On September 14, 2020, reports emerged that TikTok rejected a Microsoft takeover bid. Microsoft confirmed that its offer to buy the US operations of the popular video-sharing app TikTok has been rejected. That development has paved the way for Oracle to make a last-minute bid.
President Donald Trump gave a September 15 deadline for the Chinese-owned app to sell or shut down its operations. The Trump administration alleges that TikTok and other Chinese apps are national security threats. In recent weeks, Oracle and Microsoft led the race to buy TikTok from ByteDance.
Reuters and the Wall Street Journal reported that Oracle had won a bidding war citing sources familiar with the matter. Oracle sells database technology and cloud solutions to businesses. Previous reports had hinted that Oracle was seriously considering acquiring TikTok’s businesses in Australia, the US, New Zealand, and Canada with investment firms like Sequoia Capital and General Atlantic.
TikTok is yet to comment on the matter of what happened between Oracle and Microsoft.
What Did Microsoft Have To Say?
On September 13, Microsoft confirmed that:
“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users while protecting national security interests. We look forward to seeing how the service evolves in these important areas.”
It paves the way for Oracle to take over TikTok’s US operations last month. Trump has previously said that Oracle would be “a great company” to take over TikTok. Oracle’s chairman Larry Ellison is a huge supporter of Mr. Trump. He even held a fundraising event for him in February.
Earlier this September Mr. Trump said that the government should get a huge portion of the sale price of TikTok’s US unit if an American company acquires it. Nonetheless, some confusion has come up over the deadline. President Trump’s executive order gave a deadline of September 20. However, Trump has repeatedly said that the deadline was set on September 15.
Why Is All This Happening?
President Trump ordered TikTok’s owner ByteDance to sell its American business within 90 days or risk being shut down. That forced sale is part of a wider crackdown on Chinese technology companies operating in America.
The US President has repeatedly said that apps like WeChat, TikTok, and equipment maker Huawei pose national security threats since the data collected about the users can be shared with the Chines government. All Chinese companies deny these claims.
Huawei also will face a ban on September 15 which will affect its non-American suppliers. They will be compelled to stop shipping to Huawei if their products have US technology. All participants will need a license from the US Commerce Department to have an opportunity to supply Huawei.
What Does China Say About The TikTok Saga?
About two weeks ago, China said that it will impose new government restrictions on tech exports. The rules seem to be aimed at delaying the TikTok sale. Based on these restrictions, some technologies like artificial intelligence (AI), will require government approval before they can be exported.
TikTok is gaining massive popularity due to its highly-advanced algorithms that predict what users prefer to watch. That sort of technology has now come under the spotlight of the Chinese government.
The highly-valued algorithms will not be sold or transferred as explained in a report in the South China Morning Post.
Chinese Tech Firms Victimized By US-China Battle
TikTok is another high profile example of Chinese firms that have been caught up in the US-China technology cold war. Huawei was the first to get embroiled in a battle that has now seen it crippled from doing any meaningful business in the United States; or acquiring any parts that have any US components in them.
The Trump administration has said that these moves are about leveling the playing field and national security aiming to protect Americans’ data and privacy. However, Beijing believes that the US is acting like a bully since it is dissatisfied with its lack of progress in major technology sectors.
China says that the US is worried about losing ground and has resulted in unexpected measures of trying to block Chinese technology or acquire it; in the case of TikTok. For now, it is not yet clear what form TikTok will take if it eventually ends up in American hands; and how popular it will remain among American users.
All these events may slow down the company’s growth in the United States. But, it now appears as TikTok has already turned its attention elsewhere away from the markets it is being pushed out of; the United States and India. The company is instead investing massively in the South East Asian markets.
How Does A Forced Sale Affect TikTok Users?
It remains unclear for now what will become of the popular video-sharing app which has almost 100m active users in the US. Neither Oracle nor Microsoft is seen as the best suitors for TikTok. The video-sharing app has a predominantly young audience who share short-form lip-synching videos.
Any kind of deal will still require approval from several interested parties that include Chinese and US governments, investors, and ByteDance itself. Last month, TikTok filed a lawsuit against the US government responding to President Trump’s executive order to ban the app.