Oracle, in collaboration with a group of investors including Microsoft, is in advanced negotiations to take over TikTok’s global operations. The discussions, reportedly involving the White House, are centered on addressing U.S. concerns about national security and data privacy related to the popular social media platform. The deal under consideration would allow TikTok’s Chinese parent company, ByteDance, to retain a minority stake while granting Oracle significant oversight over critical aspects of TikTok’s operations, such as its algorithm, data collection practices, and software updates. This development comes amidst heightened scrutiny of Chinese-owned tech platforms in the U.S. and highlights the complexities of balancing geopolitical concerns with global business operations.
Oracle and Microsoft eye TikTok takeover, ByteDance to retain minority stake
The proposed agreement would see Oracle taking on a central role in managing TikTok’s operations. Oracle, which already provides much of TikTok’s infrastructure through its server network, would oversee the platform’s algorithm, data handling, and software updates to ensure compliance with U.S. regulations. This arrangement aims to mitigate concerns about the influence of ByteDance while allowing TikTok to continue its operations without significant disruption to its global user base.
As per reports, ByteDance would retain a minority stake in the company under the terms of the deal, maintaining a limited role in TikTok’s ownership. This compromise seeks to preserve continuity for the app while addressing the U.S. government’s demand for reduced Chinese involvement in the platform.
Microsoft’s participation in the discussions marks a significant development, though the exact nature of its role remains unclear. The tech giant has previously expressed interest in acquiring TikTok and was part of a joint bid with Oracle and Walmart in 2020, as reported. That bid ultimately failed, with Microsoft co-founder Bill Gates describing the opportunity as a “poisoned chalice” due to the complexities and risks associated with managing a highly scrutinized global platform.
Walmart’s absence from current negotiations
Unlike in 2020, Walmart is not participating in the current discussions. Reports suggest that the retail giant declined to join the consortium due to the high estimated valuation of TikTok. Walmart’s withdrawal reflects a shift in its strategic focus, as the company appears to be prioritizing other growth areas over involvement in a social media platform with a complex geopolitical backdrop.
TikTok ownership talks rekindle amid U.S. national security concerns
The negotiations follow an executive order issued in 2020 by then-President Donald Trump, which required ByteDance to divest from TikTok within the U.S. The executive order was driven by concerns that TikTok’s data collection practices could potentially expose sensitive user information to the Chinese government. Although ByteDance has consistently denied these allegations, the order underscored growing concerns in the U.S. about the security risks posed by Chinese-owned tech platforms.
In response to the executive order, Trump proposed a “joint venture” model in which U.S. companies would own 50% of TikTok. While this model did not materialize, it laid the groundwork for subsequent discussions about how to restructure TikTok’s ownership to address regulatory concerns.
The current negotiations also come at a time when the Biden administration has continued to scrutinize Chinese tech companies operating in the U.S., further complicating ByteDance’s efforts to maintain control over TikTok.
TikTok deal faces hurdles amid valuation, geopolitics, and stakeholder challenges
The proposed acquisition presents several challenges. One significant hurdle is TikTok’s high valuation, which complicates negotiations and raises questions about the feasibility of the deal. Additionally, the involvement of multiple stakeholders, including Oracle, Microsoft, ByteDance, and U.S. regulators, adds complexity to the discussions.
Geopolitical tensions between the U.S. and China further complicate the situation. The deal is not merely a business transaction but also a reflection of broader concerns about data security, technology dominance, and the influence of Chinese companies in global markets.
For Oracle, taking on the responsibility of overseeing TikTok’s operations would mark a significant expansion of its role in the tech industry. While Oracle has expertise in managing cloud infrastructure, overseeing a consumer-facing platform with billions of users worldwide would require adapting to new challenges, including ensuring data privacy and addressing content moderation issues.
Microsoft’s potential involvement also raises questions about its strategic goals. While the company’s exact role in the deal remains unclear, its participation could signal renewed interest in expanding its presence in the social media space.
TikTok restructure could redefine tech security
If finalised, the proposed acquisition could lead to a significant restructuring of TikTok’s ownership and operations. Oracle’s oversight of the platform’s algorithm and data handling would address U.S. national security concerns while allowing TikTok to maintain its global operations.
ByteDance’s retention of a minority stake would enable the company to remain involved in TikTok’s growth while ceding control to U.S.-based entities. This arrangement could serve as a model for addressing similar regulatory concerns with other Chinese-owned tech platforms operating in the U.S.
The deal could also set a precedent for how governments and companies navigate the intersection of technology, national security, and global business interests.
