Oracle over Microsoft
After TikTok’s rejection of a deal with Microsoft, Oracle has successfully negotiated a deal with the video-sharing app and has now submitted a bid proposal to the Trump Administration. Oracle’s bid seems to follow Microsoft’s in outlining a partnership and a minority stake; it also may not involve a purchase. It’s unclear if any major assets are actually sold in the deal, but it seems unlikely based on how ByteDance also announced that they were not planning to sell TikTok’s US operations or its algorithm to any company.
Due to its founder’s ties to the Trump administration, however, Oracle might be more successful in convincing the president to move ahead with the deal.
The “Secret Sauce” is Kept Secret
TikTok’s source code and underlying algorithm, which predicts users’ interests based on past user history, will not be sold by ByteDance in any negotiated deal. This followed after China tightened restrictions on AI technology exports in the end of August.
Currently, details for the “partnership” with Oracle are still in the dark. However, judging from deals like SoftBank’s 2013 acquisition of 78% stake in Sprint, Oracle’s partnership could include measures like appointing a new board member to oversee national security compliance for TikTok. There’s also been news that TikTok’s American data would be moved over to Oracle’s cloud-computing infrastructure and housing that information only in the US.
Does this resolve concerns about TikTok and China?
Not particularly, especially with ByteDance’s refusal to sell TikTok’s algorithm. Just like Facebook, Youtube, and other platforms with similar algorithms, TikTok holds significant sway over what content its users ingest, and can potentially influence their users' beliefs through its platform.
However, this is assuming that TikTok does have questionable links to China, which the company has always denied. To alleviate concerns over the matter, TikTok has cited its efforts to integrate itself globally, including pointing to ByteDance’s board of directors, of which 3 out of 5 are not Chinese. Claims that TikTok is leaking user data to China are still unfounded, and there have been people who looked through TikTok’s logs and found nothing in favor of those claims.
However, if Oracle is planning to help TikTok run American data over their computers, this would help the narrative of protecting user data — never mind that TikTok held American data on American servers before this, with a backup in Singapore.
Does it matter if these concerns are unresolved?
Not particularly, because the current stance of the Trump Administration focuses more on its narrative of a tough policy on China rather than the safety of user data. TikTok’s decision to partner with Oracle is also a good strategic choice, since Oracle’s founder is much closer with the president than Microsoft — the “sale” may be more likely to go through despite ByteDance’s refusal to sell the algorithm.
There’s also a possibility that the Trump administration never actually expected or wanted a full ban to go through, and was employing negotiation tactics and threatening a full ban in order to pressure ByteDance into a deal, even if it is one that only gives Oracle a minority stake.
What Might Change with a Deal
For users
There might be a few announcements on TikTok’s website about welcoming people into some new leadership positions (but most users won’t care about that). Besides that, there likely will not be any changes that the users will be aware of, especially since the algorithm will be untouched.
Most ex-TikTok stars who were testing out a migration to competitors like Triller will likely move back to TikTok, but ones who were given particularly appetizing deals may stay put. As an example, Josh Richards, who recently joined as Triller’s Chief Strategy Officer at the age of 18, would likely not move anywhere else soon unless TikTok gives him a similarly lucrative offer.
For competitors
If the deal succeeds, that would put competitors into an awkward position. According to SensorTower data, downloads had soared for TikTok alternatives after news of the potential TikTok ban.
In particular, Triller reported on August 2nd that its app was downloaded 250M times and hit #1 in all categories on the App Store in 50 countries, including the US, UK, Brazil, Germany, France, and Australia, “with $0 marketing spend.” TikTok stars had begun thinking of migrating to Triller, with stars like Josh Richards, Griffin Johnson and Noah Beck leading the move.
However, now with TikTok facing a “sale” that looks more like a partnership than anything, users will likely move back. The key is how TikTok is more mature and aggressive in boosting influencers and securing commercialization opportunities than their competitors. In addition, even the most likely TikTok alternative, Triller, has an active userbase of 65M that pales in comparison to TikTok’s userbase of 800M users.
Previously, however, Triller had focused on a slightly different demographic than TikTok users, with a slightly older userbase and a platform that was all about the music, particularly hip-hop — people could film themselves rapping and use Triller’s AI to pull together those clips to make professional-looking videos. A successful TikTok deal may result in Triller moving back to their own platform’s original style.
Other issues
Treasury Secretary Steven Mnuchin said TikTok would also have to create 20,000 more jobs as part of the proposal, which is likely a purposeful attempt to boost job numbers after COVID.
