Why TikTok would be completely useless for Oracle – but not a requirement
With Oracle, the next US tech company should be interested in TikTok. There is hardly any rational reason to buy. Except politics.
In addition to Microsoft and the short message service Twitter , the US technology group Oracle is now said to be interested in taking over the Chinese video app TikTok. Oracle is working with American investors who in turn are involved in the TikTok owner Bytedance , including General Atlantic and Sequoia Capital , reported the “Financial Times”. That raised a lot of frowns in the tech world. Because actually there are hardly any conclusive arguments for such an entry. Oracle neither knows the business, nor are there any significant synergies. Anyone who is still looking for an argument for the takeover must leave the soil of hard economic facts. What speaks against the purchase – and what for it.
1. Oracle has no experience in the retail business
The majority of people around the world may never have heard of Oracle. The reason for this is simple: the company founded by the charismatic Larry Ellison near San Francisco is a flawless provider of business-to-business software. Oracle is the main competitor of the German software group SAP in the business with business software – from finance to human resources to accounting. In addition, the Californian company is the world market leader for databases.
The Californian group has long since sold all business areas with any reference to the end customer business that Oracle had acquired in the course of earlier acquisitions – including the “Open Office” office package from the German company Star Division. A second or third glance does not reveal how a social network such as TikTok, which is particularly popular with teenagers and young adults, should fit into the portfolio.
2. Oracle plays no role in the global cloud infrastructure
From a technical point of view, social networks like Facebook , LinkedIn or even TikTok are basically gigantic databases in which sophisticated algorithms decide which users get to see which content. And such databases, one could argue, are part of Oracle’s business.
But these are completely different from what is needed to operate a platform like TikTok. Because in order to be able to transfer images or video content to the smartphones for hundreds of millions of users worldwide in fractions of a second, you not only need a database, but also a worldwide network of cloud data centers that store and distribute the content.
This is exactly what Microsoft has , which with its software platform Azure and the global network of data centers is now the world’s second largest provider of cloud infrastructure. Microsoft has now secured almost a fifth of global business , behind Amazon , which has a third of the market share with its AWS cloud service.
Oracle, on the other hand, does not play a role in global business with just two percent of sales – and simply does not have the capacity to run TikTok on its own platform.
3. Oracle has no synergies in marketing TikTok content
The biggest source of income in social networks is the sale of advertising. Here Facebook and Google dominate the global online advertising market. Oracle lacks both the competence and the staff to run this business itself after a possible takeover of TikTok.
Here, too, Microsoft is much better off. With the search platform Bing and the news portals connected to it, the Windows Group has both the know-how and the channels to end customers that would allow TikTok content to be marketed via other channels. With the additional advertising revenues that Microsoft could generate, a billion-dollar acquisition in China could also pay off.
However, how Oracle should refinance an entry into the entertainment portal is completely unclear.
4. Oracle would be Beelzebub instead of the devil
US President Donald Trump justified the request to the Chinese TikTok parent ByteDance to sell the US business with concerns about the data security of American users. From a European perspective, however, the takeover of the service by Oracle would in a sense only replace the devil with the Beelzebub.
The reason: Oracle has a company with its subsidiary BlueKai that operates an extensive tracking network on the worldwide web. Largely unnoticed by the public, BlueKai follows traces of online users around the world when they are online.
Only at the end of June of this year did this fact become public through a data breach with billions of entries, in which the personal data of German Internet users were also openly online. American corporations are also relatively lax with personal data. Oracle’s entry would not bring more data security for end users (American as well as international).
5. Oracle may have an interest in helping Trump
The fact that Oracle is entering the bidding race could also have political rather than economic reasons and the company is only participating in TikTok for the sake of US President Donald Trump. Because Oracle founder Larry Ellison is a declared Trump supporter: “I support him and want him to be ahead,” Ellison said in April to the US magazine Forbes.
In February, Ellison invited his friends to a high profile fundraiser on his private estate and golf course in California. And Safra Catz, the CEO at Oracle, even worked in his transition team in 2016 after Trump’s election victory.
So if Oracle drove up the price for TikTok in a bidding contest with Microsoft, Trump could only be right – he had already suggested at the beginning of August that the American state should be entitled to a kind of brokerage bonus if a deal is made.
He called it “key money” – an old-fashioned term from the real estate business when a tenant slips his future landlord a bribe in order to win the contract. Oracle could make sure that the cash register rings for the tax money.
In return, Ellison and Catz were with the US activities of TikTok access to a completely new and potentially lucrative business