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TikTok Needs a New Owner in the US Before the Weekend; otherwise the app will be banned there. Favorite Microsoft is no longer there. This opens up opportunities for the American software company Oracle.
By Katja Scherer, WDR
The social media platform TikTok has exactly seven days left to find a new owner for its business in the US. But this task is becoming increasingly difficult: the US group Microsoft, previously a favorite among potential buyers, is offside. As the software maker announced, TikTok’s parent company Bytedance has ruled out a sale to Microsoft.
American software maker Oracle is now the new favorite. This is written by various media outlets like the “Wall Street Journal”. The US government has also confirmed that Oracle has made a corresponding offer. Some Chinese outlets, on the other hand, report that Bytedance is no longer considering selling its app to an American company. So the buzz is boiling as the sale deadline approaches.
TikTok threatens to be banned
TikTok users can upload and view short videos, for example sports videos, makeup tutorials, or political clips. Therefore, the application is successful all over the world and has caused a dispute between the US and China for a long time. The US government fears that Bytedance, the father of TikTok, will transmit the user’s data to the Chinese government. Thus, he has given the group an ultimatum: either the US TikTok business will be sold until September 20, or the app will be banned in the US.
Bytedance denies the allegations and has filed a lawsuit against the ban. Many observers see the dispute over TikTok as a struggle for political power. They assume that the US government wants to slow down China’s rapid growth in the digital world. President Trump had forced the sale of the app by presidential decree. In addition to TikTok, the White House is also putting pressure on other Chinese companies: the messaging service WeChat, for example, and the manufacturer of drones and cameras DJI. Like TikTok, they are all prime examples of China’s success in the digital world.
The sale to Microsoft has failed
The TikTok video app was launched by Bytedance in 2016. A year later, the app merged with its Chinese counterpart Musical.ly, after which the international triumphant advance began. According to media reports, the number of users of the app worldwide was 800 million people at the end of 2019, and the trend is growing rapidly. In the US alone, more than 100 million people use the app regularly. For comparison: Facebook has about 256 million regular users in the United States and Canada. TikTok is one of the fastest growing apps.
Microsoft has not disclosed why the agreement between Bytedance and Microsoft fell through. One reason could be the new guidelines from the Chinese government. It decided in late August that algorithms programmed in China could only be exported with the permission of the Chinese government. That means even TikTok can only be sold in its entirety with Beijing’s blessing, a huge hurdle to negotiations.
TikTok algorithm: the heart of the platform
Simply put, the algorithm is the digital heart of TikTok. Ensures that users always see what interests them in the application. With the help of artificial intelligence, the software analyzes for each user individually which videos they like to watch and then shows them more. TikTok does this so well that users sometimes spend more time on Instagram or Facebook. And that is exactly what makes the app so successful and valuable.
It is conceivable that Oracle, unlike Microsoft, would be satisfied with only receiving the data from American users of TikTok, but not the core algorithm. The decisive know-how would then remain in China. The Wall Street Journal writes that Oracle is planning some kind of technology partnership with Bytedance.
Treasury Secretary Steven Mnuchin told CNBC that the United States government would hold talks with Oracle about this later this week. The closing date for the sale on September 20 cannot be changed.
