ByteDance drops TikTok US sale, rejects Microsoft bid, partners with Oracle

Oracle is set to the “trusted technology partner” for TikTok after ByteDance abandoned the sale of its US assets and rejected a bid by Microsoft.

ByteDance, the parent company of TikTok, hopes the partnership will spare the social network from being banned in the United States.

In a statement on Sunday 13 September, Microsoft said: “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.”

TikTok data Born in the USA to be Living in America

Microsoft said they would have made significant changes to TikTok in order to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation. This would have included localising all American data in the United States and deleting the data from servers outside of the country.

“We look forward to seeing how the service evolves in these important areas,” the statement added.

Under the proposed deal, Oracle will assume management of TikTok’s user data in the States, which is currently stored in Google Cloud. Oracle is said to be still negotiating the acquisition of a stake in TikTok’s US operations, Reuters reported.

“User data protection and assurances around how the company’s algorithms push content to US users are thoughtful components of a substantive solution, but whether they can change political outcomes is a much more difficult question,” said John Kabealo, a regulatory lawyer uninvolved in the deal discussion.

In order to enable the deal to go ahead with Oracle’s third-party oversight of TikTok data, ByteDance will argue that the Committee on Foreign Investment in the United States’ approval of China Oceanwide Holdings Group’s purchase of US insurer Genworth Financial offers a precedent.

Trump Approved

Beijing-based ByteDance had been in talks to divest TikTok’s US business to either Oracle or a consortium led by Microsoft after President Donald Trump ordered the sale last month and threatened to shut down the popular app in the country.

Trump signed two executive orders last month targeting TikTok and ByteDance, including one to ban US companies from transacting with them to come into effect on September 20, and another requiring ByteDance to sell TikTok by November 12.

President Trump was believed to be in favour of Oracle’s bid back in August, but it is still unclear whether he will approve the deal. If he does agree, then he must rescind his order calling for TikTok to be divested.

During an August press conference, President Trump said: “I think Oracle is a great company, and I think its owner is a tremendous guy. He’s a tremendous person. I think that Oracle would certainly be somebody that could handle it.”

However, sale talks stalled, as China issued new export control rules last month that would bar TikTok from transferring its algorithm to a foreign buyer without explicit permission from the Chinese government. 

Reuters reported last week that the Chinese government would rather shut down TikTok in the United States than let it be part of a forced sale, as it would make ByteDance and China appear weak in the face of pressure.

Chinese foreign ministry spokesman Zhao Lijian said at a regular press briefing that the United States was abusing the concept of national security, and urged it to stop oppressing foreign companies.

But ByteDance could still press ahead with a sale without approval from China’s Commerce Ministry if they sell the assets without key algorithms.

Retail giant Walmart, which had joined Microsoft in its bid, said on Sunday it is still interested in investing in TikTok, and that it would have further discussions with ByteDance’s leadership and other interested parties.

“We know that any approved deal must satisfy all regulatory and national security concerns,” Walmart said.

Jeffrey Towson, Professor of Investment at Peking University’s Guanghua School of Management, said Oracle’s deal was ‘bad news for Walmart more than anyone else’ since this has hampered their plan to catch up with Amazon as an entertainment giant.

Some of ByteDance’s top backers, including investment firms General Atlantic and Sequoia, will also be given minority stakes in TikTok’s US operations, Reuters reported.

Amidst recent setbacks in India, Britain, and the US, ByteDance has been ploughing ahead with plans to take its social media services deeper into Asia. It is reportedly planning to make Singapore its beachhead for the rest of Asia, with plans to invest billions of dollars and recruit hundreds in Singapore over the next three years.

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ByteDance drops TikTok US sale, rejects Microsoft bid, partners with Oracle

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Nicole Ong

Tech Reporter, W.Media

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TikTok owner ByteDance to invest billions in Singapore, but new data center reports untrue

ByteDance, the owner of TikTok, is reportedly planning to invest billions of dollars and recruit hundreds in Singapore as part of its global expansion, according to people familiar with the matter.

However, contrary to reports by Bloomberg, plans by ByteDance to set up a new data center in Singapore is untrue, a source said to Reuters.

The source also said that the Beijing-based firm has ‘stepped up the purchase of cloud computing servers in Singapore to backup data based in the US for contingency in the event of an incident.

The investment by ByteDance is expected to span over the next three years, coming at a time when the Chinese multinational internet technology company is being forced to sell their US operations of the hugely popular social networking service, TikTok. 

But it is unlikely they will meet the deadline of September 20 to sell their assets imposed by President Donald Trump, as new Chinese regulations have complicated negotiations with bidders Microsoft and Oracle.

Southeast Asia is a primary target for Zhang Yiming, the founder of ByteDance, as the region has 650 million smartphone-savvy population where competitors Alibaba and Tencent are making significant inroads.

“Singapore is highly attractive to tech firms looking for a hub to address the Southeast Asian markets due to geographic proximity. The workforce is highly educated, tech savvy and multilingual,” said Bloomberg Intelligence analyst Vey-Sern Ling.

ByteDance, the world’s most richly valued startup, currently has more than 200 job openings and 400 current employees in Singapore. And a company source reported to Reuters that TikTok had started to move some of its engineers from China to Singapore this year.

In other news, Chindata Group, a carrier-neutral hyperscale data center solution provider in Asia Pacific, confirmed on 9 September 2020 it will publicly file an initial public offering in the United States of America. 

In the filing, ByteDance accounted for 68.2% and 81.6% of Chindata’s total revenues in 2019 and for the first six months of June respectively. In 2019, the revenue from ByteDance was at US$82.3 million, and in the first six months of 2020 along, ByteDance accounted for US$93.6 million of Chindata’s revenue.

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Explore the latest for cloud and data centers in Singapore

Singapore has one of the most dominant tech industries in Asia, with advancements happening almost daily.

So, what can you expect from a hub market, the downstream opportunities to the edge markets, and the innovation of technology in the space of Cloud Computing, connectivity, cybersecurity and data centers?

Register now to explore what the future holds for cloud and data centers in Singapore at our Digital Summit

Get involved in the conversation and connect with your peers on LinkedIn and Facebook using #WMediaEvent!

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