No US company is more intertwined with TikTok than Oracle. Here’s what to know about Oracle’s relationship with TikTok and its role in a still-unfolding saga.

TikTok parent company ByteDance is once again racing toward a deadline to sell off its popular video app or face a ban in the US.

Several interested buyers have publicly emerged, and the most discussed deal scenarios involve a key role for a longtime partner of the video platform: Oracle.

For several years, Oracle has worked with TikTok in the US. The company is contracted to provide cloud services and maintain a separation between US users’ data and ByteDance employees in China.

Now, the White House is searching for a deal that satisfies a law passed last year requiring ByteDance to divest its US operations. A proposal circulating among officials in US President Donald Trump’s administration would involve Oracle providing continued security assurances and potentially taking a small stake in a new US TikTok entity majority-owned by a third party.

Here’s what to know about Oracle’s relationship with TikTok and its role in a still-unfolding saga. 

How do Oracle and TikTok currently do business?

No US company is more intertwined with TikTok than Oracle. 

The video app is one of Oracle’s most important cloud services customers. In 2020, TikTok became a crucial early client when Oracle was trying to build what was then a nascent part of its business. Last summer, Oracle warned investors that a TikTok ban would hurt profits and increase expenses.

Tiktok has often invoked Oracle in its years-long struggle to avoid a US ban. The US tech stalwart has a longstanding relationship with Washington, and TikTok has sought to associate itself with the company to satisfy China hawks’ national security concerns.

To that end, in 2022, TikTok touted a high-profile data hosting partnership with Oracle dubbed “Project Texas” — a nod to the home of Oracle’s headquarters. TikTok said it spent over US$1 billion ($1.3 billion) on changes limiting ByteDance’s access to sensitive US user data.

Despite the arrangement, Project Texas was never accepted by US regulators as adequate to address national security concerns. 

Oracle has largely been silent on its close relationship with TikTok. It doesn’t list the company among its flagship cloud customer successes, for example. 

What is Oracle’s proposed role in a sale of TikTok’s US operations?

Trump has openly discussed Oracle co-founder and chairman Larry Ellison as a possible buyer. However, Oracle likely doesn’t have the cash. The company is spending much of its cash on building new data centers and has over US$90 billion in debt, partly due to a prior acquisition.

Plus, the infrastructure-focused company has little experience running a consumer-oriented app.

The likelier scenario, and the one that’s under consideration with Trump administration officials, would involve Oracle reprising its role providing a security backstop for US users’ data, according to people familiar with the matter.

The backstop would guarantee that TikTok’s US operations under new ownership would not contain a back door that China’s government could exploit. Though not all details are clear, such a deal would potentially include Oracle taking a small stake in the new enterprise. 

Some are referring to the plan as “Project Texas 2.0”, according to Politico, as it would include a similar data monitoring arrangement.

Publicly known bidders include a group led by billionaire Frank McCourt and Reddit co-founder Alexis Ohanian; a group led by tech entrepreneur Jesse Tinsley that includes YouTube star Jimmy Donaldson (better known as MrBeast); and San Francisco-based Perplexity AI, which is proposing a merger.

A group that includes Microsoft might become another bidder, according to people familiar with the matter. 

What happened when Oracle tried to buy TikTok in 2020?

Oracle was part of an investor group that tried to buy TikTok’s US operations back in 2020, the first time that Trump tried to force a sale of the video app. That fall, the group’s bid to acquire TikTok’s US operations was initially approved by ByteDance and submitted to the US government for a security review. Trump also blessed the deal.

Under that arrangement, the cloud giant would have taken a minority ownership stake in TikTok’s global business and provided technology and data storage services for the app to protect US user data.

But the arrangement hit a snag when officials in Washington and Beijing disagreed over whether ByteDance would maintain any involvement in the new TikTok entity. The deal fizzled and Trump turned his attention to the 2020 election. It officially fell through once Joe Biden was elected president.

What’s up with the Ellison-Trump friendship?

“He’s sort of CEO of everything — he’s an amazing man, an amazing businessperson,” Trump said of Ellison during a White House event on his first full day in office.

Ellison has donated to Republicans, including Trump. He is also famously close to Elon Musk, a newly central figure to the Trump orbit. He previously sat on Tesla’s board of directors and invited Musk to vacation at his private Hawaiian island.

And Oracle CEO Safra Catz served on Trump’s transition team ahead of his first term.

What are the challenges in securing a sale of TikTok’s US operations?

There are two challenges in spinning off TikTok’s US operations.

The first is price. Very few companies can afford TikTok US, which has been valued anywhere from US$20 billion to US$150 billion depending on the deal specifics. Many of the top tech giants that could afford a deal like this — Meta Platforms and Alphabet’s Google, for example — are dealing with intense antitrust scrutiny, which makes them unlikely buyers. 

The second challenge is more technical. Chinese authorities are unlikely to approve a deal that involves selling the new buyer TikTok’s valuable content algorithm, which determines the posts that users see in their feed.

If ByteDance sells TikTok’s US operations without the algorithm, any US buyer would have to build their own, which is complicated; the algorithm’s ability to personalise content and get users to keep scrolling helped give TikTok its value. Even Meta has struggled to copy the secret sauce for its Reels competitor.

It’s also unclear whether ByteDance can technologically separate TikTok’s US business from the rest of the app’s global operations. At a Supreme Court hearing earlier this year, lawyers for TikTok argued that severing the US business would be almost impossible.

What happens next?

The deadline for ByteDance to divest from TikTok is April 5. If the company does not come up with a deal by then, it faces another US ban. US Vice President JD Vance said last week that he’s confident a deal will be agreed to before that deadline, but did not specify what would happen with the ownership of TikTok’s algorithm.

Trump has suggested he would try and extend the deadline again if a deal isn’t done in time. It’s also possible that another extension could lead to pushback from Congress. The national security law that would ban TikTok was passed with broad bipartisan support, and it’s likely Congress will eventually push to enforce the law.