TikTok, the popular social media video-sharing app, is at the center of a bitter tug-of-war between the United States government and its Chinese owners. The Trump administration gave ByteDance’s TikTok and Tencent’s WeChat a 45-day deadline to sell their businesses interests in American territory or cease operations. Now, two bids are present for TikTok’s operations in North America, Australia, and New Zealand. The interested parties are Microsoft and Oracle. We examine what TikTok wants to do to look attractive for potential buyers.
TikTok’s strategy for survival was outlined by Washington DC, sell your stakes or disappear. Microsoft wanted to step in, but talks cooled down, as the initial offer from the American software developer seemed bland in the eyes of its Chinese puppetmasters. Not long after, Larry Ellison’s Oracle, coupled with two other investors from Los Angeles and New York, also manifested their interest in acquiring the company.
TikTok’s main selling point is its huge customer base. If Microsoft —or Oracle, for that matter— wants to acquire the app, they’d be getting a sweetheart deal: an acquisition would pump the user base for the software developers and drastically reduce TikTok’s average age. Age is an issue in TikTok. The social media video-sharing app is present on nearly half of every teenagers’ phone in the US.
Oracle worked with private equity firms General Atlantic and Sequoia to put together a sales pitch in ByteDance’s way that might make TikTok’s owner look elsewhere for what Mainland China claims to be a “fire sale.” Chinese official media isn’t happy at all with the US government’s decision to put Chinese companies under an ultimatum over cybersecurity issues.
Oracle’s bid for TikTok is Larry Ellison’s attempt at a big data grab. With its massive user base in Oracle’s servers, the company could build new paths into other sectors, as data collection in TikTok helps improve the marketing of a myriad of products. TikTok’s price tag is big despite its fire sale status, ByteDance won’t let go of the app without raking in some major cash: from 20 to 50 billion US dollars. That price requires not only a large savings account, and it also requires some technical capacities on behalf of the buyer, namely an authoritative domain on Artificial Intelligence, particularly the kind of AI that’s present in TikTok.
Between Microsoft and Oracle, the competitive advantage is in Microsoft’s hands because they are a company with the capital and capacity to take over TikTok’s assets in North America and the Pacific. Oracle had to partner up with big private equity firms to bolster its checkbook to show some muscle to ByteDance, who’s also considering chopping up TikTok’s regional assets to stay on top despite the setback with the American government over spyware accusations.
