TikTok’s owner has chosen Oracle over Microsoft as its preferred suitor to buy the popular video-sharing app, according to a source familiar with the deal.
Microsoft announced on Sunday its bid for TikTok had been rejected, removing the tech giant from the running a week before President Donald Trump promises to follow through with a plan to ban the Chinese-owned app in the US over spying concerns.
TikTok and the White House have declined to comment and Oracle did not return a request for comment.
Walmart, which had planned to partner with Microsoft on the acquisition, said on Sunday it “continues to have an interest in a TikTok investment” and is discussing the matter with ByteDance and other parties.
The Trump administration has threatened to ban TikTok by Sunday, September 20 and ordered ByteDance to sell its US business, claiming national security risks due to its Chinese ownership.
The government is concerned about user data being funnelled to Chinese authorities. TikTok denies it is a national-security risk and is suing to stop the administration from the threatened ban.
TikTok denies it has shared user data with the Chinese government or that it would do so if asked. The company says it has not censored videos at the request of Chinese authorities and insists it is not a national security threat.
It is not clear if the proposed acquisition will only cover TikTok’s US business, and, if so, how it will be split from the rest of TikTok’s social media platform, which is popular worldwide. ByteDance also owns a similar video app, Douyin, for the Chinese market.
Any deal must still be reviewed by the Committee on Foreign Investment in the United States (CFIUS), a US government group chaired by the Treasury Secretary that studies mergers for national security reasons.
The president can approve or deny a transaction recommended by the panel, though Mr Trump has already voiced support for Oracle as a “great company” that could handle the acquisition.
Microsoft said in a Sunday statement that ByteDance “let us know today they would not be selling TikTok’s US operations to Microsoft”.
It added it was “confident our proposal would have been good for TikTok’s users, while protecting national security interests”.
The company said it “would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combating disinformation”.
TikTok, which says it has 100 million US users and some 700 million globally, is known for its fun videos of dancing, lip-syncing, pranks and jokes. It has recently become home to more political content such as the comedian Sarah Cooper, who drew a large audience by lip-syncing Mr Trump’s own often-disjointed statements from public appearances.
But the app has also raised concerns because of its Chinese ownership.
The White House has cracked down on a range of Chinese businesses, including telecom equipment makers Huawei and ZTE and messaging app WeChat, over worries they would enable Chinese authorities to attain US user data.
Republican and Democratic politicians have raised concerns about censorship and children’s privacy.
TikTok has sued to stop the ban, but not the sale order. The negotiations have been complicated by several factors, including Mr Trump’s repeated demands that the US government should receive a “cut” of any deal, a stipulation and role for the president that experts say is unprecedented.
In addition, the Chinese government in late August unveiled new regulations that restrict exports of technology, likely including the artificial intelligence system TikTok uses to choose which videos to provide its users. That means ByteDance would have to obtain a license from China to export such technology to a foreign company.
The deal had come together rapidly after the administration ramped up its threats against TikTok this summer, despite TikTok’s efforts to put distance between its app and its Chinese ownership.
It installed former Disney executive Kevin Mayer as its American CEO, but he resigned in August after just a few months on the job, saying the “political environment has sharply changed”.