Oracle Wins Bid For TikTok, Beating Out Microsoft – Deadline

TikTok has been bought by software giant Oracle after the U.S. government forced the parent of the popular meme-making, video-sharing app to sell it to a U.S.-based firm or else have it banned.

The software company beat out Microsoft, whose bid to take over U.S. operations of the app was rejected. Oracle wound up being the favorite, many analysts believe, in large part because founder Larry Ellison is a supporter of President Donald Trump. The White House still has to officially sign off on the deal in order for it to take effect.

Founded by Chinese internet entrepreneur Zhang Yiming, TikTok is owned by ByteDance, a Beijing-based tech giant. TikTok has been a spectacular growth story but has run into a buzzsaw in the form of conflict between the U.S. and China. President Donald Trump and his administration declared the social media platform a security threat. Secretary of State Mike Pompeo and other officials have repeatedly said it is being used to siphon users’ data and compromise the U.S. India had previously banned TikTok, citing similar security concerns.

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Oracle will be announced as TikTok’s “trusted tech partner” in the U.S., according to a report in the Wall Street Journal, but the transaction won’t be structured as an outright sale.

“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,” Microsoft said in a statement Sunday evening. “To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.”

In early August, Trump had issued an executive order that insisted on the sale, a move most U.S. business historians say has few precedents. There is no antitrust concern in play, given that TikTok competes with SnapChat, Instagram and a host of other social platforms and does not command dominant market share.

Walmart had joined with Microsoft for a bid last month in a move that surprised Wall Street. Most analysts had expected Microsoft to prevail on the merits. Although, like Oracle, its heritage is software, it has acquired communication platforms like LinkedIn and Skype and it has a successful video game division, giving it ways to connect with TikTok’s core teen-age users.

Trump had imposed a September 15 deadline for the deal to be sealed. When negotiations were complicated by technical aspects of disentangling TikTok’s infrastructure from that of ByteDance, the notion of extending the deadline surfaced, but Trump last week insisted the date was firm.

In a lawsuit against Trump’s executive order filed a few weeks ago, TikTok lifted the veil on its dramatic growth. With 100 million monthly active users, the company has risen from 91.9 million in June and more than doubled from the 39.9 million of last October. Since January 2018, the site has surged more than 800% from 11.3 million users, with its global footprint reaching 689 million users across more than 200 countries.

Kevin Mayer, a longtime Disney executive who spearheaded major M&A deals like 21st Century Fox, Marvel and Pixar before leading the launch of Disney+ last fall, jumped to TikTok as CEO earlier this year. That stunning news came after Mayer lost out on the CEO job in favor of Bob Chapek. But Mayer did not last even three months as TikTok’s CEO, explaining to Yiming and employees that he hadn’t anticipated the severity of the storm that would blow up around the company.

While TikTok was built on the breezy site, it has branched out from its initial sweet spot of dance videos to become a factor in recent protests against racial injustice. It also had ambitions to compete with SnapChat, Twitter and other social giants in the advertising space, convening a presentation for buyers during the NewFronts in the spring.

TikTok also played a memorable role in an episode that embarrassed the Trump presidential campaign in June. When thousands of ticket requests for a Trump rally in Tulsa circulated on TikTok, campaign officials boasted about likely record-setting attendance and even set up an overflow area next to the arena. It turned out the buzz was vastly exaggerated, the ticket demand an elaborate prank. Only a few thousand attended the rally and TV cameras showed thousands of empty seats.

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