Why would the US company Oracle acquire TikTok?

US tech giant Oracle has confirmed that it has reached a partnership agreement with the Chinese company that owns TikTok for short videos.

Microsoft exited negotiations with Chinese company ByteDance on Sunday night, after which Reuters announced that Oracle would become the technology partner and manage the data of TikTok users in the United States.

Such a partnership would address US security concerns, but it would not be a complete sale, sources told Reuters.

However, Chinese media said ByteDance would not directly sell its US operations and would not give the source code of Tik Tok to anyone.

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Oracle security roots

Oracle sells database technology and cloud systems to companies. It was one of the first companies to help clients structure their records in this way. Its president and one of its founders, Larry Ellison, chose this name for the code name of the project he carried out for the benefit of his first client in 1975, the CIA.

The company was established two years later and has entered into contracts with the CIA, Naval Intelligence, Air Force Intelligence, and the National Security Agency.

The Gizmodo news site published detailed data on Oracle’s activities with the US government intelligence services, saying it was a relationship that “has been repeatedly ignored by those who like to pretend that Oracle is just a modest startup like others in Silicon Valley. ”

But the company’s customers and cloud services now extend widely, from serving automakers like Mazda and Yamaha, to retail stores like Co-Op and Debenhams in the UK.

Oracle’s technology can be used to track all the data, Ellison says. “All the data about your bank accounts, your current balance, your savings are stored in an Oracle database.” He said it decisively in Geoffrey Rosen’s book The Naked Crowd, which was released in 2004.

“The flight reservations I made are stored in a database with Oracle. The books that I have purchased from Amazon are stored in an Oracle database. Your Yahoo account details are stored in an Oracle database … There’s no Privacity”.

Safe choice?

The US administration claims that TikTok and other Chinese applications are sources of threat to national security and for this reason Oracle, given its history in the intelligence field, can be considered a reliable option.

“On the surface, Oracle and TikTok don’t appear to be compatible,” says Chris Stockle-Walker, author of a book that is about to be released on the platform. “Oracle seems like a bland company, while TikTech is a spontaneous, youth-focused app.”

“But there are hidden geopolitical factors. If US President Donald Trump’s concerns about TikTok are security, then Oracle will be a safer bet.”

Ellison, ranked by Forbes magazine as the fifth richest person in the world, is an outspoken supporter of President Trump and launched a fundraising drive for his campaign in February.

Trump had previously said that he believed Oracle was the best person who could make a deal with TikTok.

“I think Oracle is a great company and I think its owner is a wonderful person,” he said last month.

“He’s an amazing guy. I think Oracle can handle the situation.”

Deadlines for Tik Tok

September 15: Deadline President Donald Trump set for Bytes Dance to reach an agreement.

• September 20: An executive order to prevent companies from trading with ByteDance goes into effect under US jurisdiction.

• November 12: A second executive order comes into effect giving ByteDance a deadline to divest Tik Tok’s US assets.

However, any agreement requires the approval of the governments of the United States and China. Chinese media have reported that ByteDance will not sell the company to Oracle.

Oracle is accused of hostility toward China after it laid off 900 employees from its work team there, in the same week the United States imposed additional tariffs on Chinese products. Employees attributed the decision to cut their numbers to tension between the United States and China.

‘Technological association’

What is understood is that Oracle’s stake in TikTok will not be a direct sale, but rather a “technology partnership,” as reported by The Wall Street Journal and Reuters. This suggests that the control of TikTok by the US company will be limited.

Two weeks ago, China announced new government restrictions on technology exports. This means that selling some types of technology, such as artificial intelligence technologies, to any foreign entity requires prior approval.

Many argue that TikTok’s main strength is the way it identifies proposed clips, the type of users viewing, and the timing of their submission, and that Oracle may not be able to know their details or use them for other purposes.

“An agreement in which Oracle takes over data management without obtaining the source code and implementing major operational changes is not enough to allay any legitimate concerns about TikTok,” said Alex Stamos, a former Facebook security officer. , in a tweet on Twitter. It’s complete nonsense. “

However, another expert believes that the partnership can be successful. “Oracle’s security component can ease tension and it can also help make TikTok look more mature,” says Tamara Littleton, owner of The Social Element, a consultancy.

“TikTok is struggling to control its content at this time, and despite its good reputation for its logarithmic system, it can work against it at times. Oracle’s expertise can help address some of these issues.”

Both TikTok and Oracle declined to comment when contacted by the BBC.