Weeks after the Trump Administration ordered a TikTok divestiture in the U.S.; Oracle has confirmed a deal with ByteDance, the Chinese owner of a popular video-sharing app. However, the deal will have to be approved by the U.S. Government.
Treasury Secretary Steven Mnuchin told CNBC that a review is on about the proposal submitted by ByteDance. The proposal is with the Treasury Department over the weekend. Mnuchin emphasized that security is a top priority. U.S. government will ensure the code, and the American data is secure
Entering The Young Segment
The deal, if finalized, will give a boost to Oracle’s cloud business. TikTok is extremely popular with the youth. Oracle will get a chance to enter this segment and take control of a prominent advertising avenue.
TikTok has over 100 million monthly active users in the U.S. A vast majority of these users are teens. The largest age bracket among TikTok users in the United Kingdom in December was 18-24.
Microsoft was also in the race to acquire TikTok’s U.S. operations. The company announced that it is quitting from the race on Sunday. Talks to acquire TikTok by Microsoft started on August 2. Walmart also entered the race and joined forces with Microsoft. However, on Sunday, Walmart said it still wants to invest in TikTok.
Both Oracle and TikTok have a common interest in marketing. TikTok earns its revenues by showing user ads. Oracle offers software that marketers can use to manage advertisements on different social sites like Facebook. TikTok also adds users while Oracle is facing a decline in revenues in the last four quarters.
It is a mutually beneficial association. TikTok can use the cloud infrastructure of Oracle. It will be one more property for Oracle, and it can boast about one more cloud client. It will also attract other potential cloud customers.
Oracle’s portfolio is also diversifying and expanding due to acquisitions. It acquired Sun in 2010 and became a prominent seller of servers for data centers. Oracle also maintains good relations with U.S. Government.