Oracle Is Leading Contender to Help Run TikTok in New Deal
The Takeaway
• ByteDance management wants Oracle to play a key role
• ByteDance wants a deal based on Project Texas venture
• Other cloud firms may bid for a piece of any eventual deal
Oracle has emerged as a leading contender to help run TikTok as part of a deal President Donald Trump is orchestrating to satisfy last year’s divest-or-ban law, say investors, bankers and former executives familiar with the Chinese tech giant. ByteDance management prefers Oracle, while President Trump has also indicated his support for Oracle playing a key role.
At the same time, though, ByteDance’s leaders want to retain a hands-on role with TikTok’s operations in any deal, even if U.S. companies end up owning a piece of TikTok U.S., the people say. That stance could undercut hopes of several U.S. bidders interested in buying control of TikTok, including a consortium led by billionaire Frank McCourt with Reddit cofounder Alexis Ohanian.
According to investors familiar with ByteDance’s thinking, the Chinese company is hoping Trump will approve a deal based on the contours of Project Texas, a multibillion-dollar initiative set up between TikTok and Oracle in the past couple of years in which TikTok stores U.S. user data on Oracle servers and lets Oracle review the source codes of the algorithm dictating what users see on the app.
ByteDance’s preference could draw criticism that it would leave control of TikTok still in Chinese hands, undercutting the point of the law. But President Trump has expressed support for keeping TikTok alive, partly because he credits it with helping him win the election, which likely strengthens ByteDance’s negotiating position. And the law gives the president discretion to decide what qualifies as a ByteDance divestiture of TikTok.
The precise form of a TikTok deal remains hazy. While a new entity, partly owned by U.S. companies, is likely to be formed to oversee TikTok U.S., it’s unclear what that entity would house. For instance, it’s not known whether the entity would handle advertising, sales and engineering for TikTok in addition to controlling U.S. user data or the algorithm, the most valuable asset within TikTok.
One person involved with a potential bidder said it remains unclear what is actually for sale in the TikTok deal, and their understanding of that has changed multiple times after conversations with White House officials.
TikTok declined to comment on the bidding. Oracle did not respond to requests for comment.
The lineup of potential bidders is also unclear. President Trump said over the weekend that four bidders had emerged, without identifying them. And while several groups, such as one led by McCourt and another involving Employer.com founder Jesse Tinsley, have drawn headlines for their interest, several people say Oracle is the only serious contender. Still, representatives from the bidders have been called to Washington D.C. multiple times to make their case, and there is a lot of political jockeying within the administration, said a person involved in the discussions.
One issue that is unresolved is whether the U.S. government will get an economic interest in TikTok through the deal, as President Trump has suggested. Some options that bidders have discussed include giving the government a 50% revenue share in TikTok U.S. or a 50% cut of proceeds from a future sale or IPO of the U.S. entity.
However a deal is structured, Oracle is expected to be involved as the cloud computing provider for TikTok, renting its servers to the app, according to one of the bidders. Another firm could also be involved in the task of managing the TikTok app, said people involved in the talks. Oracle primarily sells software to businesses and has less experience running consumer-facing social or e-commerce applications.
It’s possible other cloud firms could vie for part of TikTok’s cloud business, particularly as several cloud firms now handle some TikTok cloud work.
TikTok and Oracle set up Project Texas in the wake of President Trump’s abortive 2020 effort to ban TikTok. After Trump lost the 2020 election, President Joe Biden’s administration continued a national security review of ByteDance’s TikTok ownership. Project Texas was designed to try to satisfy the administration’s concerns.
TikTok created a U.S. data security unit and arranged to store the app’s U.S. data on Oracle servers as part of a cloud deal. The efforts weren’t enough to satisfy the administration or TikTok’s congressional critics, leading to the passage of last year’s law requiring TikTok to sever its ties with ByteDance or be banned in the U.S.
Because Project Texas wasn’t blessed by the administration, it lacked some key elements that required government involvement. For example, under TikTok’s original proposal for Project Texas, the app’s U.S. data security unit was going to report to a government-approved board comprising U.S. citizens with tech and national security backgrounds. But such a board has never been created.
Now, though, Trump’s about-face toward TikTok—from attempting to ban it in 2020 to rescuing the app from a shutdown in January—has given TikTok and ByteDance leaders hope that he would be amenable to a compromise based on a complete version of Project Texas, said the investors, bankers and former executives.
ByteDance leaders and key investors continue to believe this is the best solution for the app’s future.
For Oracle, getting involved in the TikTok bidding makes sense for another reason: Oracle has a deep relationship as a major cloud provider to ByteDance, even beyond TikTok.
ByteDance is one of the largest renters of Nvidia graphics processing units at Oracle, and it is set to receive some of the first Blackwell chips that go to the cloud provider in coming weeks. An Oracle employee said the ByteDance contract is so large and important that there are specific internal tools and processes for handling ByteDance’s services and requests.
Oracle has not publicly discussed this aspect of its relationship with ByteDance. On Oracle’s latest earnings call this week, founder Larry Ellison didn’t even name ByteDance as one of its leading artificial intelligence customers, though he did name OpenAI, xAI and Meta Platforms.
