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4 things to know about Oracle’s surprise TikTok deal

To the surprise of many, Oracle beat out Microsoft. However, the TikTok saga isn’t over yet . . .

4 things to know about Oracle’s surprise TikTok deal
[Photo: cottonbro/Pexels]

One of the most dramatic tech sagas of 2020 is close to an end—probably. On late Sunday The Wall Street Journal reported that BytDance, TikTok’s Chinese owner, had come to an agreement with the U.S.’s Oracle to aquire the insanely popular social media app.

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For most of the year, TikTok has been under the scrutiny of Trump’s White House for fears the app, which has over 100 million users in America, was or could send user data directly to the Chinese government. Those fears were the alleged reason Trump issued a mandate in August that ByteDance must sell TikTok to a U.S. buyer by mid-September or risk being banned in America.

As of last night, TikTok has found that buyer. Here are four important things to know about the TikTok-Oracle deal.

  1. Oracle beat out Microsoft: Many assumed Microsoft would be the one to cut a deal with ByteDance. And they tried, hard. A Microsoft acquisition of TikTok would have given the Redmond giant a new consumer presence. Besides the Xbox, Microsoft’s customers are primarily corporate-based. Announcing it has failed to secure a deal, Microsoft said, “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests. To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement.”
  2. For Oracle, it’s about cloud computing: Let’s be honest, Oracle scooping up TikTok seems a bit weird, right? After all, Oracle has fewer connections with the everyday consumer than Microsoft does—not to mention the company has exactly zero track record managing a social media platform. So, when would Oracle want TikTok? The WSJ says Oracle’s interest in the social media app “is primarily driven by kickstarting its fledgling cloud-computing business.”
  3. The deal probably isn’t an outright purchase: Despite Oracle winning the bid, the deal probably isn’t an outright purchase. Matter of fact, the WSJ says that Oracle will be named as TikTok’s “trusted tech partner” instead of its new owner. This suggests that while Oracle may technically help run TikTok in the U.S., the company wouldn’t actually take control of its assets—including TikTok’s all-important secret algorithms. That’s what could have sunk the Microsoft deal, matter of fact. Earlier this month China announced trade restrictions on AI technology, like the kind TikTok uses. It’s reported that Microsoft wanted to acquire TikTok’s AI algorithms.
  4. The deal still needs to be approved by the White House: Though Oracle is the winning partner, the TikTok saga isn’t over yet. U.S. regulators and the White House still need to approve the deal. Will that happen? It’s hard to say for sure, but it’s looking likely. Trump has already expressed support for Oracle’s bid back in August, saying, “Well, I think Oracle is a great company, and I think its owner is a tremendous guy, a tremendous person. I think that Oracle would be certainly somebody that could handle it.”
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