Rapid Reaction: TikTok Selects Oracle as its “Trusted Technology Partner”

Without an outright sale, it’s a very different deal than many anticipated.

The TikTok sweepstakes appear to be over, and what an ending it was. Instead of an outright sale, TikTok selected Oracle as its “Trusted Technology Partner.” Oracle confirmed the news today in two-sentence statement, and now it’s on to the Trump administration to review. 

So in sum, a process that began with the Trump administration demanding that TikTok either sell itself or face a ban will likely end with neither.

There still may be some twists — the Trump administration could block the deal, for instance — but here’s a quick special edition of the newsletter on what it all means:

The "Trusted Tech Partner" wrinkle

Oracle's bid to become TikTok's "Trusted Tech Partner" and not its outright owner is a significant development. If it means Oracle won't get access to TikTok's algorithm, then the deal won't address the biggest concern with the app — namely that the Chinese Communist Party could tinker with the algorithm to push friendly narratives without TikTok users’ knowledge. 

Since TikTok recommends content mostly via this algorithm, as opposed to a follow model, your experience is largely guided by the technology. This makes it harder to spot manipulation in the background, and many hoped the deal would address the issue. Instead, Trusted Tech Partner sounds a lot like “Official Truck Sponsor of the NFL.” It’s a nice label without much significance (My apologies, Ford).

The national security benefit

From a national security perspective, giving Oracle access — or ownership of — TikTok's backend servers could be a positive development, as a US firm monitoring these systems would be a check on data misuse from a foreign government. But there are two sides to this coin, Oracle founder Larry Ellison has called NSA surveillance “essential” and “great.”

A win for China

All told, this looks like a win for China. The Trump administration said it would force a sale or ban TikTok. Then, China restricted the sale of the algorithm. Now it looks like there will be no sale and no outright ban. Advantage: China.

An open internet remains (for now)

By preventing a TikTok ban, this deal would mean the US internet won't resemble China's, where services are unavailable due to government restrictions. People who've lived with a censored internet do not speak highly of the experience.

Remember the precedent

This process sets a precedent for countries that don't like US tech companies to force a sale or partnership. It will make operating internationally more difficult for US tech firms. 

Oracle better not mess it up

This is a high stakes deal for Oracle. Today’s TikTok users are tomorrow’s enterprise software buyers. If Oracle breaks their favorite app, they’ll remember.

Thanks for reading this special edition of Big Technology. I’ll be back Thursday with this week’s main newsletter. Catch me on CNBC’s Closing Bell at 1 p.m. pacific / 4 p.m. eastern today (Monday) where I’ll be discussing the deal.

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