ByteDance is set to snub a deal with Microsoft for the sale of its US operations of TikTok in favor of partnering with a consortium led by Oracle, according to reports. The Chinese video-sharing app has been given a deadline of September 15th to sell to an American company following Donald Trump’s executive order last month.
Microsoft had emerged as the front-runner for acquiring TikTok’s US operations, which the president had said was the only way to prevent a complete ban of the app in the United States, and early reports claimed that CEO Satya Nadella had held talks with Trump about the potential for a deal.
The Washington Post now reports that Californian-based Oracle has been chosen as a “technology” partner for ByteDance in the US and will handle TikTok’s user data in America. Reuters reported that the deal is more of restructuring rather than a straight sale. There is no official word on how much of TikTok’s US business ByteDance will still own. Chinese state media, on the other hand, has reported that ByteDance would not be selling TikTok’s US operations to Oracle.
The deal now lies in the hands of the powers that be. Both Washington and Beijing will have to give the green light for this to go through. It is believed that Trump wants TikTok’s business in the US to be owned by an American company. Beijing, on the other hand, is reported to prefer shutting down the app over being forced to sell to an American tech giant.
Over the past month, several other players have declared an interest in buying TikTok’s US operations. Walmart emerged as an outside candidate after it became clear that the retailer had been participating in negotiations with Microsoft.
One of the main questions that remains unanswered during this whole saga is whether or not TikTok’s algorithm would be included in any sale to a US company. The algorithms used to decide what content is shown to each individual user are a social media company’s biggest asset. Without them, the profiles and prediction modeling systems that feed users targeting ads would not be anywhere near as successful as they are. According to the South China Post, ByteDance will refuse any deal that involves the transfer of TikTok’s algorithm outside of China, citing new government export controls as one of the reasons.
All interested parties, including ByteDance, Oracle, and The White House have not responded to media requests to comment. We’ll have to keep an eye on this one and see how it develops. Stay tuned.