Microsoft Back on the Clock for TikTok
Bobby Allyn
Well, well, well:
The Trump administration is working on a plan to save TikTok that involves tapping software company Oracle and a group of outside investors to effectively take control of the app's global operations, according to two people with direct knowledge of the talks.
Under the deal now being negotiated by the White House, TikTok's China-based owner ByteDance would retain a minority stake in the company, but the app's algorithm, data collection and software updates will be overseen by Oracle, which already provides the foundation of TikTok's web infrastructure.
That would effectively mean American investors would own a majority stake in TikTok, but the terms of the deal could change and are still being hammered out.
I mean, this sort of buried the lede, which others went ahead and unburied. As NPR notes six paragraphs in, it's not just Oracle that is involved in a deal here, it's apparently Microsoft too!
Granted, I'm slightly biased in pointing this out since several weeks ago, well ahead of the actual TikTok ban, I wondered out loud if the way to square this circle wasn't for Microsoft to ride in to save the service.1 I even noted that perhaps Oracle could be in the mix as well, albeit I had the potential roles reversed:
Microsoft may not have to buy the company in full. They may just need to buy enough to push ByteDance's share below a controlling threshold. And if the company determines that Microsoft can boost that value and/or that such a structure is certainly better than going to $0, you can make a case...
There are all sorts of wildcards and hurdles in the above ideas. Still, at the highest-level, it would seemingly make the most sense for all of the parties involved. Oracle might want a say in that, given their deal already in place to secure TikTok's US data, but it would be an overall better fit with Microsoft. Perhaps Oracle could be the second largest shareholder, easing some of Microsoft's financial burdens in such a deal and promising to keep some level of the Oracle cloud in use (and perhaps trading some NVIDIA GPUs while they're at it).
This was sort of obvious since Microsoft had tried to buy TikTok once before, when Donald Trump wanted to ban the app during his first term in 2020 – but unlike that (strange) deal, which would have seen Microsoft pay a finders fee of sorts to the US government, this deal seems less gnarly now. And unlike the last time, the planets are seemingly aligning for this to happen – though many hurdles remain, including, of course, money.
NPR cites a source saying Oracle could be interested in buying a stake in the "tens of billions" and goes on to note the entire service could be valued upwards of $200B in such a deal. That's a far cry from the $20B – lol – that some would-be acquirers were throwing out there. But it's also in part because this deal would be for the worldwide operations, not just the US ones.
But even if it's not quite $200B, Oracle obviously won't be able to make such a deal happen by themselves – see also: 'The Stargate Project' numbers and partners. Four years ago, when hashing out a similar deal, Oracle partnered up with Walmart. Certainly, Oracle is in a stronger position now (thanks, AI) but they'd still need a partner and Walmart is sitting it out this time, according to NPR. And so we now welcome back Microsoft to the negotiating table...
Beyond the money, this deal makes sense for them because guess who also happens to be the largest buyer of OpenAI models through Microsoft? TikTok! The AI element of all this is obviously key for not only saving the company, but making it work going forward. ByteDance's algorithms would undoubtedly have to be ripped out of the app to satisfy the US law regarding influence, and Microsoft, with the assist from OpenAI, could slot in some new ones. Obviously that's easier said than done, but the pieces are there to make this work.
With China now signaling that they're perhaps open to a deal, undoubtedly as a tariff/trade negotiation with Trump, that perhaps just leaves the odd element that no one seems to quite be able to wrap their heads around (because a deal can't just be straightforward and simple with Trump): the notion that the US government might need half of any such deal.
No one can parse this because Trump's wording has been vague. Though it has seemingly gotten less vague as he keeps repeating it. It seems like he wants any would-be US buyer(s) to give/gift half of the stake they buy to the government. Again, I go back to the 2020 deal where Trump wanted a finder's fee. This sounds like more of an equity stake to participate in the upside, but how that would be structured, nobody knows. And the precedent that would set seems... more like something China would ask for (demand) rather than America!
Still, the pieces are moving into place – but...
One more thing: I'm going to go ahead and guess that Trump's new best friend Elon Musk would much rather that he and/or Xitter and/or xAI be involved in the deal, perhaps instead of Microsoft. This makes sense for different reasons than Microsoft's involvement (beyond Xitter being an actual social network, Musk's ties to China are obviously of interest here). Still, this would be a big enough deal that perhaps there's room for all of them. Especially if it really is Oracle that would be the controlling partner here...
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
Update:
A new Reuters report quotes President Trump as saying:
"No, not with Oracle. Numerous people are talking to me, very substantial people, about buying it and I will make that decision probably over the next 30 days. Congress has given 90 days. If we can save TikTok, I think it would be a good thing."
However this could just be misdirection as Reuters own reporting backs up the NPR report that Oracle is central to the discussions – as they'd presumably have to be given their cloud/data deal. That is a pretty direct statement though. Would the President... lie? This President?! (Or does he simply not know all the details...)
Update 2:
A new CNBC report has Perplexity doubling-down on their offer to merger with TikTok, now including the notion of letting the US government own up to 50% of the entity. This both looks oddly desperate by Perplexity – a startup last valued at $9B – and yet is the type of thing President Trump must love!
Update 3 (January 28, 2025):
When asked if Microsoft was trying to buy TikTok, President Trump gave a humorous, "I would say yes," Bloomberg reports. But he went on to note that there are a lot of interested parties and ideally there would be a bidding war.
1 And yes, it was a sub-prediction in my list for 2025. Call it, 6a.