KEY POINTS

  • Oracle Corporation is poised to take over TikTok's management in the U.S. and three other countries
  • TikTok owner ByteDance decided to enter into a partneship with Oracle instead of selling TikTok outright to a U.S. company
  • It is unclear if the Trump adminsitration will approve of the move

Chinese tech company ByteDance has chosen not to sell its popular short-video sharing subsidiary TikTok to Microsoft Corporation but will instead enter into a partnership with Oracle Corporation, which has close ties to the Trump administration.

Making the announcement Sunday that stunned Microsoft, ByteDance said it will sell a large but unspecified stake in TikTok to Oracle but won't sell TikTok’s U.S. assets. Under the proposed deal, Oracle will become ByteDance’s technology partner and will take over management of TikTok’s U.S. user data.

ByteDance, Oracle and the White House had not yet responded to the news about the partnership. It's also unclear if President Donald Trump will agree to a partnership with Oracle instead of an outright sale of TikTok's assets to an American company as he previously ordered.

Oracle has close ties to the Trump administration. Larry Ellison,  Oracle co-founder, chairman and chief technology officer, has hosted a fundraiser for Trump. CEO Safra Catz was a member of Trump’s transition team.

ByteDance had been in talks to divest TikTok's U.S. business after Trump on Aug. 3 threatened to ban TikTok in the U.S. by Sept. 15 if negotiations for the app to be sold to Microsoft or a different "very American" company failed. Three days later, Trump signed two executive orders banning U.S. transactions with TikTok and WeChat 45 days after the signing, or by Sept. 29.  TikTok later said it planned to file legal action to challenge Trump's order banning transactions.

On Sunday, Microsoft announced in a blog post that it was informed by ByteDance it wouldn't be selling TikTok’s U.S. operations to Microsoft. “ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft,” the post said.

“We are confident our proposal would have been good for TikTok’s users, while protecting national security interests. To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement."

Oracle began negotiations to buy TikTok's operations in the U.S., Canada, Australia, and New Zealand on Aug. 17. Also involved in the deal are a number of U.S. investors, including growth equity firm General Atlantic and venture capital firm Sequoia Capital, which already owns a stake in TikTok.

TikTok is at the center of a diplomatic storm between Washington and Beijing TikTok is at the center of a diplomatic storm between Washington and Beijing Photo: AFP / MARIO TAMA