Oracle has emerged as the foremost candidate in a high-stake deal to assist in running TikTok’s U.S. operations, attempting to position itself as a principal player in one of the most scrutinized tech negotiations in recent years.
ByteDance is advocating for Oracle as a partner but wants to retain significant influence over the app’s daily operations. This could be the potential turning point for TikTok’s future in the U.S. and possibly herald a new day in the kind of partnerships multinational tech companies enter into under geopolitical duress.
A Geopolitical Battleground in the Tech Space
The origin of the deal dates back to disagreement over security threats posed by the Chinese ownership of TikTok. Under the Trump administration, an executive order issued in 2020 declared that ByteDance had to either sell off TikTok’s U.S. operations or face a complete ban within a thirty-day time frame. While attempts to finalize a sale ran afoul of numerous legal and regulatory hurdles, Oracle has now come out as the preferred partner to ensure TikTok’s continued presence in the U.S. market.
Former President Donald Trump had previously voiced strong support for Oracle, describing it as a credible and trusted American company. That support may actually have influenced ByteDance’s decision to emphasize Oracle over other tech giants Microsoft or Walmart in the running for a possible partnership.
Project Texas: ByteDance’s Strategy for Retaining Control
The management of ByteDance presumably views Oracle favorably, given its enterprise experience and long-standing reputation in cloud services. Unlike consumers that favor other competitors, Oracle focuses on cloud computing and database management and offers the perfect counterweight to ByteDance’s ambition of keeping control over TikTok’s core technology. But sources said that ByteDance wants to retain an active role in content moderation, algorithm building, and strategic decision-making regarding TikTok.
This preference lines up well with what Project Texas is envisaging, which is a proposal by ByteDance to address U.S. security concerns and yet allow it to retain operational control over the app. Under Project Texas, the TikTok U.S. user data would be held in Oracle’s cloud with full conformity to American security practices. The purpose of the plan is to persuade the regulators that TikTok’s algorithm and key decision-making processes are insulated from any Chinese government meddling. ByteDance is relying on this framework for Mr. Trump and the regulators to approve the deal so it can keep control over the technology and creative aspects of the app while meeting national security scrutiny.
Challenges and Roadblocks Ahead
Whereas Oracle’s standing as the leading contender looks impregnable, much leeway must be granted for these remaining problems. The Biden administration was already looking at Chinese-owned tech companies under the scope of national security reviews.
The Committee on Foreign Investment in the U.S. (CFIUS) has continued to scrutinize the bidding process, almost reversing the degrees of freedom granted earlier to those companies.
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