TikTok has abandoned talks with Microsoft Corp to sell its music-video app in the US, favoring instead a partnership or restructuring deal with Oracle Corp, people familiar with the talks have said.
A deal between TikTok owner ByteDance Ltd (字節跳動) and Oracle is likely to include a stake in a newly configured US business, but would look more like a corporate restructuring than an outright sale, said one of the people, who asked not to be identified because the information is not public.
The terms being discussed with Oracle are still evolving, one of the people said.
However, one of the options is Oracle could take a stake of a newly formed US business while serving as TikTok’s US technology partner and housing the video app’s data in Oracle’s cloud servers.
Early offers from both parties valued the US business at about US$25 billion, but that was before Chinese officials weighed in with new rules imposing limits on technology exports, people with knowledge of the matter said.
The sale of TikTok — forced by US President Donald Trump administration’s ban on grounds of national security — is one of the issues at the heart of fraying Washington-Beijing tensions. Any deal still requires signoffs from both sides.
Microsoft, which was working with Walmart Inc, had been seen as the more likely winner, but talks cooled in the past few days, one person said.
Microsoft was not asked to make revisions to its initial offer in the face of signs of opposition to a deal from Chinese government officials, the person added.
It is unclear whether a deal with Oracle would pass muster with the Trump administration, a person familiar with the discussions said.
However, couching the deal as a corporate overhaul might help in Beijing.
It could strike a balance, allaying fears over TikTok’s cache of sensitive US data, while addressing Chinese concerns over the export of key artificial intelligence technology, said Yik Chan Chin, who researches global media and communications policy at the Xi’an Jiaotong-Liverpool University in Suzhou, China.
“If you say this is a hostile takeover, that may not be nice for both parties,” she said. “But if you frame it as like restructuring or spinoff,” that’s more acceptable to the two governments.
ByteDance intends to bring a proposal to the White House ahead of this month’s deadline imposed by Trump, a person with knowledge of the matter said.
If the Chinese company is able to get a deal through the White House that does not involve an outright, forced sale, it would mark a major feat for ByteDance founder Zhang Yiming (張一鳴), who has been reluctant to hand over such a prized asset.
However, critics have questioned how a technology partnership with Oracle, rather than an outright sale, would assuage the White House’s national security concerns.
“A deal where Oracle takes over hosting without source code and significant operational changes would not address any of the legitimate concerns about TikTok, and the White House accepting such a deal would demonstrate that this exercise was pure grift,” Facebook Inc former chief security officer Alex Stamos wrote on Twitter.
Some US officials would prefer shutting down TikTok’s US operations if a sale does not meet their demands for putting the business and related data into US hands.
“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft,” Redmond, Washington-based Microsoft said in a statement on Sunday. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.”
Microsoft representatives declined to comment beyond the statement.
Representatives for TikTok declined to comment, and Oracle did not respond to requests for comment outside normal business hours.
The White House also did not immediately respond to a request for comment.
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