Oracle has reportedly entered the bid to buy TikTok’s operations in the U.S.
The California-based tech giant declined to comment, but the Financial Times reports that General Atlantic and Sequoia Capital are among the ventral capital firms working with Oracle to complete the bid.
Although there could be other potential bidders for TikTok (included rumored interest from Twitter), it is likely just a two-horse race between Oracle and Microsoft.
TikTok is currently looking for a buyer to take over its U.S. business after President Trump threatened to ban the video-sharing app on September 15. Trump claimed that there was “credible evidence” that TikTok’s parent company, Beijing-based ByteDance, could be a detriment to national security.
Europe, recently considered a safe haven for the Chinese app, might be the next Tik Tok battleground. While the European Union hasn't issued any formal warning or ban on TikTok, some of its data protection watchdogs launched a probe into Tik Tok's privacy policies in mid-July.
Between Microsoft and Oracle, the latter might have a slight edge in its bid for TikTok due to the relationship between co-founder and chairman Larry Ellison and Trump. In a recent interview with Forbes, Ellison said that he “supports” Trump and “wants him to do well.”
Ellison also reportedly hosted a fundraiser for Trump at his California home, which resulted in protests from Oracle employees.
As a response to the security assertions from Trump, TikTok launched an information hub website and a companion Twitter account this week to set the record straight on security and privacy issues. The website leverages text, videos, and news articles to make its case.
Why Do Oracle And Microsoft Want TikTok?
On the surface, TikTok doesn’t seem like the most logical acquisition for Oracle. The company is focused more on its enterprise business, and even Bloomberg Intelligence Analyst Anurag Rana said the bid makes “little strategic sense.”
However, TikTok could be a good fit for the company. Oracle has the ability to secure TikTok’s data, it has the liquid to complete the deal, and Ellison is one of the few tech moguls on Trump’s good side.
The benefit for Oracle is that it could use the data to inform its cloud business and the acquisition would be a good value since TikTok is being forced into a quick sale.
For Microsoft, buying TikTok makes more strategic sense. The tech giant's interest in the social media app is all about acquiring new consumer data. With its focus squarely on selling its products to businesses, its been years since Microsoft made real inroads with individual consumers. From helping Xbox games to developing new consumer software, the data from TikTok could be incredibly useful.
Tik Tok would also allow Microsoft to connect with a younger audience. By having its own video app, Microsoft can use the technology to improve its development of artificial intelligence, specifically as it relates to speech and analyzing images.
While there could be other bidders, it is unlikely. A buyer needs to have the cash, which is why a giant is needed. Google can't enter the race due to regulatory concerns, and Amazon can’t make a bid because of CEO Jeff Bezos’ feud with Trump.
Whether Oracle, or Microsoft scoops up TikTok, the question remains: Will the buyer also get to unlock TikTok’s proprietary algorithm?
That would make the acquisition well worth it.