Here's what we know about Oracle's bid to become TikTok's 'trusted technology provider' and potentially save it from Trump's threats of a US ban (ORCL)

tiktok oracle

Summary List Placement

The US government is expected to review a deal between Oracle
and TikTok-parent ByteDance on Tuesday, potentially ending the
months-long battle over TikTok’s ownership and status in the
US.

Oracle, best known as the leading provider of database software
and a $187 billion tech titan in its own right,�is
the unlikely and unexpected partner
 Beijing-based ByteDance has
chosen to resolve the matter, emerging as the winner this weekend
after Microsoft confirmed
Sunday
that its bid for TikTok was turned down.

Oracle and TikTok both confirmed in statements that they
submitted their joint deal to the US government for approval, with
TikTok saying it believed the deal “would resolve the
Administration’s security concerns.”

Other than that, few details about the deal — or what it means
for US-China tensions — have been revealed.

What has been confirmed

  • TikTok and Oracle each confirmed that Oracle was named a
    “trusted technology provider.” Treasury Secretary Steven Mnuchin
    also confirmed that ByteDance and Oracle had submitted the deal to
    the US government for review. 
  • Mnuchin
    told CNBC on Monday
    that under the proposed deal, ByteDance
    committed to establish TikTok as a US-headquartered global company
    and create 20,000 new jobs.

What is reported

  • The global business for TikTok, which has more than two billion
    worldwide installs outside of China, will be placed into a new
    US-headquartered entity,
    the Financial Times reports
    . The new entity will have ByteDance
    as the majority shareholder, and Oracle as a minority shareholder,

    The Wall Street Journal reported
    .
  • Other interested US investors — including Sequoia Capital,
    General Atlantic, and
    potentially Walmart
    — will be able to buy minority stakes in
    the new entity, according to
    The Wall Street Journal
    .
  • The new TikTok entity will have “independent oversight” and be
    managed “at arms length” by ByteDance, the Financial Times
    reported.
  • One concern was whether TikTok
    would retain its renowned algorithm
    under the deal. The
    Financial Times reported that TikTok would continue to have access
    to the recommendation algorithm surfacing videos on users’ “For
    You” pages. This would avoid any questions over the transfer of
    ownership of the algorithm to a US buyer, sidestepping a
    potentially thorny issue with Chinese regulators.
  • Oracle will reportedly take over management and processing of
    TikTok’s user data either
    in the US
    or
    globally
    — though Reuters and the Financial Times report
    different possibilities.
  • Instead of an outright deal, the Oracle-TikTok relationship is
    more of a “partnership” without the “exchange of significant
    assets,” the Wall Street Journal first reported.

What we don’t know

  • We don’t know why ByteDance’s deal with Microsoft, which seemed
    sure for weeks, fell apart at the last minute.
    Reuters reported
    that investors were unhappy the price that
    Microsoft offered, and that it upset ByteDance CEO Zhang Yiming by
    characterizing TikTok as a security concern that only it could
    fix.

What’s next

  • The Committee on Foreign Investment in the US — which reviews
    transactions between foreign and American companies and declared
    last month that ByteDance had to divest its US operations — is
    set to review the proposed deal on Tuesday, according to The Wall
    Street Journal.
  • If CFIUS approves the deal, President Donald Trump will have to
    sign off on the details. On Tuesday, Trump said he had “high
    respect
    ” for Oracle cofounder Larry Ellison, without
    elaborating.
  • The Chinese government will also have to agree to the terms
    before the deal is official. The Financial Times reported that
    Chinese officials have already shown support for the Oracle deal,
    which appears to let ByteDance retain significant control. 
  • Some US lawmakers, like
    Senator Josh Hawley of Missouri
    , have urged CFIUS and the
    president to reject the deal, arguing that it is too lenient and
    doesn’t do enough to assuage national-security concerns.
  • If the deal is rejected, it could send negotiations back to
    square one, with a potential ban still looming over TikTok.

Are you an insider with insight to share? Contact this
reporter at pleskin@businessinsider.com or DM @paigeleskin on
Twitter.

SEE ALSO: Oracle
wins bid to become TikTok’s ‘trusted technology provider’ in
US


Join the conversation about this story »

NOW WATCH:
Why Pikes Peak is the most dangerous racetrack in America

Source: FS – All – Entertainment – News
Here's what we know about Oracle's bid to become TikTok's
'trusted technology provider' and potentially save it from Trump's
threats of a US ban (ORCL)