Microsoft Corporation (NASDAQ: MSFT) was a strong contender for the bid to partner with TikTok but it looks like it lost that bid to rival software giant Oracle Corporation (NYSE: ORCL). The social media platform has become a global sensation in 2020 but Trump’s administration recently threatened to ban it in the U.S due to security concerns.
TikTok’s only choice to avoid being caught in the crosshairs of the lengthy trade war between China and the U.S was to team up with a U.S company to avoid being banned. The Trump administration argues that the app can be used to spy on U.S citizens or even collect personal data, thus posing a threat to national security. TikTok stated that its data centers are located outside China and that its data is not affected by Chinese laws. Meanwhile, the Chinese video platform received a lot of attention from U.S companies, among them including Microsoft and Oracle.
TikTok demonstrated its potential earlier this year when its popularity shot up, allowing it to gain more than 300 million users in the first quarter alone despite the coronavirus pandemic affecting many other businesses. The U.S government planned to ban Tiktok in the U.S as of September 20, which means that the window for the Chinese social media platform to act quickly if it still wants to maintain its user base in the U.S market.
There is still a lot of uncertainty regarding whether or not teaming up with Oracle might shield TikTok from the ban. President Trump was also not particularly clear on how the Chinese social media platform would be banned. Meanwhile, a Tiktok employee took to the Federal Court to challenge the impending ban. The hearing is scheduled for Tuesday.
Neither TikTok nor Oracle have revealed the nature of their agreement and how it will affect the two. However, the partnership will be vetted by a team of experts appointed by the relevant authorities. Trump has been aggressively pushing on the national security agenda as one of the key focus points for the trade war battle with China. It has affected Chinese companies conducting business in the U.S and one of the most affected is Huawei.