In a surprising turn of events over the weekend, social media giant TikTok rejected an offer from tech mogul Microsoft and instead signed with less popular software company Oracle.
On Sunday, confirmation of the deal was given after President Trump nudged TikTok sell to an American business or risk being considered a threat to national security. The White House claimed that its parent company, ByteDance, and its connection to China made the application unsafe for Americans amidst fears that the social platform would give American citizens’ information to the Chinese government. TikTok denied all allegations and has stated that no information is stored within China’s borders.
What It Means
There have been no announcements stating what parts of the company Oracle will be taking over. Until this weekend, Microsoft was the apparent front-runner to purchase the social media platform. However, amidst claims that ByteDance had alerted TikTok that Microsoft was passing on the offer, it seems that the company chose to go in an unexpected direction.
Steven Munchin, Treasury Secretary, held an interview with CNBC on Monday at the White House where he stated that Oracle and TikTok had offered a proposal for a partnership.
There are still hurdles standing in the way before completion of the deal can be made. The next step for the pair is to win approval from the U.S. Committee on Foreign Investment in the United States (CFIUS). The interagency group oversees foreign investments in the U.S.
A close source claims that the two parties believe the deal has been structured to satisfy concerns over national security. Though it appears promising, there is a possibility that tensions between Washington and Beijing could prevent the deal from going through based on political advantages.
When asked about the deal, Hillary McQuaide, TikTok’s spokesperson, stated that the company would not comment “on rumors or speculations.”
TikTok is a short-form video social media app that quickly became popular after bursting into the market a few years ago. It has quickly come to rival social media giants like Snapchat, Twitter, Instagram, and Facebook. TikTok has created its own celebrity genre and viral dance trends are often matched to sounds or music.
The company’s ties to China have become a point of contention within the past year. In November, the White House announced that the company was considered to be a threat to national security. The U.S. opened an official investigation into the app and President Donald Trump has stated numerous times that he will not hesitate to ban the app.
What to Expect
An executive order banning U.S. companies from doing business with ByteDance was signed by President Trump on August 6. The allegations include that the app poses risks that could qualify it as a “national emergency.”
TikTok continues to deny these allegations and has said that all U.S. data is stored in the U.S. with backup being in Singapore. The company has been quick to point out that their data centers are not located within China and therefore are not under Chinese jurisdiction. The company also chose to sue the U.S. government last month as a response to the executive order.
For now, it seems that there is a deal on the table, and it is only a matter of time before it is known if TikTok will in fact be banned in the U.S. or if the merger will allow the company to continue operating.