As the Oracle’s TikTok buy-out appears closer to reality, there is skepticism and support for the deal. While some believe that Oracle may not be equipped to buy the social media platform, others believe this may be the right move. What does this potential buy-out mean for marketers?
The social media platform TikTok’s purchase by Oracle seems to be heading toward closure with the American giant getting a nod from the President of the United States of America. From the outset, the deal looks beneficial to both Oracle and ByteDance, the owner of TikTok. TikTok will escape its shutdown in the U.S. owing to data security concerns. On the other hand, Oracle will gain access to rich data of more than 100 million usersOpens a new window of the social media platform. However, some analysts are skeptical about the deal owing to several reasons. Analysts at Forrester also believeOpens a new window that this deal will be a ‘death knell’ for U.S. TikTok. Yet, some people are confident and even believe that Oracle is a better candidate than Microsoft or Facebook.
With the deal yet to be finalized, let us see if it will impact marketers and organizations in any way.
1. Why Some Analysts Are Not Confident About the Deal
A few analysts are skeptical of the value the potential deal may bring to either party owing to a few reasons. For starters, Oracle does not have any meaningful presence in social media. Analysts also believe that the potential buy-out, besides being sketchy in the details, will put social media in uncharted territory in the U.S. Here are a few more reasons why they are not confident.
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Lack of relevant business experience and resources
A few people are skeptical about the benefit of this potential TikTok purchase. One of the major reasons is Oracle’s primary client base involves enterprises. Unlike Microsoft, the company does not have a history of running a major consumer-oriented business. It also does not have experience running a consumer business that faces stiff competition. Plus, it is dependent on ever-changing consumer tastes, especially from a predominantly young user base.
Further, Microsoft sells ads via Bing, Bing ad network, and LinkedIn. Oracle, however, does not have experience running a scalable ad business. Microsoft has heavy investments in internet search and machine learning (ML) and could use them to improve TikTok. On the other hand, Oracle is not considered a tech leader in this space.
Cultural misfit
Another major skepticism surrounds the cultural fit of these two enterprises. Oracle has a more traditional sales-driven culture. Moreover, it does not have a reputation for hiring top technical talent or the willingness to accept short-term losses, which will be important in growing a promising social platform. Analysts believe that if TikTok must thrive under Oracle, the latter should allow the U.S. TikTok team to operate independently. Microsoft did the same with LinkedIn when the corporation bought it.
The ambiguity surrounding the deal
Oracle has a long history of working with the U.S. government and its intelligence community. Oracle’s first client was the Central Intelligence Agency (CIA). The company Oracle is also named after the project, the co-founder, executive chairman, and CTO, Larry Ellison, worked before founding it. Further, Ellison is closely associated with the Trump administration through generous donations. Hence, skeptics see a more political angle than any real benefits to either company involved.
ByteDance will continue to have control of its intellectual property
Though any American entity may buy the popular social app, Chinese ByteDance will still maintain control over the app’s intellectual property (IP). This is because the Chinese government amended its Catalogue of Technologies Prohibited or Restricted from Export on 30 August, 2020. According to this regulation, ByteDance cannot sell its core TikTok IP without permission. The IP consists of algorithmic models that recommend content and are continuously refined over a massive data set that continues to grow. The partnership excludes this IP, and ByteDance will continue to enjoy its most valuable asset. As such, the deal may not help marketers in the short term.
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2. Why Some Marketers Feel Positive About the Possible Acquisition
While some analysts are skeptical about the potential deal, others believe that buying TikTok can positively impact Oracle and marketers.
Access to rich data
Oracle offers cloud computing and data-management services that compete with those of Adobe, Salesforce, and SAP. Buying TikTok can give Oracle access to the massive consumer data TikTok has. According to Oberlo’s TikTok statisticsOpens a new window , the social app has about 800 million users worldwide. Further, after India and China, the U.S. stands third in the number of app downloads with more than 165 million downloads to date. The app has currently an estimated 100 million users in the U.S. With a massive active user base, TikTok is already viewed as the next powerhouse in marketing.
Acquisition of a popular platform such as TikTok may allow Oracle to help companies promote themselves better on the social platform.
Data privacy and security
Len Buzyna, chief technology officer at HGS, believes Oracle wants to acquire TikTok for two reasons: Increase its cloud security reputation and improve its cloud market share.
According to Forrester’s researchOpens a new window , Oracle stands fifth after Amazon Web Services (AWS), Microsoft Azure, Alibaba Cloud, and Google Cloud in public cloud service market share. Forrester analysts believe that the potential acquisition of TikTok will bring Oracle sufficient exposure and visibility as an important cloud player if not adding to its enterprise credibility.
However, the biggest possible benefit organizations are seeing from this potential deal is data privacy and security. Oracle has not been involved in controversies related to consumer data privacy and security in recent years, unlike other Big Tech companies like Facebook. Marketers and organizations believe that by acquiring TikTok, Oracle can establish itself as a protector of user data. Compared to Oracle, many marketers believe Microsoft does not have the necessary security features in its cloud infrastructure.
Trip Chowdhry, managing director of Global Equities Research, believes that it is important to protect user data like how the country protects its citizens. He saysOpens a new window , “Your information as an American citizen is a national treasure. Just as the U.S. protects its biggest monuments, personal information also needs protection. Technology from Microsoft and Facebook is not enough to do that.â€
Buzyna adds, “Oracle establishes its defender-of-data reputation by storing user data responsibly and protecting it from being compromised, but the company also has the opportunity to make users feel comfortable about how that stored data is used. Once a user’s trust is earned, that trust becomes a marketable asset for a company. Oracle now has this chance to position itself as a cybersecurity leader and trustworthy partner. And by extension, Oracle’s marketing partners benefit from this association as well.â€
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Marketers believe that the possible TikTok acquisition has brought data privacy into focus. Data privacy is more critical now as a customer’s trust in corporations to protect and responsibly use their data is declining. Measure Protocol, a person-based data marketplace, recently conducted a surveyOpens a new window in the U.S., Canada, and the United Kingdom about how consumers felt about TikTok’s impact on their privacy and the U.S.’s potential ban. About 51% of the respondents who are concerned about their privacy supported President Trump’s ban on the app.
Oracle’s acquisition of TikTok is expected to make marketers worldwide take data privacy and security more seriously. They may be compelled to be transparent about their data use policy to instill confidence in end users.
What Does the Future Hold for Marketers?
The potential TikTok purchase by Oracle has already received the presidential nod and needs just a few more regulatory approvals to become a reality. With the deal inching closer to reality, both concerns and excitement surround the social platform’s future. While a few analysts are unsure of Oracle’s ability to grow the social media app, others believe that this may provide marketers and organizations the right opportunity to address data privacy concerns.
It is a little too early to say how exactly the deal will impact marketers, one thing is for sure – marketers will be looking at several changes in the coming few years.
What do you think will be the impact on marketers if Oracle ends up buying TikTok? Do share your opinion with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .