Floor left open to Oracle as TikTok rejects Microsoft offer

TikTok risks September 20 closure in the US if it does not meet sale deadline set by US President Donald Trump.

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Microsoft says its offer for the United States operations of TikTok has been rejected [File: AP Photo]

Microsoft, the United States technology giant, said on Sunday that its offer to buy TikTok had been rejected, leaving Oracle the sole company in the frame ahead of a looming deadline for the Chinese-owned video app to sell or shut down its operations in the US.

TikTok, best known for its dance videos shared by teenagers, has been thrust to the centre of a growing diplomatic storm between Washington and Beijing.

The US government has expressed concern that user data could end up in the hands of China’s communist government and President Donald Trump has given Americans a deadline to stop doing business with ByteDance, the platform’s Chinese owner.

China last week updated its export rules to give it a say over the transfer of TikTok’s algorithm to a foreign buyer and has indicated it would rather see the company closed down than have it be part of a forced sale. 

Microsoft indicated at the beginning of August that it was interested in acquiring TikTok’s US operations, but said on Sunday its bid had been rejected.

“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft,” the US tech giant said in a statement.

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“We are confident our proposal would have been good for TikTok’s users, while protecting national security interests,” it added.

Reuters reported TikTok owner ByteDance planned to pursue a partnership with Oracle. 

Under the deal, Oracle will be ByteDance’s technology partner and will assume management of TikTok’s user data in the US, sources told Reuters. Oracle is also negotiating taking a stake in TikTok’s US operations, the sources added.

ByteDance and Oracle did not immediately respond to Reuters’ request for comment.  

The Oracle bid will need approval from the White House and the Committee on Foreign Investment in the United States (CFIUS), a source told the Wall Street Journal, but both parties were under the belief the agreement would meet US data security concerns.

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Oracle’s Chairman Larry Ellison is one of the technology world’s few supporters of Trump. The firm has significant technological prowess in handling data, but no experience in social media. Its customers are also companies, rather than consumers. The White House declined to comment on the developments.

Under an executive order Trump issued in August, TokTok will have to close in the US if a purchase agreement is not reached by September 20. 

TikTok has been downloaded 175 million times in the US, and is used by as many as a billion people worldwide to make quirky, short-form videos on their mobile phones. It has repeatedly denied sharing data with Beijing.

Microsoft said it would have “made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation”.

A deal with Microsoft could also have included Walmart, which joined forces with the tech giant in negotiations.

In late August, China’s commerce ministry published new rules potentially making it more difficult for ByteDance to sell TikTok to a US entity by adding “civilian use” to a list of technologies that are restricted for export.

ByteDance had vowed to “strictly abide” by new export rules.

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TikTok, meanwhile, has filed a lawsuit challenging the crackdown by the US government, contending that Trump’s order was a misuse of the International Emergency Economic Powers Act because the platform is not “an unusual and extraordinary threat”.

Controversially, Trump has demanded that the US government get a cut of any deal, which critics contend appears unconstitutional and akin to extortion.

Source: News Agencies