Sometimes rumours confuse us. That our editorial team looks at each other and we conclude someone has a big imagination. Who would come up with such a crazy idea? An acquisition of TikTok by Oracle clearly fits into that category. We don’t understand a potential acquisition by Microsoft entirely either, but it still makes more sense than an acquisition by Oracle.
There is a rumour based on reliable sources that Oracle is currently in the race, as well as Microsoft, to acquire the relatively new popular social network TikTok. This is a social network that is wildly popular among teenagers.
What should Oracle do with TikTok?
Oracle’s entire empire, as Oracle’s portfolio is that extensive, focuses on the business market. Almost all Oracle products are not aimed at your local bakery, but at companies that generate millions if not hundreds of millions of revenue. Oracle is a true enterprise player. Yet, it is currently listed as a possible candidate for buying TikTok. A product that focuses on consumers, especially teenagers. It is a combination that is difficult to reconcile with.
Like us, more analysts in the market are surprised by this potential strategic move of Oracle. An acquisition of TikTok, or parts of it, will cost tens of billions of euros. It is by no means a small acquisition.
Oracle does not want to respond to rumours, which is not surprising. We asked the PR officer at Oracle if he has a TikTok account, he doesn’t have one.
We did do our research and tried to figure out what the reasons for a TikTok acquisition by Oracle could be, just like many other analysts in the market. We’ll address all the obvious reasons. Some examples:
- Oracle would have a good customer case with TikTok for its Oracle Cloud;
- According to sources, the Oracle Cloud has a huge overcapacity, so why not invest in a service that creates more visibility;
- Oracle offers several marketing services. Linking these services to a social network can be an incredible benefiticial especially for data profiling;
- TikTok is a Chinese company, and President Trump wants to get rid of Chinese social media in the US. Oracle founder and Trump sympathizer, Larry Ellison, would be happy to help the president with this.
These are pretty much the most obvious reasons as to why Oracle would like to buy Tiktok. We think these reasons are all falls or deceptive.
- You can also create a customer case by giving a big brand a lot of discount in exchange for big marketing campaigns. It’s also a lot cheaper.
- Overcapacity is there for a reason. It always costs money.
- With TikTok, you can enrich your marketing products with more data. However, it is more sensible to buy a social network that reaches a broader demographic, such as Twitter.
- The extent of Ellison’s support for Trump is not entirely clear, but buying a social network for 10 or 20 billion euros, which does not match with your current business operations is unbelievable, maybe even stupid. In addition, Ellison can acquire TikTok using his private assets and keep Oracle out of the deal. That would sound more likely.
Should we just discard this rumour? No, because Trump has publicly announced that it would be wonderful if Oracle would acquire TikTok. He’s a firm supporter. This does not confirm that Oracle is in fact interested, but it does make it less unbelievable.
Oracle has enough challenges as it is
If Oracle is looking for acquisitions to expand its empire, then we believe there are better candidates than TikTok. If we look at the cloud market, people talk about Amazon, Google and Microsoft as the major vendors. But Oracle also offers an extensive cloud offering and still wants to compete with those three. The fact is that Oracle is lagging behind and struggles to catch up with the competition.
There are plenty of acquisitions that Oracle can make to close the gap or at least strengthen its cloud offering to compete more with the other three players. In our experience, that would be a much better strategy than entering the consumer market with a social network. Especially since Oracle doesn’t have any knowledge of social networks. Developing and marketing enterprise IT products is a completely different ball game than running a social network.
TikTok cannot add much value to Microsoft either
As far as we are concerned, the same goes for Microsoft as it does for Oracle. Microsoft is also, for the most part, a company that operates in the business market. However, the company still runs a large game division with Xbox and some gaming studios. With these gaming divisions it does target consumers, and also teenagers. TikTok would have to fit somewhere within those products. The acquisition could also strengthen Microsoft’s online activities. For example MSN, LinkedIn and Bing.
In the end, the question is whether Microsoft should spend tens of billions on a social network and whether it fits with the company. We don’t think it does. But if we must choose, TikTok is a better fit for Microsoft than Oracle.
Facebook, Google or Twitter make more sense
In the end, TikTok would naturally be a better fit for Facebook, Google or Twitter. An acquisition of TikTok by Facebook is not desirable. This social network already owns Instagram and WhatsApp, in addition to its own platform. As a result, the company is already too dominant in the social network space. Google is the absolute leader when it comes to online services, but it never struck gold with its social media projects. Google’s only successful social media product is YouTube, which it acquired. All other attempts have failed, and there are a lot of them: Google Buzz, Google Wave, Google Plus, Blogspot (still exists) and a dozen apps. We probably forgot a couple more.
Twitter could also be a contender. The only question is whether the company has enough money for an acquisition of this kind.
Will it come to an acquisition?
If we are going to look at what we do know, it remains to be seen if it even comes to an acquisition. Chinese ByteDance owns TikTok, and Trump accuses them of espionage. We’ve heard that before:
- Trump turns Huawei into a threat to the U.S. economy
- To stop China’s world domination, Huawei has to die
- Huawei is heading towards bankruptcy, desperate for a way out
Trump has given ByteDance until November 12th to sell TikTok to an American company, or at least the American branch. Otherwise, the service will be banned in the United States. Basically, Trump is forcing the company to sell its popular social network to an American company.
According to Trump, TikTok shares the data of all TikTok users with the Chinese authorities. In the meantime, ByteDance has decided to sue the U.S. government because of the imminent ban. The court will have to consider whether the U.S. is justified in banning the service.
Ultimately, ByteDance would much rather keep its social network in its own hands and offer it to users all over the world. If TikTok is banned and the company can still earn tens of billions from a partial sale, it does have a profitable way out. This doesn’t change the fact that they basically have no choice. Finally, the Chinese government has to approve the acquisition. It is unclear how the Chinese government looks at the situation, but it makes sense that the Chinese government is not thrilled about the course of events.