Tech firm Oracle has confirmed that Bytedance has formally proposed a partnership over the US operations of its video sharing app TikTok.
While full details of the partnership between Oracle and Bytedance have not been disclosed, it is aimed at avoiding President Donald Trump's threat to close down the US services of TikTok.
Oracle buyout of TikTok
Last month, President Trump expressed that he welcomes the idea of Oracle buying out the US operations of Chinese-owned video sharing platform TikTok.
Trump said Oracle would be “a great company” to take over the operations of TikTok in the US, following reports that Oracle is a possible buyer of the Chinese social media app’s business in North America, Australia and New Zealand.
Trump made the comments during a speech in Yuma, Arizona after he learned of reports that Oracle was working on an offer for some TikTok assets with a group of ByteDance’s investors.
Oracle is collaborating with a group of US venture capital companies that have a stake in TikTok, the source says. According to a report from The Financial Times, General Atlantic and Sequoia Capital as reportedly two of the investors working with Oracle.
TikTok ban in the US
Earlier in August, Trump issued executive orders that would ban TikTok and WeChat in the US in 45 days if sold by their Chinese-owned parent companies.
However, the orders did not indicate that a certain amount of money from the sale needs to be sent to the US Treasury Department, which Trump has been insisting on in the past few days.
The TikTok order states that after 45 days, “any transaction by any person, or with respect to any property, subject to the jurisdiction of the United States, with ByteDance Ltd.,” will be prohibited.
The order also makes the accusation that the social media platform “automatically captures vast swaths of information from its users,” such as location data and browsing and search histories, which “threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information — potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.”
In response to the orders, TikTok spokesperson Josh Gartner issued a statement saying: “TikTok is loved by 100 million Americans because it is a home for entertainment, self-expression, and connection. TikTok will be here for many years to come.”
Also in August, TikTok sued the Trump administration in response to the president’s order that bans US transactions with the app.
Politics behind the deal?
Oracle's shares went up by 7% in mid-morning trade in New York following the announcement.
Carolina Milanesi from the Silicon Valley-based research firm Creative Strategies commented: "While I can see the upside for Oracle from a cloud perspective, it is hard not to think how much of this deal rests on politics rather than tech."
Oracle chairman Larry Ellison is a known supporter of Trump who hosted a fundraising event for his campaign in February at his private golf course and estate in California.
