Microsoft drops out of TikTok talks, paves way for Oracle partnership

Microsoft has announced it is dropping out of the race to acquire the US operations of TikTok, the Chinese-owned short-form video-sharing app that has found itself at the centre of US president Donald Trump’s trade war with China.

In a brief statement on Sunday 13 September, Microsoft confirmed it was no longer pursuing an acquisition of TikTok in the US and other anglophone countries – the UK excepted – that could possibly have avoided a total ban on TikTok, after being rejected by the platform’s owner ByteDance.

“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users, while protecting national security interests,” said a Microsoft spokesperson.

“To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.”

This paves the way for the unlikely rival bid led by consumer-averse enterprise software giant Oracle to succeed. Indeed, according to a number of reports, this is likely to be announced imminently.

Citing anonymous sources, the Washington Post reported that TikTok had proposed an arrangement whereby ByteDance retained ownership of TikTok but outsourced management of its data to a cloud partner – presumably Oracle. This would appear to align with reports in Chinese state media that suggest ByteDance will not be selling TikTok.

The proposal may also see ByteDance move its headquarters out of China to get around concerns that it would still be subjected to Chinese legislation that gives Beijing the right to force Chinese companies to hand over data they hold – which has also been a concern in the long-running Huawei controversy.

It is unclear if this arrangement would satisfy the Trump administration enough to allow TikTok to continue to operate. However, Larry Ellison, Oracle chairman and chief technology officer, has previously aligned himself with Trump, whereas Microsoft’s Bill Gates has frequently clashed with him.

Both Oracle and TikTok declined to comment on the latest developments at this stage.