FB Pixel no scriptByteDance lobs ball into Trump's court with sights on Oracle and Walmart partnerships | KrASIA

ByteDance lobs ball into Trump’s court with sights on Oracle and Walmart partnerships

Written by Lin Lingyi Published on   4 mins read

The Chinese app factory has submitted a proposal to mollify the Trump administration at the eleventh hour, leaving TikTok’s fate in the balance.

On September 13, Microsoft was nudged out the race to acquire TikTok’s operations in the United States, Canada, Australia, and New Zealand, leaving Oracle as the viral short-video platform’s lone feasible partner in a spin-off, partnership, or some other arrangement that cleaves this part of the business away from TikTok’s parent company, ByteDance.

The deal’s outcome is still up in the air, pending approval from Washington. But if Oracle does indeed become TikTok’s “trusted tech partner” in the US, ByteDance would likely retain partial ownership in an entity that essentially functions as a joint venture between Oracle and TikTok—an arrangement proposed by Microsoft earlier, but rejected, when the Trump administration was adamant about forcing a complete divestment of ByteDance’s financial interests in TikTok’s operation specifically in the US.

In fact, sources now say that ByteDance is seeking a majority stake in the planned business entity in its tie-up with Oracle, according to Reuters.

In a situation where government intervention intertwines with data security and corporate ownership in unpredictable ways, two of Oracle’s shot-callers, co-founder Larry Ellison and CEO Safra Catz, have close ties with the White House—a condition that may impact Washington’s final decisions regarding the fate of TikTok.

Strange bedfellows

Even when Oracle first put its hat into the ring, many wondered: how does it even mesh with TikTok? Oracle is chiefly known for its database management system and its expertise in storing, controlling, and maintaining data, which speaks to the Trump administration’s stated concerns about ByteDance’s Chinese origins and the company’s handling of user data. And to make TikTok’s continued presence in the US viable, the company promised to make TikTok Global a US-headquartered company with the capacity to create 20,000 new jobs, according to an interview with Treasury Secretary Steven Mnuchin by CNBC, doubling the number promised earlier this year.

kr asia community

Read this: New regulations might create hurdles for TikTok’s sale in its two biggest markets

Oracle’s existing business conveniently serves TikTok’s needs for cloud services, scoring it a major client alongside Zoom. Previously, Ellison declared that Oracle was the “only [cloud vendor] that spans two markets,” covering software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS) for enterprises. Ellison also insisted there is a trend of customers “moving entirely from Amazon Web Services onto the Oracle Cloud.”

A TikTok-Oracle link-up could also wrestle away annual business worth at least USD 800 million from Google Cloud and place it in Oracle’s books.

This isn’t the first time for Oracle to wade into the social vertical. In 2012, in rapid succession, it acquired social marketing solution company Vitrue, social intelligence platform Collective Intellect, and social media development platform Involver. But TikTok would be Oracle’s first time managing a consumer-facing platform that is constantly in the headlines.

An ambivalent medium

ByteDance’s move to prevent an outright sale of its core algorithms and operations, while simultaneously entering into a partnership with Oracle for its US, Canada, Australia, and New Zealand operations, requires a delicate balance to satisfy the demands of two global superpowers. Aside from Trump’s pronouncements regarding ByteDance, the Chinese government recently tightened regulations on tech exports, restricting the sales of artificial intelligence-related technology.

Trump told reporters on Tuesday that a deal was near, and Mnuchin stated that the administration will be “looking to have discussions with Oracle over the next few days with [their] technical teams.”

However, if Oracle and ByteDance’s current proposal is rejected, it is unclear what options remain for TikTok’s continued operation in the US. Previously, Trump had verbally announced that September 15 was a hard deadline for ByteDance to seal a sale of its US assets or face a wide-ranging ban, although his first executive order had put the deadline at September 20. At the time of publication, that cutoff date has not been moved back.

One step back, two steps forward?

Aside from its partnership with Oracle, ByteDance is also exploring a secondary partnership with Walmart in e-commerce, according to a report by Chinese media outlet Caixin. The multinational hypermarket and grocery store operator issued a short statement, indicating that “continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties.” Earlier, Walmart had been part of Microsoft’s bid. It is unclear whether Walmart’s talks with ByteDance are separate from Oracle. At media time, ByteDance has not responded to KrASIA’s request for comment.

ByteDance is already cultivating livestreaming e-commerce capabilities in its home market, China. If a link-up between TikTok and Walmart comes to fruition, there could be a new dimension in customer demand for Walmart+, a service designed to compete with Amazon Prime that launched on Tuesday. Walmart’s e-commerce business lost USD 2 billion in 2019, although things have picked up since the onset of the COVID-19 pandemic.

As collateral damage to geopolitical tensions on multiple fronts, ByteDance is walking on a tightrope at home and abroad. Outside of the US and China, the company will invest billions of dollars in Singapore to bulk up its operations in Southeast Asia. Like many other foreign firms, ByteDance may be seeking a safe haven in the region, where foreign investments of all stripes flood in.


Auto loading next article...