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The complex logic behind tiktok Co., Ltd. and Oracle

via:CnBeta     time:2020/9/17 0:23:27     readed:54

For the time being, the fate of tiktok, a subsidiary of bytecomb, has made new progress. Oracle has won the competition to become tiktok's "trusted technology provider". The proposal has been submitted to the U.S. government for approval. The media further tracked and reported that,The U.S. national security team reviewed the proposal on Tuesday afternoon and made a recommendation to President trump. It is unclear whether the proposal favors approval or rejection.

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Trump told reporters in the South Lawn of the White House that his staff were "very close to reaching an agreement" and hinted at support for Oracle Chairman Larry Ellison.

Why oracle bone inscriptions? Why security partners?

Why did tiktok choose oracle bone inscriptions? Why does the U.S. government prefer oracle bone inscriptions? There may be the following reasons:

First, there is no fault in terms of safety.Oracle has always been the top-level IT service provider of the U.S. Department of defense, and can be trusted by the U.S. government in terms of data security and compliance. Its cloud computing platform is one of the few cloud platforms that have achieved the Il5 (impact level 5) security level of the U.S. Department of defense.

The second is the good relationship between Oracle and the US government, especially with President trump.Oracle founder Larry Ellison (Larry Ellison), a staunch supporter of Trump, also hosted a fundraising event for Trump at home this year. Oracle CEO Katz (Safra Catz) also worked for the Trump campaign in 2016. Given that the biggest pressure on TikTok to stop U.S. business now comes from Trump, this is particularly important.

The third is the most important solution for tok.As we all know, byte skipping wants to keep tiktok's business in the United States, rather than sell it. Under Trump's high-pressure statement, the public opinion basically believes that tiktok's US business can only be sold. However, according to the information released so far, Oracle and tiktok are cooperative rather than simple acquisition relationship, which is the biggest change after Oracle's participation. On the one hand, because Oracle has little experience in operating 2C business, it is not willing to rashly take over tiktok's business; on the other hand, because of its deep relationship with the government, Oracle is confident that it can come up with a cooperation plan that the US government is willing to accept.

Microsoft, on the other hand, has its own 2C business. It also acquired LinkedIn, a workplace social media platform, a few years ago. Its goal must be to acquire tiktok, rather than to operate in a cooperative way. Therefore, under the premise of cooperation, Oracle is almost the only choice.

But in any case, the best outcome for tiktok is to bring in partners rather than sell as a whole. Tiktok can continue to operate in the U.S., while partners are only involved in infrastructure support and provide endorsement on data security.

Why did oracle bone inscriptions capture tiktok?

This also starts with the U.S. Department of Defense's cloud computing platform project three years ago.

In 2017, the Pentagon decided to plan the future US defense system cloud computing platform, which will last for 10 years, with a total investment of US $10 billion. The project is named Jedi (joint enterprise defense infrastructure) program. The Pentagon report to Congress suggested that the cloud service procurement should use the "winner take all" mode to achieve unified data sharing and security management.

In view of the long-standing leading position of Amazon AWS and the long-term cooperation between the company and the Pentagon, at that time, the American industry generally believed that the project would basically cost Amazon. At that time, Amazon's two major competitors were Oracle and IBM, the traditional IT companies. However, the final result of this project is unexpected, and it is Microsoft that laughs to the end. This project is of great significance to Microsoft, and it greatly improves the development potential of Microsoft in the field of cloud computing.

At this time, subtle changes have taken place in the U.S. cloud computing industry. As Amazon has increased its expansion efforts in retail, health care and other fields, more and more traditional industry enterprises have abandoned AWS platform and switched to Microsoft and Google, including Wal Mart, Kroger and other retail giants to avoid their business and data running and storing on the platforms of potential competitors Storage. The final result is that the three powerful cloud computing platforms are in a situation of confrontation,After that, IBM and Oracle were far away from Amazon, Microsoft and Google. Oracle is almost abandoned by the industry.

If we want to make a major breakthrough as soon as possible, or we can't keep away from the first echelon. That's why Oracle has to compete in tiktok's U.S. business. The deal with tiktok is likely to be the only opportunity for Oracle's cloud computing platform to turn around.

Prior to that, tiktok purchased $800 million of cloud computing services from Google in 2019, and this part of demand is expected to continue to grow as tiktok's business expands. Snapchat, which is much smaller than tiktok, signed a five-year $2 billion cloud computing procurement framework with Google in 2017. So tying tiktok is a gold mine for Oracle. However, the cloud computing demand of tiktok's US business is only a part of this gold mine.

As a social media that has sprung up since 2018, tiktok's monthly live users in the United States have reached 100 million, an increase of 800% compared with that in 2018.

User growth of tiktok

Tiktok has an amazing 50 million daily living users in the United States, 50% of which are between 18 and 34 years old. Users with household incomes of more than $100000 account for 37% of all tiktok users, and women have an overwhelming advantage.

Women are young and high-income, the golden subdivision of retail and consumer services. There is no doubt that TikTok holds the key to the future high-value customer base, but now the U.S. government forces TikTok to hand it in.

Oracle's dream is to get this key to get the advantage position of digital marketing. In the field of digital marketing, especially CRM based on SaaS, Oracle has been tightly suppressed by its core competitor, salesforce. Although Oracle has also acquired some digital marketing and analysis products such as moat, it has little influence in the field of digital marketing. If Oracle can find another way to build its own business in 2C (though it's hard), it's a huge opportunity for Oracle.

Google uses its advantages in search engine and 2C Internet service to develop a complete set of digital marketing system and digital marketing and advertising services for enterprises. Google's 2B business and 2C business complement each other. With Google Zhuyu in the front, Oracle's existing cloud computing CRM services, digital marketing services, and tiktok's data resources also have the opportunity to quickly build a new business development road. If you think boldly, Oracle will even have the opportunity to break the monopoly of Google and Facebook in the field of digital advertising, and quickly catch up with Amazon to become the third strongest.

On the other hand, the rapid loss of business income also forces Oracle to make full efforts to develop cloud computing business as its lifeline. Oracle's original corporate customers are choosing to rent server time and software usage rights, and to cut down on software licensing and software service budgets on internal IT systems, which are originally Oracle's core revenue sources.According to flexera's survey of IT management in 2020, Oracle is the company that will cut the most investment in IT department in the future, even higher than its old rival IBM.

Oracle's original software service revenue cheese is rapidly disappearing and being replaced by cloud computing. If it can't seize the opportunity to build up its advantage in cloud computing in time, it will become a backward giant like its old rival IBM.

In an interview with Caijing at the end of June,"If Chinese companies want to develop their overseas business independently, they should at least cut personnel, data, business operations and it systems, leaving only financial connections. In the future, financial ties should also be weakened as much as possible. Local strategic investors should be introduced to share profits, and help in government relations. " At present, tiktok's follow-up development in the United States is on this road.

Li Jun(the writer is an overseas writer of Caijing)

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