TikTok Is a Waste of Money for Oracle
Oracle is a rumored buyer of TikTok, even though the Chinese social media company would seem to be a very poor fit with Oracle's portfolio.
President Trump says a U.S. company or companies will buy Chinese social media company TikTok. The service mostly includes short user-created videos. China’s ByteDance owns it. The U.S. government has concerns about security because TikTok collects user data. It could be a way for China to monitor the habits of U.S. citizens. That makes it a security problem. In all likelihood, an American owner would protect this data.
The Biden administration said that TikTok had to be sold. Congress backed that decision. The Trump administration reversed it, and TikTok ownership negotiations have gone on for months. At times, though, they have gone on at all.
The most common rumor is that a group led by Oracle Corp. (NYSE: ORCL | ORCL Price Prediction), one of the largest enterprise software companies in the world, will purchase TikTok. Oracle’s customers are businesses and the government. It seems to be a very poor fit with TikTok. The ownership might also include ByteDance, but U.S. companies would control the user data. Does an individual consumer product belong in Oracle’s portfolio?
Oracle’s stock recently surged because it said its AI cloud infrastructure would bring in $144 billion by its 2030 fiscal year. The problem with the assessment is that five years is a very long time in the artificial intelligence business. Nevertheless, Oracle’s market cap rose over $100 billion in one day. TikTok is expected to sell for $100 billion or more.
In theory, Oracle could use its enterprise software and server farms to hold TikTok data. How would that serve its strategic goals? AI software helps drive the habits of TikTok users, but the marriage of that with Oracle cloud technology is a stretch.
TikTok has 170 million users in the United States. Almost all are individuals. It is easy to see how Microsoft could use that customer base to distribute its CoPilot software, or for Google to distribute its Gemini product. In fact, Elon Musk’s X social media platform is getting distribution of its Grok AI product. These moves could give each a chance to catch industry leader OpenAI.
The mystery of Oracle’s participation in a buyout is that its longtime strategy does not include this. Larry Ellison is the world’s second-richest man. He owns 40% of Oracle. Maybe he doesn’t need an excuse or reason to be a part of a transfer of TikTok ownership.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
