteDance proceeded to reject its bid.

Commenting on the failed talks in a statement, Microsoft execs noted the “significant changes” that would be required to “meet the highest standards for security, privacy, online safety, and combating disinformation.”

And now, in a brief statement of their own, Oracle higher-ups have confirmed the finalization of a contract to become the “trusted technology provider” of ByteDance and TikTok.

Importantly, the deal will require approval from the Trump administration, and per Treasury Secretary Steven Mnuchin, the 45-year-old Committee on Foreign Investment in the United States (CFIUS) is set to make a formal recommendation to the president later this week.

Given that Microsoft refused to budge in its dialogue with ByteDance, it’ll be particularly interesting to see CFIUS’s take on the specifics of the “trusted technology partnership” – including, most notably, whether the agreement meets the buyout requirements outlined in the aforementioned executive order. Similarly, the financial terms of the deal and the inclusion of the proprietary algorithms are unclear at this time.

Needless to say, the fate of TikTok (and its more than 100 million domestic users) is consequently far from certain.

Also worth mentioning is that Walmart “continues to have an interest” in purchasing TikTok despite the rejection of Microsoft’s offer. The retail giant was previously negotiating a potential acquisition alongside Microsoft, and if the federal government gives Oracle’s “trusted technology provider” proposal the green light, it’s possible that Walmart will secure shares in the publicly-traded company.

At the time of this writing, Oracle stock, traded as ORCL, had experienced a nearly five percent uptick from yesterday’s close, with shares trading for $59.66 apiece.

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