Tuesday, August 18, 2020

Why Would Oracle Want TikTok?

TikTok Logo
Oracle is reportedly in talks to acquire the certain operations of social video service TikTok. 

I'm hearing through the back channel that the move is not being well received within Oracle itself this morning. 

From the Verge

Oracle has expressed an interest in acquiring TikTok, according to the Financial Times, giving Microsoft a potential competitor in its bid to control the Chinese social video app in the US. Larry Ellison’s enterprise software giant has reportedly held preliminary talks with TikTok’s parent company ByteDance already, working with venture capital firms including General Atlantic and Sequoia Capital, and is “seriously considering” acquiring its business in the US, Canada, Australia, and New Zealand.

So why would Oracle acquire a business that is so far out of its market space? 

I've heard speculations from various quarters. It could be motivated by a desire to leverage TikTok's user data to enhance Oracle's marketing products. It could be motivated by a desire to get into a consumer business. It could be motivated by a desire to hurt Microsoft--something that would fit Ellison's competitive nature. 

There's one more possible motivation I haven't heard mentioned, and that is to get TikTok's huge workload for Oracle Cloud Infrastructure (OCI). Oracle's market share lags far behind Amazon, Microsoft, and even Google's. There is a bit of a chicken-and-egg problem facing Oracle, however. Cloud infrastructure providers need large workloads to realize economies of scale, making them price competitive. But how can Oracle achieve that scale? One way is to buy the workloads. And what bigger workload than a video-sharing service? 

This is likely the reason that it offered a deal to host some of Zoom's workloads on OCI. So, it might also be the primary motivation for Oracle to pitch for TikTok. 

Anyone with me?  

1 comment:

clive boulton said...

Two more reasons. TikTok gives Oracle a head start on content addressable databases--the future of big data NewSQL DBMS. Secondly, business communications tend to see adoption by younger demographics on social media platforms that scale well, e.g. YouTube.