Oracle’s TikTok Takeover

Oracle Beats Microsoft in Bidding War

Oracle Corp. (ORCL) will partner with TikTok to take over the app’s US operations. TikTok has been caught in the crossfire as tensions rise between Beijing and Washington. Last month, President Trump announced he would ban TikTok in the US due to national security concerns unless a domestic company stepped in to take over its US business.

Several companies were interested in the high-profile deal, including Microsoft (MSFT), which many saw as the frontrunner in the race to take over TikTok. However, Oracle won the bidding war.

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Yesterday, Treasury Secretary Steven Mnuchin said Oracle sent a bid proposal for TikTok’s operations to his office over the weekend. The Committee on Foreign Investment in the US, led by the Treasury, is reviewing the agreement this week. They will be looking to see if it complies with the government’s requirements about data security.

The details of the agreement have not yet been disclosed, but it is expected that the deal will be more like a partnership than an acquisition because there will not be a substantial exchange of assets. Some existing investors in Bytedance, TikTok’s parent company, will get stakes in the new venture as part of the deal. These investors include US firms Sequoia Capital and General Atlantic.

Mr. Mnuchin also said the agreement involves plans to headquarter TikTok in the US, which will create 20,000 new jobs. The deadline set by the White House for the deal to close is September 20.

Oracle’s Plans

Through partnering with TikTok, Oracle hopes to ramp up its cloud-computing business, which lags behind Amazon (AMZN) and Microsoft. Oracle mainly works with business clients, so running a consumer-facing social media platform will be a significant change for the company.

TikTok has about 100 million monthly users in the US—a huge jump up from 11 million users in 2018. Worldwide, the app has about 689 million users. These users, as well as investors and lawmakers, will be eager to see how the next five days of negotiations unfold, and what choices Oracle will make when the deal is closed.

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