Oracle could become the “technology provider” for TikTok under a deal reached with China’s ByteDance, Oracle said Monday, amid a Trump administration order forcing the divestiture of TikTok U.S. assets.
The software company’s official confirmation comes after Treasury Secretary Steve Mnuchin said in an interview with CNBC Monday that the U.S. government received a proposal from Oracle to partner with TikTok. That came after Microsoft said Sunday that ByteDance had rejected its acquisition offer for TikTok.
Oracle stock climbed on news of the latest development in the unfolding TikTok saga, with shares up about 5% in mid-morning trading.
Financial terms of Oracle’s deal for TikTok were not disclosed. Existing U.S.-based ByteDance investors, including General Atlantic and Sequoia Capital, will receive ownership stakes in TikTok under the proposed deal, per a Wall Street Journal report.
“Oracle confirms Secretary Mnuchin’s statement that it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend in which Oracle will serve as the trusted technology provider,” an Oracle rep said in a statement to Variety. “Oracle has a 40-year track record providing secure, highly performant technology solutions.”
Earlier, Mnuchin said that the Treasury-led Committee on Foreign Investment in the U.S. (CFIUS) will review Oracle’s proposal this week.
“We will be reviewing that at the CFIUS committee this week and then will be making a recommendation to the president and reviewing it with [Trump],” Mnuchin said on CNBC. “From our standpoint, we’ll need to make sure that the code is, one, secure, Americans’ data is secure, that the phones are secure and we’ll be looking to have discussions with Oracle over the next few days with our technical teams.”
Oracle chairman and cofounder Larry Ellison is an open supporter of President Trump and the software mogul hosted a fundraiser for Trump at his Rancho Mirage, Calif., home earlier this year (prompting protests from Oracle employees). Meanwhile, Trump has endorsed in principle an Oracle-TikTok deal.
It’s not clear whether the Oracle-led bid will satisfy Trump’s executive order that explicitly requires ByteDance to fully divest TikTok’s U.S. assets by Nov. 12 citing the U.S. government’s claims that the video app threatens America’s national security. TikTok has sued Trump and his administration, seeking a ruling blocking the enforcement of the order once the Commerce Department issues its regulations. Trump’s order is “not based on a bona fide national emergency and authorizes the prohibition of activities that have not been found to pose ‘an unusual and extraordinary threat,’” as required under U.S. law, TikTok alleged in the federal lawsuit.
Meanwhile, besides the absence of details about the financial mechanics of Oracle’s proposed partnership with TikTok, it’s unclear whether Oracle will have access to the artificial-intelligence algorithms that the TikTok app uses to serve up suggested videos — and have been a key element driving its growth. Last month, China’s government adopted new export restrictions on companies operating in the country covering AI technologies, such as the algorithms used by TikTok.
TikTok had 53.5 million weekly active users in the U.S. for the week of Aug. 30-Sept. 5, 2020, per research firm App Annie.
TikTok is currently headed on an interim basis by Vanessa Pappas, previously GM for North America, Australia and New Zealand. She stepped into the role after after ex-CEO Kevin Mayer last month said he would resign just over three months after leaving his high-ranking post at Disney, citing the current political climate surrounding TikTok amid growing tensions in China-U.S. relations.