American software giant Oracle has won the bidding war for the U.S operations of TikTok. Bytedance, the parent company of social media app TikTok, has selected Oracle to be the app’s technology partner for its U.S. operations. Earlier, Bytedance rejected an acquisition offer from the tech giant Microsoft.
According to Microsoft officials, “This move came after President Trump executive order”. President Trump released a statement threatening to take legal action against firms doing business with the Chinese app. Already, the US president citing security concerns issued a statement to ban TikTok. This move came after India blocked several Chinese origin apps including Tiktok citing data theft issues after China’s aggression alongside the Indian border. After the spread of coronavirus, relations between the US and China have worsened.
In addition to the US, China’s hostility in the South China Sea has already impacted its relations with its neighbors. To tackle this, four countries including India, Japan, Australia and the US have planned to come together.
The United States is among the major markets for Tiktok after its ban in India. Also, there is still confusion about the ownership of Tiktok in the US. The people involved in the negotiations said that it was unclear if Tik Tok’s selection of Oracle as a technology partner would mean that Oracle would also take a majority ownership stake of the social media application.
Microsoft was the biggest competitor for the acquisition of Tiktok
Microsoft had been seen as the American technology firm with the deepest pockets to own Tik Tok’s U.S operations from Byte Dance. With the greatest ability to address the national security concerns that led to Trump’s order. The executive order from Trump said that Tik Tok essentially needed to strike a deal to sell its U.S operations by September 20 or risk being blocked in the United States.
But as China updated its export control rules last month that would bar Tik Tok from transferring its technology to a foreign buyer without explicit permission from the Chinese government, the sale talks had been in a holding pattern. However, Bytedance has declined to sell its US business to Microsoft.
Oracle to assume management of Tiktok
Under the proposed deal, Oracle will assume management of Tik Tok’s U.S data and is also negotiating to take a stake in Tik Tok’s U.S shares. However, it is not clear whether Trump, who wants a U.S technology firm to buy the majority of Tik Tok in the United States and will approve the proposed deal. However, none of the firms including ByteDance and Oracle has issued any statement clarifying the situation. Also, the White House has declined to comment on this issue. Earlier, Microsoft said that ByteDance has not informed that it would not be selling Tik Tok’s U.S operations to Microsoft.
Geopolitical tension tend to worsen
They would not structure the deal as an outright sale. Any resulting deal could still be a reason for geopolitical tension between the United States and China.
China and the US geopolitical tensions arose amidst the coronavirus crisis. It is alleged that China did not disclose about Coronavirus on time which led it to become a bigger concern. Also, last year the US government had banned “Huawei”, a Chinese phone manufacturer and tech giant due to national security concerns. Several other counties had banned this company too under the fear of data security.
About Tiktok
Tik Tok is a widely popular video-sharing app in the United States. It allows the user to create 15 seconds small videos. The videos made on the platform have an option for users to add a transition to their videos. Earlier, it was known as music.ly and was famous for its lip-sync videos. The app reported around 800 million active users across the globe in January 2020. It was also the second most popular app on Googlr play store and fourth in the apple store.
The US is also one of the major markets of Tiktok with number of users more than 100 million. It is also widely popular around the globe and due to its AI-based algorithm for suggesting videos to its users. Tiktok was the most downloaded non-game app globally in the month of May 2020.
The government of India banned the app a couple of months ago after Indo-China border conflict became more intense. In the incident at Galwan Valley, several Indian Army personnel lost their lives.
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