TikTok Rejects Microsoft, Partners With Oracle

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TikTok Rejects Microsoft, Partners With Oracle
The interior of TikTok's office in Culver City.

TikTok’s parent company, Beijing-based ByteDance Ltd., has rejected an acquisition proposal from Microsoft Corp. and reportedly accepted a bid from Oracle Corp. 

TikTok, which has offices in multiple U.S. locations, including its largest office in Culver City, is facing an approaching deadline imposed by an executive order from President Donald Trump threatening to ban the app’s U.S. operations unless they are sold to an American company.

The short-form video platform will announce Oracle as its “trusted tech partner” in the United States, according to a report by the Wall Street Journal, which cited anonymous sources.

The structure of the Oracle deal is not immediately known, but it is likely not to be an outright sale. Some of ByteDance’s existing investors, including Sequoia Capital and General Atlantic, will get stakes in the venture as part of the deal, according to the WSJ report.

Microsoft released a statement on Sept. 13 confirming it has lost its bid for TikTok’s U.S. operations. 

Walmart Inc., which previously joined Microsoft on the bid, said in a statement on Sept. 13 that it continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties. “We know that any approved deal must satisfy all regulatory and national security concerns,” Walmart said in the statement.

Chinese officials on Aug. 28 updated rules on technology exports, which prohibits exporting technology including text analysis, voice recognition and content suggestions without a license from the Chinese government, giving Beijing the power to veto the sale of TikTok’s algorithm to its U.S. bidders.

Pressured by the new rules, ByteDance will not sell or transfer the algorithm behind TikTok in any sale or divestment deal, according to Hong Kong-based South China Morning Post, citing a source briefed on the Chinese company’s boardroom discussions.

Any deal reached by TikTok and its U.S. bidders will need to be reviewed and approved by the White House and the Committee on Foreign Investment in the United States.

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