Microsoft’s bid to take over TikTok’s US operations has been rejected by Chinese owner ByteDance, with database specialist Oracle securing a deal to operate the popular video-sharing app.
The move comes just a week before President Donald Trump‘s threatened ban on the app – claiming national security risks – is due to come into force.
Mr Trump had ordered the sale of TikTok‘s operations in the US, where it has 100 million users.
ByteDance had been in talks to either sell to Oracle or a consortium led by Microsoft, and including retail giant Walmart.
But those talks were thrown off track after China updated export control rules last month – giving it a say over the transfer of TikTok’s algorithm to a foreign buyer.
Microsoft disclosed on Sunday that its bid had been rejected.
It was later confirmed on Monday that ByteDance was to pursue a partnership with Oracle that it hopes will spare it from a US ban while also allaying any concerns from Beijing.
The Chinese firm said the cloud computing specialist would serve as TikTok’s “trusted technology provider.”
The Reuters news agency, citing sources, reported that TikTok would create up to 25,000 new jobs in the US should the White House agree to the partnership.
TikTok is best known for short video clips that go viral on social media, especially among young people, but American officials are worried that user information could find its way into the hands of the Chinese government.
The app has said it would never share such data with Chinese authorities.
Trump: ‘I don’t mind’ if Microsoft buys TikTok
It was not yet clear whether Mr Trump, who favours an American tech firm owning a majority of TikTok in the US, would approve the deal.
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Oracle, whose chairman Larry Ellison is a supporter of the president, has significant technical expertise but no experience in running social media – instead dealing largely with corporate clients.
Its shares leapt more than 5% on news of the planned partnership.