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ByteDance rejects Microsoft's purchase bid for TikTok in favour of Oracle

By Kenneth Ang - on 14 Sep 2020, 1:50pm

ByteDance rejects Microsoft's purchase bid for TikTok in favour of Oracle

Image: Unsplash

And so, the months-long "custody battle" for social networking app TikTok's US operations has come to a close, with Oracle emerging as the final victor.

Yesterday evening, Microsoft announced via blog post that TikTok's parent company ByteDance has rejected their proposal in favour of Oracle's, and under the new agreement, the latter will become TikTok's "trusted tech partner" in the United States. Now, this arrangement is rather different from what Microsoft was offering, simply because Oracle isn't buying the app per se.

Originally, U.S. President Donald Trump had given ByteDance a September 15 deadline to sell TikTok's operations within the country, with non-compliance possibly resulting in a ban. This ultimatum was motivated in part by security concerns - the app has a rather notorious history when it comes to managing and safeguarding user information. Accordingly, Microsoft stepped in with its proposal to buy said operations, and reassured users that it would make the necessary security improvements if the sale went through.

However, Chinese officials noted that it would prefer to shut down TikTok's U.S. operations entirely rather than sell them, on the grounds that complying with the U.S. government's demands would mean a loss of face for China itself. Essentially, that's probably part of the reason why it decided to partner up with Oracle rather than Microsoft in the end.

Additionally, the Chinese firm has also established that the app's biggest plus point, its "For You" algorithm will not be available for sale. Based on a report by the South China Morning Post (thank you!), a source who sat in for ByteDance's boardroom discussions was quoted as saying "The car can be sold, but not the engine.". But algorithm or not, it remains to be seen whether the U.S. government is content with this arrangement between Oracle and ByteDance, since the latter didn't technically "sell" its operations in the United States.