TikTok Goes with Oracle

TikTok has rejected Microsoft (NASDAQ:MSFT).

ByteDance, the Chinese owner of popular video app TikTok, has chosen Oracle (NYSE:ORCL) to be its U.S. technology partner. Oracle will take a significant stake in the business, the companies said.

Microsoft said that ByteDance had chosen not to sell it TikTok’s U.S. assets. “ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft,” Microsoft said in a blog post.

The Trump administration had imposed a September 20 deadline for ByteDance to announce a plan for the sale of TikTok in the U.S. or be banned by September 29.

Microsoft’s failure to buy TikTok amounts to a symbolic loss for Satya Nadella, who took over Microsoft from Steve Ballmer in 2014. Under Ballmer, Microsoft had sought to buy Yahoo in 2008 but ultimately withdrew the bid after Yahoo rejected the offer.

TikTok generates revenue through advertisements it shows to people scrolling through videos displayed in the app. Microsoft has its own advertising business, including the Bing search engine. Like Microsoft, Oracle offers cloud infrastructure, which TikTok could rely on to work in the U.S. Oracle was not among the top five providers of cloud infrastructure by revenue in 2019, while Microsoft was number two, according to technology research company Gartner.

Oracle has important ties to the Trump administration. Company co-founder Larry Ellison hosted a fundraising event for Trump’s election campaign earlier this year. Leon Panetta, a Director of the Central Intelligence Agency, sits on Oracle’s Board of Directors.

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