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Oracle wants to buy TikTok but it's hard to say

via:CnBeta     time:2020/8/20 20:38:56     readed:122

Tiktok's fate regeneration variable. The Financial Times recently quoted people familiar with the matter as saying that Oracle, an established U.S. it company, has held preliminary negotiations with byte hop, the parent company of tiktok, and is seriously considering purchasing the app's business in the United States, Canada, Australia and New Zealand. Oracle is working with U.S. investors holding byte jump shares, including transatlantic and Sequoia Capital.

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On August 18 local time, U.S. President trump confirmed the news when he attended the event in Arizona. This is the third company after Microsoft and Twitter to disclose its intention to acquire tiktok, and Oracle's admission makes the outcome even more unpredictable.

Not long ago, trump issued an administrative order requiring the delivery of tiktok's US business sale within 90 days of byte skipping. The previous time limit was 45 days. After the extension, tiktok got more space to move around, but the time was still tight. A number of scholars and lawyers interviewed by Caijing said that even if Oracle, twitter and other companies joined the bidding, byte skipping was still in a passive position in the negotiation process.

The Ministry of foreign affairs of China has repeatedly responded to the issue of tiktok. Foreign Ministry spokesman Zhao Lijian said on the 17th that tiktok's U.S. business, including the president, all middle and senior management of the company have employed Americans. Tiktok server in the United States, data centers in the United States and Singapore, the operation team has all realized localization, the company employs 1500 American employees, and promises to create 10000 jobs. Tiktok also disclosed the audit policy and algorithm source code."It can be said that tiktok has met almost all the requirements put forward by the US side."

Tiktok's US employees are ready to file a lawsuit against tiktok's trading ban, according to the US Capitol Hill newspaper. Their lawyers said they will file a lawsuit in the federal court later this week, accusing Trump's actions as administrative ultra vires and damaging employees' constitutional rights, including the right to remuneration.

"The acquisition must not be the most desired outcome of byte jump, even if it can get back 10 billion dollars of purchase money." Tang Dajie, director of Saiyi Enterprise Research Institute and visiting researcher of finance, taxation and law research center of Wuhan University, told Caijing that transferring tiktok to the United States is like creating a strong opponent for itself. The other party has the algorithm, operation ability and gene of byte hopping in the field of short video. In the future, it will form a competitive relationship with byte skipping in the global situation.

01

The relationship between government and business is the advantage of oracle bone inscriptions

At the event on August 18, when a reporter asked, "is Oracle a good buyer in the acquisition of tiktok?" When,Trump responded, "Oracle is a great company, and the boss is a great person. Oracle bone inscriptions can certainly handle it. "The implication is that trump is optimistic about Oracle's acquisition of tiktok.

Jiang Zhaokang, a lawyer and GSC Potomac partner in international trade and supply chain management, has done business with Oracle. He told Caijing that Oracle's outstanding advantage lies in government relations. "Oracle founder Larry Ellison (Larry Ellison) is a strong supporter of Trump, which is rare in the field of IT ."

In an interview with Forbes in April, Larry Ellison spoke about Trump ." I don't think he's a demon. I support him and hope he does well ." In February, Larry Ellison also publicly raised money for Trump's campaign, prompting some Oracle employees to petition against it.

Furthermore, Oracle CEO Safra Katz (Safra Catz) was a member of the executive committee of the Trump transition team in 2016.

In the past, the U.S. government usually did not intervene in the issue of merger and acquisition. However, the government led acquisition of tiktok is inseparable from the relationship between government and business. "The U.S. government may create some reasons to favor oracle. Trump is not principled and is not sure what this administration will do. " Jiang Zhaokang commented.

Wang Peng, a scholar at the Management Institute of the Beijing Academy of Social Sciences, told Caijing that at a time when the public thought that the acquisition of Microsoft was basically a foregone conclusion, trump set a 90 day deadline for tiktok, and then supported Oracle to participate in the bidding. Considering that Oracle has always been regarded as an important enterprise for the US government to monitor network data, Trump's support for Oracle's acquisition of tiktok may involve political interests and demands.

In addition, Oracle has a close relationship with early tiktok investors such as general Atlantic and Sequoia Capital, which does not rule out the possibility of acquiring tiktok through investors. Previously, investors led by Pan Atlantic investment group and Sequoia Capital offered $50 billion for tiktok, much higher than the $10 billion to $30 billion offered by Microsoft, and higher than the valuation of snap33 billion, a similar short video company.

Yu Shilin, a research manager at Huasheng securities, told Caijing that a higher price could help bidders win tiktok and that Oracle had a cooperative relationship with the two investment institutions.

02

Who are the most potential buyers?

Before Oracle, the industry generally believed that Microsoft, the first to show its intention, was the most likely buyer.

