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Oracle's Deal For TikTok May Not Include A Purchase

Microsoft said on Sunday its bid to acquire the U.S. assets of Chinese-owned TikTok has been rejected by TikTok's parent company, ByteDance.
Ng Han Guan
Microsoft said on Sunday its bid to acquire the U.S. assets of Chinese-owned TikTok has been rejected by TikTok's parent company, ByteDance.

Updated at 1:04 p.m. ET

A deal with Oracle for TikTok's U.S. operations may end up including a partnership instead of an outright purchase.

With its deadline to sell or be banned in the U.S. fast approaching, Chinese tech giant ByteDance said it will not be selling its video-sharing app TikTok to either Microsoft or Oracle, according to China state TV.

Separately, Oracle said in a 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."

In a statement of its own, TikTok confirmed the talks with the U.S. government.

"We can confirm that we've submitted a proposal to the Treasury Department which we believe would resolve the Administration's security concerns," a TikTok spokesperson told NPR. "This proposal would enable us to continue supporting our community of 100 million people in the US who love TikTok for connection and entertainment, as well as the hundreds of thousands of small business owners and creators who rely upon TikTok to grow their livelihoods and build meaningful careers."

Microsoft said Sunday that ByteDance informed the company that its bid for TikTok's U.S. operations had been rejected.

Microsoft, a $1.5 trillion company, had been seen as the most likely buyer because of its vast resources and long history of doing business with the federal government.

"We are confident our proposal would have been good for TikTok's users, while protecting national security interests," a Microsoft spokesman said. "To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combating disinformation. ... We look forward to seeing how the service evolves in these important areas."

Walmart, which had proposed teaming up with Microsoft in a TikTok bid, saidthe giant retailer "continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties."

The Wall Street Journal reported Sunday that Oracle was in negotiations to be TikTok's "trusted tech partner," an ambiguous relationship that did not involve an outright sale of the platform, according to the Journal.

Reuters, citing unidentified sources, reportedthat Oracle would "assume management of TikTok's U.S. user data. Oracle is also negotiating taking a stake in TikTok's U.S. operations."

Oracle, a software company that sells database products and cloud computing services to businesses, did not return a request for comment.

Any potential sale of the app, known for short viral videos of lip-syncing and dance challenges, has been complicated by China's recent decision to restrict how artificial intelligence technology can be exported from the country.

The move means that any deal for TikTok might not include the app's sophisticated algorithm, seen as the secret ingredient to its success.

Wedbush analyst Daniel Ives said Microsoft likely was only interested in acquiring TikTok with its algorithm, which ByteDance may have resisted.

"Given the need now to get a green light from Beijing after its export rules were changed a few weeks ago, TikTok's days in the U.S. likely are numbered with a shutdown now the next step," Ives said. "Unless there are some last minute changes, ByteDance heads into the White House deadline this week with some dark days ahead as the plug now likely gets pulled on the TikTok app within the U.S."

For months, the Trump administration has been pressuring TikTok to divorce itself from its Beijing parent company, ByteDance, as officials in Washington fear the Chinese government could use the video app as a tool to spy on Americans.

Trump signed an executive order last month that makes it illegal for U.S. citizens to do business with ByteDance or any of its subsidiaries starting on Sept. 20. In a separate action, Trump ordered that TikTok sell off its U.S. operations by Nov. 12. Trump has said several times that TikTok must be purchased by Sept. 15, though it is unclear how that date would be enforced.

Lawyers for TikTok have filed a legal challenge to block Trump's executive order outlawing transactions between ByteDance subsidiaries and U.S. businesses, saying the move is unconstitutional and is rooted in speculation.

TikTok, which has became a super hit during the pandemic, has been downloaded in the U.S. more than 100 million times. The company says it has taken steps to protect the data of Americans, which the company said is stored mostly in the U.S.

Worries that the Chinese government can access such data is unfounded, TikTok has long said, claiming that government officials in Beijing have never asked for data on Americans and if such a request were made, the company would deny it.

NPR's Avie Schneider and NPR's Shannon Bond contributed to this report.

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Bobby Allyn is a business reporter at NPR based in San Francisco. He covers technology and how Silicon Valley's largest companies are transforming how we live and reshaping society.