“Dark Horse” scenarios, in which an unlikely candidate comes from the back of the pack to win it all, are very rare in real life. However, when it comes to Oracle’s acquisition of TikTok’s US business that’s exactly what happened. After various blockbuster brands, such as Facebook and Microsoft, were named as potential acquirers, it was the lesser-known, albeit still gigantic, computer technology company that partnered with Wal-Mart to win the deal.

Invest in Oracle

The Backdrop: The US and China Trading Blows

Anyone who has been following recent global news is aware of the ongoing tensions between the United States and China. Both countries have been exchanging financial punches over the past few years. News regarding new import tariffs, or another trade negotiation gone wrong, are quite frequent, and it seems that the trade war could go on forever.

One high-profile act taken by Trump was limiting the ability of Chinese tech companies to do business with their US counterparts. Citing “security concerns,” the US administration basically crippled many potential tech partnerships between private companies on both sides. 

The TikTok Time Bomb

This attitude on Trump’s side was demonstrated in August, when the US President gave ByteDance, the parent company of popular social media app TikTok, a 90-day ultimatum. Basically, Trump told ByteDance to sell TikTok’s US business, or pack up and leave. With 100 million monthly users in the US on the table, TikTok became a hot commodity for American social media and tech companies. 

The first high-profile bidder was Microsoft, which reportedly offered as much as $50 billion to acquire TikTok’s US business. While other tech giants, such as the social savvy Facebook, were also in the running, the general atmosphere in markets was that Microsoft was the company that would end up with TikTok in its hands. As it turns out, that was a wrong assumption. 

Oracle sees the Future

When discussing social media, many names come to mind: Facebook, Twitter, Pinterest or even Google. However, no one ever says “Oracle” in that regard. While well known in the tech ecosystem, Oracle is not a household name and has definitely not been synonymous with “social media” as some of the other companies mentioned earlier — until now. 

As it turns out, Oracle was also in the running all along and despite conducting most of its past business in realms other than social media, the company has social media dominance in its crosshairs. Behind the scenes, Oracle has been in talks with ByteDance, trying to swoop in and take the prize. 

On September 14th, exactly one month after Trump’s ultimatum was put in place, TikTok announced that it was rejecting Microsoft’s bid and will instead partner with Oracle, selling its activities in the US to the computer technology giant. To carry out the acquisition, Oracle partnered with retail giant Wal-Mart, which will now have an incredible platform on which to approach younger would-be shoppers. 

Invest in Wal-Mart

Waiting for the dust to Settle

The pieces are lined up and the ultimatum is far from expiring, so now all three parties involved have to do is wait for government approval. ByteDance has already applied for an export license from the Chinese government, while Oracle and Wal-Mart are awaiting official confirmation after President Trump said he approves the deal “in concept.” 

After the bureaucratic process is concluded, Oracle and Wal-Mart will own a total of 20% of TikTok, holding 12.5% and 7.5%, respectively. And, when the new US version of TikTok rolls out, most likely unbeknownst to its American users, Microsoft and Facebook will have to sit on the sidelines and watch as their newest social media rival wins this race. 

Start Investing with eToro