Why This Makes Sense On Three Counts

If the Wall Street Journal's article is correct, Oracle has emerged as the winner over Microsoft and Walmart for the acquisition of ByteDance's US operations as TikTok's "trusted tech partner". While many in the industry remain confused on why Oracle would acquire the social media giant's 100 million monthly active users in the US, Constellation has publicly declared three reasons over the past few months:

  1. Battle for key workloads in the cloud wars. As with the win for Zoom and 8X8's Jitsi product, Oracle has shown how the Oracle Cloud Infrastructure can scale to handle the toughest workloads for the public cloud. Video requires a stable and highly elastic cloud. Oracle's next gen cloud infrastructure powered Zoom's amazing growth with minimal glitches. This gives them another massive workload.
  2. Once in a lifetime opportunity to create an ad network. Oracle's assets in third party data via the Oracle Data Cloud and acquisitions such as Blue Kai allow them to enter the ad network business with 100M MAU's monthly active users and potential access to 700 million MAU's worldwide. Oracle's data cloud can access actionable audience data on more than 300 million users and has 30,000 data attributes for direct marketing initiatives. TikTok is the fastest growing social network and ad platform in the US and gives Oracle instant social media credibility.
  3. Tech diplomacy in the US vs China trade wars. Given the geopolitical wars between US and China, this acquisition puts Oracle in the good graces of both governments. China and their investors will breathe a sigh of relief that ByteDance's assets aren't lost. The US government gains a win with the assets in US hands for privacy and national security.

The Bottom Line: Oracle Could Enter A New Era As A Digital Giant

Oracle's skill in winning TikTok is a coup on the cloud front, the ad tech front, and in the geopolitical trade wards. With over 80% of the top 20 ad networks, portals, creatives optimizers, trading desks, and ad brokers leveraging data from Oracle Data Marketplace, TikTok builds on this lead. With Rob Tarkoff, head of Oracle CX at the helm, there is a huge opportunity to compete head on with Google, Facebook, and Amazon for the estimated $600 billion dollar digital ad market in 2024. Add a next generation public cloud infrastructure to the mix and a shrewd management team, Oracle is now entering a new era where digital giants win based on their ability to:

  1. attract massive user bases;
  2. create signal intelligence with rich data;
  3. achieve decision velocity via automation and artificial intelligence; and
  4. deliver digital monetization models

Oracle's success in running TikTok and a consumer business will require a different mindset. If this ends up as just a pure technology partnership with Oracle playing the privacy and data enforcer, then the deal will lose the ad tech appeal. However, this once in a lifetime opportunity is one that Oracle has been building towards over the past five years. If the deal goes beyond just a cloud deal, expect Oracle to emerge as a new digital giant via this acquisition and compete head on with Amazon, Facebook, Google, Microsoft, and Twitter for ad revenue.

Your POV

Ready for Oracle in the consumer world? Do you think TikTok will succeed or fail? Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.

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