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What is the story about?
Oracle’s stock surged 7% on Friday after the cloud services major emerged as a key player in a consortium set to oversee TikTok’s US business, offering the company a timely boost after months of market uncertainty.
In a memo circulated to employees on Thursday, TikTok CEO Shou Zi Chew said the platform’s US operations will be run through a new joint venture that includes Oracle, private equity firm Silver Lake, and Abu Dhabi-based investment group MGX. The transaction is expected to close on January 22.
The agreement clears a major regulatory hurdle for TikTok, preventing a potential ban triggered by a US law signed by President Joe Biden that mandated divestment of TikTok’s American unit on national security grounds. Former president Donald Trump had earlier extended the deadline for a deal multiple times and, in September, signed an executive order approving a possible divestment plan for China-based parent ByteDance.
Under the arrangement, Oracle will play a critical oversight role, being responsible for auditing and validating that TikTok complies with “agreed upon National Security Terms,” according to the internal memo.
While China has not officially confirmed the deal, Chinese state media reports suggest regulatory alignment. CNBC’s Eunice Yoon reported, state-run outlets quoting a pro-Beijing academic who said the arrangement complies with Chinese law and is “not a sale of the algorithm.”
Market reaction was swift. In a note to clients, Evercore ISI described the development as a “nice win” for Oracle, adding: “We continue to believe the recent pullback represents an interesting entry point with investors that can take a 6-12 month view.”
The TikTok news comes after a turbulent period for Oracle. Shares had fallen sharply amid concerns over heavy AI infrastructure spending and reports earlier this week that talks over a $10 billion data centre deal with Blue Owl Capital had stalled.
Despite recent volatility, Oracle stock is up 8% so far this year, even after a more than 20% pullback over the past month.
In a memo circulated to employees on Thursday, TikTok CEO Shou Zi Chew said the platform’s US operations will be run through a new joint venture that includes Oracle, private equity firm Silver Lake, and Abu Dhabi-based investment group MGX. The transaction is expected to close on January 22.
The agreement clears a major regulatory hurdle for TikTok, preventing a potential ban triggered by a US law signed by President Joe Biden that mandated divestment of TikTok’s American unit on national security grounds. Former president Donald Trump had earlier extended the deadline for a deal multiple times and, in September, signed an executive order approving a possible divestment plan for China-based parent ByteDance.
Under the arrangement, Oracle will play a critical oversight role, being responsible for auditing and validating that TikTok complies with “agreed upon National Security Terms,” according to the internal memo.
While China has not officially confirmed the deal, Chinese state media reports suggest regulatory alignment. CNBC’s Eunice Yoon reported, state-run outlets quoting a pro-Beijing academic who said the arrangement complies with Chinese law and is “not a sale of the algorithm.”
Market reaction was swift. In a note to clients, Evercore ISI described the development as a “nice win” for Oracle, adding: “We continue to believe the recent pullback represents an interesting entry point with investors that can take a 6-12 month view.”
The TikTok news comes after a turbulent period for Oracle. Shares had fallen sharply amid concerns over heavy AI infrastructure spending and reports earlier this week that talks over a $10 billion data centre deal with Blue Owl Capital had stalled.
Despite recent volatility, Oracle stock is up 8% so far this year, even after a more than 20% pullback over the past month.
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