With skepticism swirling around Oracle's agreement to become the "trusted technology partner" of TikTok in the U.S., marketers will be closely watching to see if the enterprise tech firm's new role signals a death knell for the app that has seized the attention of young audiences, or a move that ushers in the realignment of a stagnant social media landscape.
Oracle shepherding TikTok's future in a key growth market is especially interesting since the company has no meaningful stake in social media, and is subsequently free of the scrutiny embattling the category in areas like data privacy. Oracle's lack of the baggage that has weighed on other Big Tech players could serve to benefit TikTok, which is being forced to alter its approach to the U.S. over national security concerns stemming from its parent company ByteDance's roots in China. In other ways, the partnership — which has yet to be finalized, on top of remaining sketchy in the details — puts social media into relatively uncharted waters in the U.S.
Perhaps no other deal in the history of the sector has been this highly politicized, with the fate of a lighthearted video-sharing app becoming a key battleground in a brewing trade war between two global superpowers. Oracle will have to walk a fine in managing relations on several fronts, while TikTok — itself a growing global presence — might have to contend with different working relationships between U.S. partners and other regions of the world.
"The idea of the shared community or digital space is going to be a bit bifurcated when you have a completely independent scenario with the U.S. geography," Nicole Greene, senior director and analyst at Gartner, said. "There are some interesting implications of that being more upfront than it has in the past. Most people think about social as this global thing, and now it's like, oh wait, there's actually two really independent sides of TikTok, in theory."
To better understand why Oracle could be interested in the partnership, it's instructive to look at the other companies that have thrown their hat in the ring to win the app's business, since all have been unusual suitors in their own way. Walmart, for instance, surprised many when it announced it was joining Microsoft's now-rejected bid to acquire TikTok's operations in several English-speaking regions, including the U.S.
The big-box retailer at the time said its interest was primarily rooted in TikTok's potential in e-commerce and advertising, two areas that are critical to Walmart as it invests more heavily in its own media network and online shopping channels to keep pace with Amazon. Oracle is likely putting a lot of stake in similar capabilities since they would serve as a rich source of data that might inform its core cloud-computing and data management services.
"It's an interesting opportunity for [Oracle] to come in and reimagine: What does social look like for people from a data privacy and security perspective, and balance that with all the conversation around the U.S. and China?" Greene said.
"Although Oracle may be kind of an outlier, I'm not shocked by it," Greene added. "It makes sense as organizations begin to spread their own digital footprints."
A deep partnership with TikTok also arrives at a time when calls for alternatives to the major digital advertising platforms like Google and Facebook are growing across several sectors, opening new opportunities for deep-pocketed firms with established technology infrastructure to move in. Meanwhile, TikTok, broadly viewed as an exciting disruptor, is primed to become the next powerhouse in marketing, recently surpassing 100 million users in the U.S.
"[Oracle] don't seem to have other horses in the race. That's kind of cool just in terms of TikTok always having been an independent upstart," Evan Horowitz, CEO of Movers+Shakers, a creative agency that has produced TikTok campaigns for brands like e.l.f. Cosmetics and NYX, said in a recent interview.
While it's not a lock that Trump will clear the deal — which is currently under review by the Treasury Department's Committee on Foreign Investment and does not appear to meet the president's original demand that ByteDance sell the business — Oracle is well-connected to the nation's leader through chief executive Larry Ellison, who is an influential donor. Beyond the political optics of the Trump administration giving this particular partnership the okay, Oracle's status in Silicon Valley might help TikTok position itself as a more mature service and one that's increasingly independent from China — an image it's already fought hard to prop up with a major U.S. expansion in recent months.
"Oracle has a pretty solid reputation for their software and cloud-engineering systems," Greene said. "We've talked about the resurgence in engagement for social platforms, but a lot of what's lacking in the space is trust."
Weighing the benefits
TikTok last year signed a pricey three-year contract with Google Cloud to use the Alphabet arm's cloud services, The Information reported earlier this summer. Oracle retains technology power in similar areas, but trails behind Amazon Web Services, Microsoft Azure, Alibaba Cloud and Google Cloud, meaning hosting TikTok could be a gap closer, as noted in a blog post by Forrester Research.
"[It's] difficult to see how Oracle, as a newcomer to the ad business — albeit with expertise in martech software — can really move the needle from an advertiser perspective."
Media editor, WARC
But if TikTok is able to keep its algorithm as-is — something that was not a given in the case of an acquisition thanks to a new Chinese export law — the benefit for marketers might not be as immediate.
"Oracle can probably most meaningfully make a contribution to the back-end of TikTok's operations, particularly from a cloud-computing and data management standpoint," Alex Brownsell, media editor at the researcher WARC, said over email.
"TikTok's user-facing tech, especially its personalised content recommendation engine, is the best in the business," Brownsell said. "It's therefore difficult to see how Oracle, as a newcomer to the ad business — albeit with expertise in martech software — can really move the needle from an advertiser perspective."
Longer-term, Oracle might be able to fortify the TikTok algorithm as a best-in-class offering, which could be important step for the app as it faces a new wave of competition. Bigger rivals, including Facebook, have recently launched copycat services that have attempted to lure TikTok talent with the promise of bigger reach and paydays. Google's YouTube, another search heavyweight, this week began testing a TikTok lookalike feature called YouTube Shorts in India, according to The Verge.
"What's interesting about Oracle is that they can bring some of that search sophistication ... and potentially give [creators] on TikTok who are doing well even more exposure," Greene said. "Potential for increased search visibility is something really interesting for marketers who are looking to potentially partner with an influencer and get more into that content-creation, video style of TikTok."
However, broader concerns surrounding TikTok's future linger. An executive order issued last month by President Trump will ban transactions with the app starting Sept. 20 if it can't find a U.S. buyer.
Even if the app is allowed to continue to operate as usual, altering the platform too much from the fun, user-generated videos that have helped the app explode in popularity still risks alienating users and the marketers who covet those audiences, analysts said. This was also an obstacle Microsoft faced in vying to acquire the business and meld its outsider status with big corporate culture.
"Are they going to allow the platform to continue to evolve in the organic, creator-owned fashion?" Greene said of Oracle. "For marketers, it's just something they're going to have to keep an eye toward."
"If Oracle takes over US TikTok platform development, it will be the death knell for US TikTok."
The best bid at giving peace of mind to users and marketers seems to be Oracle largely taking a behind-the-scenes role and not attempting to change TikTok's current trajectory as stewarded by its internal teams, which have to date been successful in rapidly expanding the service's audience and advertiser offerings.
"If Oracle takes over US TikTok platform development, it will be the death knell for US TikTok," Forrester's blog post said. "Oracle alone cannot cultivate and innovate the TikTok platform to keep up with the demands of its young, impatient, and finicky users."