Larry Ellison, Chairman of Oracle Corp., speaks at the Oracle OpenWorld 2016 conference in San Francisco, on Sunday, September 18, 2016.
David Paul Morris | Bloomberg | Getty Images
Oracle’s bid to acquire TikTok’s US company may not be as bizarre as it may sound at first, analysts told CNBC on Tuesday.
The business software giant is said to be working with venture capital firms Sequoia and General Atlantic to defeat Microsoft in the race to buy TikTok’s company in the US, Australia, New Zealand and Canada from Chinese owner ByteDance. The deal talks were confirmed by a CNBC source after they were first reported by the Financial Times.
While TikTok may not seem like the most natural fit for Oracle’s existing customer base, there could be more than that. Abishur Prakash, a geopolitical futurist at a strategic consulting firm called the Center for Innovating the Future, said companies want one thing when it comes to TikTok: data.
“By placing TikTok data on Oracle servers, Oracle can bring in-ways into new sectors,” Prakash said. Oracle does not have a social media app that TikTok could integrate with, but the company could theoretically use customer data collected by TikTok to improve its marketing products.
With more than 2 billion downloads, TikTok’s large user base can also appeal to Oracle, as can the company’s business model, which is a direct threat to Facebook.
“In the post-Covid world, every business is trying to reinvent itself,” Prakash added. “And within tech geopolitics, there are not only risks but also opportunities. Oracle may have its own ideas on how it could use TikTok that it has not yet revealed to the market.”
Preferred buyer
But would ByteDance rather sell TikTok to Oracle, co-founded by President Donald Trump backer Larry Ellison, than Microsoft?
“The perfect company for Bytedance to sell is one with deep enough pockets to pay a good price,” said Matthew Brennan, a social media analyst in Beijing.
Brennan added that the buyer “should be good enough at tech to run virtually any advanced AI (artificial intelligence that TikTok has)” but weak enough at consumer mobile that they would avoid arming a future competitor. “By these measures, Oracle sounds like a good fit,” Brennan said.
It remains unclear whether ByteDance wants to separate TikTok as a whole or by region. The company is reportedly in talks with Reliance Industries for TikTok in India, and maintains multiple bids for TikTok’s US assets.
“This is likely to create confusion and friction with Microsoft, TikTok’s asset forerunner, which has the balance sheet and ability to carry out TikTok’s non-China assets,” said Michael Norris, a research and strategy manager at Shanghai-based consulting firm AgencyChina.
“For Microsoft, the attractiveness of the deal diminishes as it has to be a shared product owner with Reliance Industries as Bytedance in non-US markets.”
Some viewers on social media are still struggling to understand why Oracle would ever be interested in TikTok.
“The deal makes zero sense when viewed from a business lens, but starts to make some sense when you see it when Larry is friends with Trump and Trump that the Treasury wants to take a cut,” said Timothy Armoo, CEO of Fanbytes , a company that aims to help brands engage with younger audiences. Ellison threw a campaign fundraising event for Trump earlier this year and has voiced his support for the president.
“Sure, there seem to be obvious gains with access to data and cloud solutions, but probably no one in Oracle’s senior team ever thought of TikTok or cared about them, so this rumor doesn’t make much commercial sense behind it,” “added Armoo. “Serving massively different demographics and cultures, I think there is no real substance to it.”
One decision
The final decision will ultimately lie outside the hands of the company, according to Prakash.
“Ultimately, the ball is in China’s court,” he told Prakash. “Will ByteDance allow TikTok to sell to companies that use US government technology?”
“Beijing is in an awkward position. If it enters, all fears of Chinese government control over its companies will reach new heights. If Beijing does not intervene, it will be empty, because its tech companies will be besieged under the siege. world. “
The way TikTok is structured means that subsidiaries in New Zealand, Canada and Australia report to the US
A ByteDance spokesman said: “We do not comment on rumors or speculation.”
An Oracle spokesman said: “This is not something we can comment on.”
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