Synergy Expected by Combining Core Database Business
Uncertain Approval from President Trump...Expectations for Chairman Allison's Gambler Spirit and Pro-Trump Stance
Possibility of Partnership with Walmart
[Asia Economy Reporter Kwon Jaehee] "Oracle's ambition has just begun."
Contrary to market expectations, when the US IT company Oracle announced a technology partnership with China's ByteDance's video app TikTok, major foreign media gave such an evaluation. It contains the prospect that Oracle, which grew through databases, can stand out in the rapidly growing cloud business based on TikTok. Initially, Oracle was known to acquire TikTok, but ByteDance revised the proposal to a technology cooperation, and Oracle accepted it.
If the technology partnership between the two companies receives approval from the US and Chinese governments, the biggest beneficiary business division for Oracle will be cloud. Currently, the company's cloud market share is in the 2% range, outside the ranking. Although it has aggressively expanded its cloud business by challenging the US Department of Defense cloud project bids and securing Zoom Video as a client this year, it has not overcome its limitations.
Oracle expects synergy from acquiring TikTok. TikTok users number 100 million in the US alone. By combining this with Oracle's core database, it becomes possible to store and analyze massive amounts of data. This enables not only existing data and advertising businesses but also various new businesses. According to market research firm Statista, Oracle's global database market share was about 69% as of 2019, holding an unshakable first place.
This was also influenced by the fact that Amazon, which holds the world's number one cloud market share (41%), is expanding its market and eyeing Oracle's database market as well. It means a new breakthrough was needed as its market dominance was threatened.
US economic media Business Insider evaluated, "Oracle has low recognition among general consumers compared to competitors, but it can overcome this through the technology partnership with TikTok."
However, it is still too early to be relieved. The Chinese government opposed the sale, and it is uncertain whether the US government will approve it. Initially, former US President Donald Trump ordered the complete sale of TikTok's US business. The New York Times analyzed, "Oracle's negotiation proposal is focused on technology partners such as cloud hosting, so it is questionable whether President Trump, who demanded selling all US businesses, will approve it."
Oracle is relying on the friendship of co-founder Larry Ellison and Oracle's business methods in the US. Ellison is considered a pro-Trump figure and is known in Silicon Valley as a 'gambler' with strong guts. Oracle reportedly proposed that ByteDance operate TikTok in the US, but user data would not be transferred outside the US and would be managed by Oracle within the US.
If approved, future partnerships with Walmart are expected to be of interest. Initially, Walmart joined the Microsoft camp and attempted to acquire TikTok, but after Oracle was selected as the final acquirer, Walmart expressed its intention to join Oracle's camp. Walmart announced, "We continue to have interest in investing in TikTok and are in discussions with ByteDance senior officials and stakeholders." Walmart plans to strengthen the e-commerce market, which Amazon tightly controls, through TikTok. Since Oracle has been evaluated as unsuitable as a TikTok acquirer due to less favorable financial conditions compared to Microsoft, the possibility of joining hands with Walmart to overcome financial difficulties is gaining weight.
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