Oracle May Compete Against Microsoft To Acquire TikTok’s US Operations

Oracle (ORCL) is reportedly bidding to acquire the U.S. operations of Chinese-owned video app company TikTok.

Oracle’s entry into this affair would pose a direct challenge to Microsoft (MSFT), which has also offered to buy TikTok’s U.S. operations from ByteDance of China.

President Donald Trump has threatened to ban TikTok in the U.S. unless it is taken over by a U.S.-based firm due to alleged security concerns. Trump has ordered ByteDance to unload TikTok’s U.S. operations by mid-November.

The Financial Times reported that Oracle has held preliminary discussions with ByteDance, and may also seek to acquire TikTok’s operations in Canada, Australia and New Zealand.

Oracle is also engaged in talks with a number of U.S. investors that currently own stakes in ByteDance, including private equity firms General Atlantic and Sequoia Capital.

Oracle’s main rival in this matter, Microsoft, has also said it was interested in TikTok’s operations in Canada, Australia and New Zealand – as well as its businesses in Europe and India. (Indian Prime Minister Narendra Modi has banned TikTok in his country).

However, Financial Times reported that ByteDance does not want to divest any of its TikTok assets outside of the U.S., Canada, Australia, and New Zealand.

Financial Times also noted that Twitter (TWTR) had also held talks with TikTok, but questions arose about Twitter’s ability to finance any deal.

Interestingly, Oracle’s cofounder Larry Ellison is a Trump supporter and earlier this year held a fundraiser for the president at his California estate.

Questions have also emerged over why Oracle would want to acquire TikTok.

Bloomberg reported that Oracle, which is the world’s second-largest software maker, currently has no investments in consumer apps or social media.

But Oracle has deep pockets to make such a purchase.

Oracle held about $43 billion in cash or near equivalents at the end of May, making it possible for the company to afford to buy TikTok. Bloomberg noted that TikTok’s U.S. business is valued at between $20 billion and $50 billion by analysts and bankers.

TikTok has 100 million users in the U.S. alone.

But CNBC noted that while Oracle could upgrade its marketing products through the use customer data gathered by TikTok to improve its marketing products, spending tens of billions of dollars to acquire a consumer social media company would be “a significant departure for the company.”