Microsoft is not an Internet company, But has always had the ambition and the effort to enter the mobile Internet. "Microsoft had a strong desire to move into the mobile Internet in Steve Ballmer's (Steve Ballmer) era ." Tang Dajie said. Consumer Internet products on the C end, Microsoft has acquired the game "my world "(Minecraft) developers Mojang Studios、 live game platform and renamed Mixer( closed). And it even threw an olive branch at Facebook, For $24 billion, But Zuckerberg refused.

Specifically, in the field of social media, Microsoft also has Skype, a video conferencing software, and LinkedIn, a workplace social platform."From the perspective of format, Microsoft has the most advantage. Its own social media business can be combined with tiktok."Jiang Zhaokang said.

But she also cautioned that this advertising value is only potential, and tiktok is still in its infancy in the development of its advertising business, so there is no guarantee that it will attract a lot of advertising revenue. In order to build a lasting advertising business, tiktok also needs to develop simple self-service tools to enable marketers to buy advertisements in bulk with automatic purchase tools. Microsoft may be able to help with technology.

In previous foreign media reports, tiktok's overall business valuation reached US $50 billion, and byte jitter thought that the valuation was low. Microsoft's offer ranges from $10 billion to $30 billion. The offer, which is far below the valuation level, has caused dissatisfaction among many outsiders. In a vote of 250 employees within Microsoft, 63% of participants objected to the deal, and some commented that "this deal is immoral in almost any way."

However, although Microsoft has a long-term attempt to enter the mobile Internet, it is generally not very successful. Therefore, even if we win tiktok, whether Microsoft has the ability to operate and manage tiktok is still in doubt. "Microsoft is likely to screw up tiktok." A cross-border trade practitioner expressed his concerns to Caijing. From Nokia to mixer, Microsoft's performance in the field of mobile Internet is mediocre, and its traditional corporate culture is not necessarily suitable for tiktok's younger positioning.

In terms of product form, twitter and tiktok have the highest closeness.Short video social networking has always been an area twitter wants to enter. As early as 2012, twitter acquired the short video app vine, which was once popular, but then went from bad to worse. Finally, it was announced offline in 2016.

With the experience of operating short video platform, the competitive products can also form synergy effect with tiktok. The acquisition advantage of twitter seems to be very prominent. However, Tang Dajie also pointed out that this must be the last situation that byte skipping is the last to see. It is possible for twitter and tiktok to form a powerful short video social networking company.

Twitter's bigger problem is its own cash reserves. In terms of market value, revenue or net profit, twitter can't compare with the other two competitors. Its cash and cash equivalents, short-term investment and other capital reserves are only $8.5 billion, far lower than tiktok's valuation. That means Twitter is likely to need to bring in other investors to close the deal.

If Microsoft and twitter still have a track record of liking tiktok, Oracle's entry is even more confusing. Oracle, the world's second-largest software maker, has previously focused on the b-end market, rarely on the consumer Internet or social media.

According to the fourth quarter financial report of Oracle in fiscal year 2020, Oracle realized revenue of US $10.44 billion, down 6% from US $11.136 billion in the same period of last year, and net profit was $3.1 billion, down 16% year-on-year. Except that the revenue of cloud services and authorization support business increased by 1% to 6.845 billion US dollars, the revenue of cloud authorization and on-site authorization business, hardware and service business decreased to varying degrees.

Jiang Zhaokang analyzed that, except for business development factors, the current business development is not ideal, which may make Oracle eager to seek the next growth point and join the potential strong social media market.

Wang Peng judged that Oracle's participation in the competition should focus on tiktok's user data. Oracle is good at storing and underlying data warehouse, which is also the biggest connection between Oracle and tiktok. Yu Shilin also said that Oracle can well support tiktok's demand for cloud data storage and save costs, while tiktok's user data can also be used to improve marketing products, especially to provide useful consumer related information for advertisers, and provide customers with a platform for advertising.

"Oracle is good enough in technology, but it is in a weak position in the consumer terminal business. This vertical combination of synergy has more advantages for both sides." Yu said.

However, Jiang Zhaokang believes that if we want to develop social media, we need to open up new areas, and it is difficult to form synergy with the original business. However, in this way, we can retain the independence of the original team. "Maybe the odds are bigger, and investors are more happy to see its success." Another possibility of Oracle's acquisition is to make financial investment, operate for a period of time, and then transfer tiktok after the calm.

"It's hard to say which company will win in the end." Jiang Zhaokang said. What's more, with more interested acquirers emerging and tiktok litigation on the agenda, more variables will happen to tiktok's fate.

Liu Shuqi, Liu Yiqin and Jinyan, reporter of Finance and Economics

Editor Xie Lirong

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