Oracle has reportedly edged out rival Microsoft in negotiations over the weekend for the U.S. operations of TikTok, moving closer toward a deal for the Chinese-owned music-video app that could thwart a threat by U.S. by President Donald Trump to shut it down.
A deal between TikTok owner ByteDance Ltd. and Oracle will look more like a corporate restructuring than the outright sale Microsoft had proposed, though it is likely to include a stake in a newly configured American business, according to a person familiar with the negotiations who asked not to be identified because the information isn’t public.
The terms being discussed with Oracle are still evolving, one person familiar with the talks said. One of the options being explored is that Oracle could take a stake in a newly formed U.S. business while serving as TikTok’s U.S. technology partner and housing the video app’s data in Oracle’s cloud servers. Early offers from both parties valued the U.S. business at about $25 billion, but that was before Chinese officials weighed in with new rules imposing limits on technology exports, said people with knowledge of the matter.
In a statement Monday morning, Oracle confirmed “it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend.”
Oracle shares gained 6.5% at 10:29 a.m. in New York Monday.
The sale of TikTok — forced by a Trump administration ban on grounds of national security — is one of the issues at the heart of the fraying Washington-Beijing relationship. Any deal still requires signoffs from both sides. Early on in the discussions, Trump had voiced support for a bid from Oracle, calling it a “great company” and co-founder Larry Ellison “a great guy.” Ellison is also one of the few Silicon Valley moguls to openly support Trump.
Microsoft, which was working with Walmart Inc., had been seen as the likely winner but talks cooled in recent days, one person said. Microsoft wasn’t asked to make revisions to its initial offer in the face of recent signs of opposition to a deal from Chinese government officials, the person added.
U.S. Treasury Secretary Steven Mnuchin confirmed on Monday that the administration received a proposal from TikTok that includes Oracle as the app’s “trusted technology partner.” He said he’ll be reviewing the proposal this week and making a recommendation to Trump, reiterating that a deadline to make a deal remains Sept. 20.
“We need to make sure that the code is, one, secure, Americans’ data is secure, phones are secure, and we’ll be looking to have discussions with Oracle over the next few days with our technical team,” Mnuchin told CNBC, adding that he had a lot of confidence in both Microsoft and Oracle. The Oracle proposal contains a commitment to make TikTok global a U.S. Headquartered company with 20,000 new jobs, Mnuchin said.
Couching the deal as a corporate overhaul could help win approval in Beijing. It could allay fears about TikTok’s cache of sensitive U.S. data while addressing Chinese concerns over the export of key artificial-intelligence technology, said Yik Chan Chin, who researches global media and communications policy at the Xi’an Jiaotong-Liverpool University in Suzhou.
“If you say this is a hostile takeover, that may not be nice for both parties,” she said. “But if you frame it as like a restructuring or spinoff,” that’s more acceptable to the two governments.
China’s government on Monday declined to comment on the prospect of a ByteDance-Oracle tie-up.
“China has talked about its position on TikTok many times. The U.S. is now encircling TikTok. This is a typical coerced transaction by the government,” Foreign Ministry spokesman Wang Wenbin said at a briefing in Beijing.
The progress in the talks with Oracle ignited celebrations among TikTok’s mostly young devotees.
“TikTok sold, you guys, that means we’re not going anywhere,” declared @ElianaGhen, who has 2.4 million followers, in a video touting the Oracle deal. “Best birthday gift ever, TikTok is here to stay!” said @mrsscott_teaches, who has 22,000 followers.
The app, which lets people record and edit short video clips ranging from lighthearted lip-syncs to more serious political statements, gained popularity during the global pandemic that’s kept many people cooped up indoors. TikTok’s loyal following of more than 100 million in the U.S. helps explain the strong interest among early suitors, from Microsoft to private equity giants such as Sequoia and General Atlantic.