On Sunday, news broke that Bytedance ($PRIVATE:BYTEDANCE) had rejected Microsoft’s bid to buy its U.S. operations, and would instead be partnering with computing company Oracle ($ORCL) to run its US operations. The announcement came after months of speculation as to who would absorb the popular Chinese app’s American business after President Donald Trump signed an executive order in July banning all transactions with the app come September 15. That’s today!
Trump’s executive orders banning Tiktok and WeChat were broader than broad to begin with, full of so much “we’ll cross that bridge when we get to it” sort of language that Microsoft, a company which had been in a federal antitrust hearing just weeks prior, felt comfortable announcing a bid at what was estimated to be a potential $30 billion acquisition. Over the next several weeks, companies ranging from Walmart to Oracle were rumored to be in talks to acquire the app. On Sunday, the winner was finally declared.
The acquisition of TikTok’s American operation is fraught with questions and uncertainties; Why choose Oracle, which has little social media experience? What parts of TikTok will be transferred over? Will the government approve of the deal? The dust has not settled yet, and many of these questions remain unanswered at present.
For now, though, we’ve rounded up reactions to the announcement from experts in the tech world. Be they journalists or entrepreneurs, this is how the industry is reacting to Oracle and TikTok’s deal.
The Oracle/TikTok deal is incredibly complex, full of layers and nuance that no mere layman could ever hope to understand. Thankfully, Lambda School CEO Austen Allred summarized the news in an eloquent tweet.
Oracle.— Austen Allred (@Austen) September 14, 2020
The general reaction to the deal can be summed up by any TikTok user’s reaction to the question, “Did you hear Oracle bought TikTok?”
Oracle is a computer technology company with no real experience managing a social media platform. To top it off, it’s not a recognizable brand in the slightest to the general consumer, even compared to Microsoft with its stiff, corporate image. That it would win out in the bidding war initially landed as a surprise and caused confusion. The first impression was so outlandish that it drew further mockery.
Oracle is acquiring TikTok. This feels like the start of a new era of tech acquisitions.— Leo Polovets (@lpolovets) September 14, 2020
What's coming next? Here are some predictions for next year. You heard them here first!
- 3M acquires Airbnb
- Disney acquires Stripe
- Home Depot acquires Palantir
Sure, it seems unusual to have Oracle run TikTok. But who will have the last laugh when the TikTok influencers start recommending HR and Finance systems in all their videos.— Aaron Levie (@levie) September 14, 2020
The general expectation was that TikTok would be acquired by a company with experience in social media, or just media in general. People like Scott Galloway even floated the possibility of Disney buying the app on his podcast.
"Oracle acquiring TikTok? I think it makes more sense if I were to swing with Heidi and Ted Cruz," Galloway said in his latest episode of "The Prof G Show" responding to the news.
But after the initial shock and laughter wore off, the question of why still remained unanswered. Until it became perfectly clear.
Cozying up to Trump
Oracle may not be noteworthy to the average tech user, but it is noteworthy for one thing. In 2016, when most of Silicon Valley was rejecting Trump, Oracle welcomed him in.
As New York Times tech reporter David McCabe wrote, "Now, as [Oracle] tries to buy the U.S. operations of TikTok... its embrace of the administration could be helpful... as his administration must bless any deal."
Oracle co-founder Larry Ellison has held fundraiser events for President Trump's campaigns, whereas Microsoft found itself seemingly in the administration's sights just a short while before the executive order banning TikTok was signed. For Bytedance, going with an ally of Trump is a measure to guarantee that their deal goes relatively unchallenged, and Oracle could use its sway with the administration to get a favorable deal.
It didn't take long before this became the main focus of news around the deal.
Probably just a coincidence, I’m sure pic.twitter.com/qauI7SX2BW— Parker Molloy (@ParkerMolloy) September 14, 2020
Oracle buying TikTok without its AI despite having zero experience in social =— Josh Constine -SignalFire (@JoshConstine) September 14, 2020
-A moderation time bomb
-A broken app with no recommendation algorithm
-China’s current best case scenario
"TikTok" is dead
Over the next 24 hours as more details about the deal came to light, a general consensus seems to have been reached by journalists covering the story: that the TikTok under Oracle will be wildly different from the TikTok of today. One day before news of the deal broke, Bloomberg reported that TikTok had decided its sale to a U.S. buyer would not include the app's algorithm, often referred to as the "For You algorithm" after the app's "For You" page.
TikTok *is* the For You algorithm. Can’t imagine the app sustaining this level of engagement without it. https://t.co/rQDbcEkrgV— Taylor Lorenz (@TaylorLorenz) September 13, 2020
This was the first sign that TikTok wouldn't make it through a deal entirely in tact. Furthermore, it may just be that Bytedance is looking to cut their losses by dumping their U.S. operation on an unsuspecting tech giant interested in the app for name alone, only for it to die later on due to the lack of key features like the For You algorithm and the experience in social media moderation that companies like Oracle, Walmart and even Microsoft lack.
-No algorithm— erin griffith (@eringriffith) September 14, 2020
-No outright sale
-Investor equity in ByteDance will get rolled into the new entity
-Oracle likely gets a small stake
-TikTok HQ moves to US
-US investors get voting control (not necessarily majority ownership)https://t.co/QKCE1xfzHs
So what, then, will happen if Oracle's TikTok is left without these key elements and fails to retain its massive U.S. userbase? It's possible that the users fracture to the app's sudden and many competitors like Instagram's Reels and Snapchat and the cultural force that is TikTok will slowly dissolve into nothingness. It's possible that Oracle ultimately ends up shuttering the app entirely and TikTok goes the way of its beloved predecessor Vine.
Whatever the outcome, the issue of data privacy is not resolved by Oracle absorbing TikTok, and the end result may very well be a still-unsafe app that breaches users' privacy until it simply fizzles out. The entire debacle with TikTok and WeChat, though the Indian government has also made moves to crack down on the apps, seems like it may have been nothing more than a distraction for the Trump administration to draw eyes away from its handling of the COVID-19 pandemic.
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