ByteDance is rumored to be willing to turn down a deal with Microsoft for the sale of its US TikTok operations in favor of a partnership with a consortium led by Oracle. The Chinese video-sharing app has until September 15 to sell its US operations to a US company, following Donald Trump’s decree last month.
Microsoft emerged as the main buyer of TikTok’s US operations, which the president said was the only way to prevent the app’s complete ban in the United States. Early rumors claimed that CEO Satya Nadella had held talks with Trump about the possibility of a deal.
The Washington Post now reports that Oracle, which is based in California, has been selected as ByteDance’s “technology” partner in the United States and will manage TikTok user data in America. Reuters said it was more of a restructuring than an outright sale. There is no official announcement on how much of TikTok’s US business ByteDance will keep. Chinese state media, on the other hand, reported that ByteDance would not sell TikTok’s US business to Oracle.
The deal is now in the hands of those in power. Both Washington and Beijing will have to give the green light for the deal to pass. Trump wants TikTok’s US business to be owned by a US company. Beijing, on the other hand, would rather shut down the app than be forced to sell it to a US tech giant.
Over the past month, several other players have expressed interest in acquiring TikTok’s US operations. Walmart emerged as an outside candidate after it became clear that the retailer was in negotiations with Microsoft.
One of the main unanswered questions is whether or not TikTok’s algorithm would be included in a sale to a US company. The algorithms used to decide what content is shown to each individual user is the biggest asset of a social media company.
Without them, the profiles and prediction modeling systems that power users targeting ads would not be as good as they are. According to the South China Post, ByteDance will deny any deal involving the transfer of TikTok’s algorithm outside of China, citing new government controls on exports as one of the reasons.
All stakeholders, including ByteDance, Oracle and the White House, did not respond to media requests for comment. We’ll have to keep an eye on this case and see how it develops. Stay tuned.