TikTok has reached an agreement to partner with software giant Oracle, a landmark deal that could redefine how the U.S. and China square off over the reach of their homegrown technology companies.
The deal, which was confirmed Sunday by a source with direct knowledge, comes after the Trump administration pressured TikTok to sell its U.S. business over concerns about the threat to national security. The administration alleged that the company’s ties to China through its parent company, ByteDance, meant it would have to hand over data about Americans if asked by China’s government. TikTok has denied that it would hand over data, which it stressed is stored outside China.
The source would not detail which parts of the technology were being taken over by Oracle, which did not immediately respond to a request for comment Sunday. Microsoft had been considered a front-runner to buy TikTok US until this weekend. Microsoft said earlier that ByteDance had alerted the company that it was passing on its proposal.
Treasury Secretary Steven Mnuchin said in an interview with CNBC on Monday morning that the White House had received a proposal from TikTok for an Oracle partnership.
ByteDance and Oracle still face several hurdles in completing a deal. First, they will need to win approval from the U.S. Committee on Foreign Investment in the United States, or CFIUS, an interagency group that is tasked with overseeing foreign investments in the U.S. A source familiar with the negotiations said both parties believed their deal was structured to satisfy all of the committee’s national security concerns. Even then, the deal still remains vulnerable to the larger geopolitical tensions between Washington and Beijing, and both governments could move to scuttle a deal if they deemed it politically advantageous.
TikTok spokesperson Hilary McQuaide declined to comment, saying the company would not comment “on rumors or speculation.”
The short-form video app burst into popular culture in the past few years, becoming one of the few recent social media upstarts to offer a credible rival to U.S. giants like Facebook and Snapchat. The app, which gives users the ability to create short videos matched to sound or music, has created its own generation of celebrities and countless dance trends.
But its ties to China emerged in the past year as a quiet point of contention in Washington. In November, TikTok was mentioned as a national security threat, and the U.S. government opened an investigation. Since then, Secretary of State Mike Pompeo has said the U.S. was “looking at” banning the app, and President Donald Trump has threatened to do so several times.
“There’s a bit of a reciprocity process going on here, since China doesn’t allow U.S. tech companies like Facebook and Google,” said Paul Triolo, head of global technology policy at the Eurasia Group. “All of these actions are part of an effort by China hawks