Why did TiTok choose Oracle over Microsoft? Inside story and impact analysis

After more than 40 days of difficult negotiations, ByteDance, the parent company of the Chinese mainland video application (App) TikTok, gave up selling TikTok's US business and instead sought "technical cooperation" with Oracle.

Oracle confirmed on the 14th that it had reached an agreement with ByteDance to serve as TikTok's "trusted technology partner" in the United States. According to CNBC, Oracle's role as a technology supplier means that the company will provide cloud infrastructure for TikTok to use, and this deal is expected to boost Oracle's cloud business, increase visibility among young consumers, and control a large source of advertising revenue.

U.S. Treasury Secretary Mnuchin also said on the same day that the Committee on Foreign Investment in the United States (CFIUS) plans to review Oracle's transaction proposal with TikTok this week and then make recommendations to U.S. President Trump, who will make the final decision. He said that according to Trump's executive order, the deadline for the transaction is September 20, and the transaction must also pass another national security review to comply with Trump's executive order issued last month.

Mnuchin pointed out that if the deal is finalized, it will create a "TikTok Global" company, which will be headquartered in the United States and create 20,000 jobs. "Our technical team will continue discussions with Oracle in the next few days" to allay the US government's national security concerns.

Reuters disclosed earlier that Oracle will be ByteDance's technology partner and will be responsible for the management of TikTok's US user data. ByteDance's major investors, such as General Atlantic and Sequoia, will also acquire a minority stake in TikTok's US business. Bloomberg News also pointed out earlier that the transaction between ByteDance and Oracle will look more like a corporate restructuring rather than a direct sale as Microsoft had previously proposed.

●Partners include Wal-Mart

China's Caixin.com reported that TikTok's American companies that cooperate with it include not only Oracle, but also Walmart, and "the cooperation with Walmart is mainly in the direction of e-commerce."

According to reports, the transaction proposal mentioned by Mnuchin is for Oracle to serve as a technology partner, "does not involve Trump's previous requirement to sell TikTok, nor does it involve the transfer of TikTok's core technology." In addition to localizing data management, Oracle will also provide TikTok with security solutions. In addition to being headquartered in the United States and creating jobs, TikTok "also made tax commitments to the US government."

In fact, Walmart, like Oracle, has transformed from a potential bidder to a partner of TikTok. Walmart believes that a potential partnership with TikTok will help the company reach more consumers and develop third-party markets and advertising businesses. The cooperation between the two parties will mainly focus on the e-commerce field.

Oracle continues to deepen its relationship with the Trump administration

Bloomberg News reported that Oracle narrowly won the bidding against Microsoft for TikTok's U.S. business last weekend as TikTok hoped to avoid shutting down its U.S. business amid the confrontation between the two superpowers, the United States and China.

Oracle began to deepen its relationship with Trump when Trump first took office. Co-founder and chairman Larry Ellison is one of the few Silicon Valley bigwigs who publicly supports Trump. He is also described by Trump as a "great guy" and supports Oracle's bid for TikTok.

Oracle CEO Safra Catz has continued to contribute to Trump's campaign, serving as a member of Trump's transition team and having dinner with Trump at the White House.

Navarro, Trump's trade adviser who once opposed Microsoft's TikTok business in the United States and even advocated a complete ban on TikTok, also expressed support for Oracle in an interview with Fox News in August. "If you compare Microsoft and Oracle, there is a big difference between the two in terms of national security. Microsoft's business in mainland China is very large, while Oracle has truly erected a strong firewall between its business and mainland China, and has enjoyed a high reputation for this. This is very important."

Moreover, given Oracle's long-cherished desire to build its own cloud computing and consumer data business, the company's agreement with ByteDance makes much more sense. If we consider Oracle's close relationship with Trump and Ellison's enthusiasm for investing in the US technology industry, Oracle's purpose is even clearer.

●Uncertainty about trading prospects remains

If ByteDance can get White House approval for a deal that doesn’t involve an outright, forced sale, it would be a major achievement for founder Zhang Yiming.

但批评人士质疑，如果字节跳动只是与甲骨文技术合作，而非直接出售资产，要怎么缓和白宫对国家安全的忧虑？路透热点透视专栏作家全吉娜便认为，只要字节跳动不是卖断式出售，都会引发华府的国安疑虑，特别是此时华府瀰漫反中言论、加上美国总统大选在即之际。

Trump also insisted that TikTok must include a portion of the revenue to be distributed to the federal government when selling its assets, but a U.S. Treasury spokesman declined to comment on whether Oracle's proposal included this fee.

Since any deal would have to be approved by U.S. and Chinese authorities, Beijing’s position is a big unknown and everything depends on the details of the deal.