TikTok: What is Oracle and why does it want the video-sharing app?

 

Software giant Oracle is believed to be the frontrunner in the bidding war for short-form video app TikTok.

Microsoft dropped out of negotiations with Chinese-company Bytedance on Sunday night, after which Reuters reported that Oracle would become its technology partner and assume management of TikTok's US user data.

The partnership should address US security concerns but not be a complete sale, sources told the agency.

However, Chinese state media has said Bytedance will not sell its US operations outright, nor will it share TikTok's source code.

Oracle's security roots

Oracle sells database technology and cloud systems to businesses. It was one of the first companies to help clients structure their records in this way.

Co-founder and current chairman Larry Ellison named the company after the codename given to a project for its first customer, in 1975: the Central Intelligence Agency (CIA).

The firm was founded two years later and went on to complete contracts for the CIA, Navy Intelligence, Air Force Intelligence and the National Security Agency.

News site Gizmodo has detailed Oracle's involvement with US government intelligence community, and says it is relationship that has been "frequently ignored by people who like to pretend Oracle was just another humble Silicon Valley start-up".

But its clients and cloud-based services now extend far wider, from serving auto-makers including Mazda and Yamaha to retailers such as the UK's Co-op and Debenhams chains.

Oracle's technologies can be used to keep track of everything, Mr Ellison has said.

"The information about your banks, your checking balance, your savings balance, is stored in an Oracle database," he said in Jeffery Rosen's 2004 book The Naked Crowd.

"Your airline reservation is stored in an Oracle database. What books you bought on Amazon is stored in an Oracle database. Your profile on Yahoo! is stored in an Oracle database… Privacy is already gone."

A safe choice?

The US administration claims TikTok and other Chinese apps are national security threats which is why - given its history in intelligence - Oracle might be considered a trustworthy option.

"On the surface, Oracle and TikTok don't seem like bedfellows," said Chris Stokel-Walker, author of a forthcoming book about the platform.

"Oracle is a relatively boring business-to-business company, whereas TikTok is a youth-centred, casual app.

"But there is underlying geopolitics. If [US President Donald] Trump's fears around TikTok are rooted in security, the company would be a safer bet."

Mr Ellison - who is ranked the world's fifth richest person by Forbes - has been openly supportive of President Trump and held a fundraiser for him in February.

The president had previously said he thought Oracle was best placed to seal the TikTok deal.

"I think Oracle is a great company, and I think its owner is a tremendous guy," Mr Trump said last month. "He's a tremendous person. I think that Oracle would be certainly somebody that could handle it."

But any deal would require the approval of both American and Chinese governments - and Chinese state media has reported that Bytedance will not sell to the company to Oracle.

Oracle has been accused of hostility towards China, after firing 900 staff from its team in the country last year, in the same week additional tariffs on Chinese goods were introduced in the US.

Employees blamed tensions between the US and China for the cuts.

'Tech partnership'

It is understood that Oracle's involvement in TikTok will not be an outright sale but instead a "tech partnership", the Wall Street Journal and Reuters report.

That suggests the US firm's control over the business would be limited.

Two weeks ago, China announced new government restrictions on tech exports. They mean some technologies involving artificial intelligence techniques need government approval before any sale to a foreign entity takes place.

Many view the way TikTok decides which videos to recommend to whom and when as being its key asset, and it may be that Oracle will not be allowed to know exactly how it works or make use of it for other purposes,

"A deal where Oracle takes over hosting without source code and significant operational changes would not address any of the legitimate concerns about TikTok, and the White House accepting such a deal would demonstrate that this exercise was pure grift," Alex Stamos, former chief security officer at Facebook, tweeted.

But another expert thinks the partnership could work.

"The security element with Oracle could ease tensions, but it can also help TikTok be a bit more mature in its outlook," said Tamara Littleton, founder of The Social Element consultancy.

"TikTok is struggling to control its content at the moment, and its revered algorithm can work against it sometimes. Oracle's experience could help to fix some of these problems."