The TikTok deal’s real winner is Larry Ellison

Larry Ellison reclines with his feet up in a boat, wearing sunglasses and a red cap.
Larry Ellison reclines with his feet up in a boat, wearing sunglasses and a red cap.
Image: REUTERS/Mike Segar
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As the dust settles on the saga of TikTok’s fate in the US, one company has emerged as a clear winner: Software-maker Oracle has, with help from the federal government, wrested TikTok’s cloud storage contract away from Google, and emerged with a 12.5% stake in the world’s hottest social media app.

These developments are a major coup for Oracle chairman Larry Ellison, the world’s seventh richest person and one of the few prominent Silicon Valley leaders to publicly back US president Donald Trump. The deal offers a much-needed win for his company, which has struggled to make a dent in the cloud computing market while competing against heavyweights like Amazon, Microsoft, and Google.

Ellison made his fortune with Oracle, which began selling computer databases in the late 1970s. At the time, database services were a novel concept: As more and more of the economy moved online, Oracle became one of the world’s biggest data hosts, and snapped up a string of enterprise software firms along the way, including Sun Microsystems, which created the Java programming language.

Today, Oracle still dominates the market for old school databases and business software—but it missed the moment to jump into cloud computing. Competitors have aggressively jumped on the new technology, which is set to supplant Oracle’s traditional databases, and Ellison’s firm has seen its revenues fall as it scrambles to catch up.

As Oracle fought to claw cloud computing market share away from Amazon, its largest competitor, Ellison hosted a major fundraiser for Trump in February, with high-rolling attendees shelling out $250,000 to spend a day golfing with the president. About 300 Oracle employees staged a walkout in protest. Ellison said he supports the president, and Trump called the Oracle chairman a “tremendous guy.” Ellison was reportedly the first person to sell Trump on the benefits of hydroxychloroquine, a discredited Covid-19 treatment the president enthusiastically touted.

Oracle did not respond to an email asking if Ellison’s public support for Trump had anything to do with the company’s successful effort to secure the TikTok deal.

Trump said Saturday he would support Oracle’s deal with TikTok. Becoming TikTok’s “trusted technology partner” means Oracle gains a major new client sure to pad its cloud computing revenues, which have recently made modest gains. The 12.5% stake in TikTok will also help its bottom line: Last year, the app netted its parent company ByteDance $3 billion in profits, and its US operations have been valued as high as $50 billion.

A key component in Oracle’s winning bid to partner with TikTok was its willingness to change very little about how TikTok operates. Rival suitor Microsoft had been seen as the frontrunner to strike a deal—but its talks with ByteDance fell through. In a pointed statement, Microsoft insisted: “We would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation.”

Oracle made no such demands, and very little is set to change. ByteDance, a Chinese firm, will retain 80% control over TikTok, and a new US-dominated corporate board will oversee TikTok’s American operations. That appears to satisfy the Trump administration’s concerns, although the national security vulnerabilities that existed before the deal remain as relevant as ever. Meanwhile, the US and China are still locked in a bitter battle for technological dominance—and both have reason to claim victory in this latest action.