A smartphone with the Tik Tok logo is seen in front of a displayed Oracle logo in this illustration taken, Septemeber 14, 2020…
A smartphone with the Tik Tok logo is seen in front of a displayed Oracle logo in this illustration taken, Sept. 14, 2020.

ByteDance, the Chinese company behind the wildly popular video sharing app TikTok, has rejected Microsoft’s bid to buy the app and appears to be leaning toward a deal with investors led by Oracle.  

In separate executive orders issued in August, U.S. President Donald Trump prohibited American individuals or companies from doing business with ByteDance after Sept. 20, and ordered ByteDance to divest its U.S. assets by mid-November.

On Sunday, the New York Times reported that Microsoft’s bid was rejected by ByteDance and that the Chinese company said that Oracle would be its “technology partner.” It’s unclear the terms of the deal being discussed.

Microsoft's corporate headquarters in Redmond, Washington. (Photo: Diaa Bekheet)

In a statement, Microsoft said its proposal “would have been good for TikTok’s users, while protecting national security interests. To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation.”

The fate of TikTok in the U.S. hangs in the balance as it approaches the Trump administration deadline. In recent months, the video app has become a focus of U.S.-China tensions with the administration accusing the company of being answerable to the Chinese government, a claim that TikTok has denied. 

But even with security concerns about TikTok, Americans have continued to download the app. By end of first quarter 2020, TikTok saw more than 300 million downloads in the U.S., according to Go.Verizon’s data.  

Microsoft together with Walmart pursued a deal with ByteDance. A second group of investors led by Oracle emerged as a possible bidder. Oracle is one of the few Silicon Valley firms with top executives who have held fundraisers for President Trump. 

As the negotiations progressed, the Chinese government changed its export rules stopping TikTok from selling its valuable recommendation algorithm, dubbed “For You,” which queued up the next video for a user to watch. 

It’s unclear if any deal with Oracle would involve the algorithm.