[News Inside] From Slum Orphan to Billionaire... The Hidden Key Player Behind the TikTok Deal

Larry Ellison Oracle Chairman

▲Larry Ellison Oracle Founder

[Asia Economy Reporter Kwon Jae-hee] TikTok, the Chinese video-sharing social networking service that was on the verge of being banned in the United States, has finally concluded negotiations with Oracle. After a tense tug-of-war between China, which sought to prevent its core artificial intelligence (AI) technology from being taken to the U.S., and the U.S., which refused to hand over data information to China citing national security concerns, the negotiations were ultimately settled. At the center of this high-stakes negotiation, which remained tense until the very end, was Larry Ellison, Chairman of Oracle.

Oracle was a latecomer in this acquisition negotiation. Microsoft (MS) was the first to express interest in acquiring TikTok. Since Oracle entered the fray belatedly and considering factors such as funding, the market largely expected MS to acquire TikTok. However, defying all expectations, Oracle was selected as the preferred negotiation partner, a result attributed to Ellison’s gambler-like temperament.

Ellison is known in Silicon Valley as a "gambler." To win, he does not hesitate to ally with enemies or turn yesterday’s allies into adversaries. He openly targets competitors and spares no means or methods to secure victory. His direct confrontation with MS is no exception. Just a year ago, Oracle announced expanded cooperation with MS to counter Amazon, the undisputed leader in the cloud market, but when it came to acquiring TikTok, Oracle immediately turned into an adversary. This episode reveals Ellison’s gambler-like character.

His gambler temperament is also related to the environment in which he grew up. Born in 1944 in a poor neighborhood of the Bronx, New York, he was abandoned by his birth mother when he was just nine months old. Raised with great care by a devout Jewish couple who adopted him, he began to drift after his adoptive mother passed away during his sophomore year of college. After dropping out of college twice and searching for work, he moved to California, where he laid the foundation for what would become Oracle.

At a software company called Ampex, he was assigned to build a database for the U.S. Central Intelligence Agency (CIA). The project was named "Oracle." While working on this project, he observed the massive amount of data scattered chaotically after the spread of computers and conceived the idea of founding a database management system company to manage data systematically. Together with two colleagues he met at Ampex, he established Oracle with initial capital of 20 million won, growing it into a global company with a current market capitalization of $179.678 billion (approximately 209 trillion won).

[Image source=Reuters Yonhap News]

Ellison, who literally built the giant Oracle with bare hands, has continuously taken gambles to win. He has not hesitated to engage in lawsuits with major companies such as MS, Google, and HP, and recently participated in bidding for the U.S. Department of Defense’s cloud project. Interestingly, although the Department of Defense’s project was expected to be awarded to one of the leading cloud market players like Amazon or MS, Oracle participated in the bidding and even filed a protest lawsuit. Recently, Oracle secured a contract with Zoom Video, demonstrating the potential of its cloud business.

The TikTok acquisition battle is also interpreted as a gamble by Ellison to win. Oracle’s core strength lies in its database. According to market research firm Statista, Oracle held an unchallenged 69% share of the global database market as of 2019. However, Ellison harbors ambitions to develop cloud computing into Oracle’s core competitive edge. Given the rapid growth of the cloud market and the necessity of using the cloud to store data more economically and efficiently, this is a strategic move. Moreover, Amazon, which holds the top global cloud market share at 41%, is expanding its market and eyeing Oracle’s database market, which is another reason Ellison is aggressively targeting the cloud business. Oracle’s cloud market share remains outside the top ranks at around 2%.

However, Oracle clearly has its limitations. Compared to Amazon, MS, and Google, which have focused on enterprises and dominate the cloud sector, Oracle’s brand recognition is weaker.

For this reason, TikTok was even more crucial for Ellison. Through TikTok, a consumer-facing business, he plans to boost Oracle’s brand recognition and accelerate growth in the cloud market. Additionally, to store the massive amount of data generated by TikTok users after separating TikTok’s U.S. operations from ByteDance, Oracle needs TikTok. In other words, TikTok would become a major customer of Oracle Cloud. By securing TikTok users’ vast data, Oracle can also expect synergy effects in its existing data and advertising businesses.

U.S. economic media Business Insider evaluated that "Oracle, which has weaker brand recognition among general consumers compared to competitors, can overcome this through TikTok."

Meanwhile, Ellison is also known as a pro-Trump figure. He is one of the few Trump supporters in Silicon Valley, traditionally a Democratic stronghold. Earlier this year, he hosted a fundraising event at his home in California to support President Donald Trump, and in April, he joined the White House advisory council for economic recovery. The Wall Street Journal (WSJ) reported that Ellison’s friendship with President Trump likely influenced Oracle’s selection as the preferred negotiation partner over MS in the TikTok sale talks.

President Trump himself has expressed admiration for Larry Ellison, stating, "He has been a great person for a long time and I respect him very much."