According to the latest reports Bytedance, the Chinese owner of the social video app TikTok has selected Oracle as TikTok's US technology partner. However, TikTok is not sold to Oracle. ByteDance will not sell TikTok to Oracle or Microsoft and will not distribute its source code to American companies. Oracle is trying to work out a complicated deal. If the deal goes through, Oracle will become an integral part of TikTok's US business.
Oracle has confirmed that it has entered into an agreement with ByteDance: "Oracle has confirmed the proposal that ByteDance made to the Treasury Department last weekend. Following this proposal, Oracle becomes a trusted technology provider. “It is reported that the transaction has yet to be approved by the US government. As a result of this report, Oracle's share price rose 6.86% yesterday.
Microsoft is out of the picture
Microsoft is now completely out of the picture and already has an official statement. The Chinese government updated the list of technology export controls two weeks ago. The new export control limits the export of technologies such as TikTok algorithms. Bytedance then stated that the Chinese regulations were strictly adhered to. According to a Chinese government official, "ByteDance can sell all TikTok products, but not its algorithm." In fact, TikTok is technically useless without its algorithm.
A source familiar with the technology said that ByteDance uses the same source code for TikTok in all countries / regions and has been modified for different markets. The source said, "In theory, the US team can copy the algorithm, but it takes time to get users to do the same …"
Algorithmic constraints are forcing potential buyers (including Microsoft-led consortia) to Rethink purchase plans and reviews. Because if Microsoft can't purchase the algorithm, it can't meet its commitment to national security issues.
A person familiar with the matter said Microsoft's plan is more ambitious than Oracle's. Owning TikTok can help Microsoft have more influence over everyday consumers. In addition to the Xbox games business, Microsoft is mainly giving up the hunt for corporate users in this area. TikTok will also provide Microsoft with a treasure trove of data on young and mostly female users for which there is currently insufficient evidence.
Currently there is no guarantee that the US government will approve the latest Oracle-Oracle deal with TikTok.