Oracle Landing TikTok Means A Lot Of Things, But Definitely Not An Ad Network

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Sunday night just got exciting, and how! Reports have confirmed that Oracle has won the bid for the U.S. operations of TikTok (a ByteDance company), leaving behind both Microsoft and Walmart from the race. It’s being touted that this deal will not be structured in the typical sense of it being an acquisition but more like a trusted technology partner. The value that TikTok brings to Oracle might offer confusing signals for some, but it’s honestly not a case of catching the wrong fish. Here are five reasons why we at Greyhound Research believe Oracle, as the trusted partner for TikTok in the U.S., maybe the best thing that happened to Oracle in recent times.

1/ First things first, this is a significant win for TikTok’s key stakeholders.

After the White House took a stand on TikTok data being of national security interest and hence the need for it to be hosted locally in the U.S., things have only gotten more uncertain. Only recently, China’s Commerce Ministry and Ministry of Science and Technology unveiled the new export restrictions under which it introduced new restrictions on artificial intelligence technology exports. At Greyhound Research, we believe, irrespective of who gets to own it or host it, apps like TikTok are an economy in their own right. Hence, any looming uncertainty over its fate naturally attracts the wrath of its key stakeholders. These include the brands, the agencies, and, most of all, the content creators.

Albeit the deal with Oracle is yet to be confirmed, certainty on TikTok’s future will help add many layers of comfort to those who are deeply invested in it.

2/ More than anything, Oracle winning this deal with TikTok is a stamp of approval. 

At Greyhound Research, we believe, since this deal between Oracle and TikTok is being overlooked directly by the White House, Oracle winning it will serve as a stamp of approval from the White House itself.

Hence, Oracle will be positioned as a trusted partner for other similar agreements that may surface in the future. In fact, for all we know, other China-based apps may even end up choosing Oracle basis this premise since a similar crackdown on other apps may be in the offing. It might help to know that Oracle only recently won a cloud computing deal with Zoom that was also in the news for its China links and other security issues. Of course, all is well settled on that front – at least for now!

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3/ The obvious outcome, Oracle gets to host TikTok data on the Oracle Cloud. 

That’s probably the most obvious part of this deal, and it takes no genius to figure this one out. Having said that, in recent times, Oracle has been positioning itself rather aggressively for its Public Cloud offerings, and against both Amazon Web Services and Microsoft Azure. The win with Zoom (as mentioned above) and 8X8’s Jitsi are excellent examples of Oracle stamping its presence in the domain.

At Greyhound Research, we believe, if this deal with TikTok does go through, it will act catalyst to Oracle’s ambition with its Cloud offerings that span infrastructure, platforms, and apps.

More specifically, both Zoom and TikTok are consumer apps that are used at significant scale and complexity (customized, live, video content, and feeds), thereby confirming Oracle’s ability to manage complex workloads at scale.

4/ An added benefit, Oracle gets to bolster its aspirations with Marketing Cloud. 

Over the past few years, Oracle has been ramping up presence with it’s marketing cloud offerings. (I wanted to say quietly ramping up, but wasn’t quite sure if quietly and Oracle go in the same breath!).

At Greyhound Research, we believe, while the possibilities with what Oracle can do with TikTok are endless, let’s be clear, it’s highly unlikely Oracle gets access to the source code and related algorithms.

Hence, the contours of this deal with TikTok will revolve around data. One of Oracle’s most wanted product is its Data Management Platform (DMP) that it has pretty much built with its acquisition of BlueKai. Competition in this space includes the likes of Adobe, SAP, Salesforce, and others. Oracle’s DMP essentially allows marketing organizations to personalize campaigns and needs data from apps like TikTok to improve targeting. Other Oracle Marketing Cloud products that stand to gain on TikTok data significantly include Cross-Channel Orchestration, Marketing Automation, Social Marketing, Commerce, Mobile Marketing, Web Content Management, Marketing Analytics, Data Cloud, and Content Marketing.

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5/Let’s be clear, Oracle is not in the media activation business and not in ad networks.

It’s being touted by many that this is an excellent chance for Oracle to create an ad network. In theory, yes, it is. But lest we forget, Oracle is not in the media activation business and works closely with both marketing organizations and agencies that use the Oracle Marketing Cloud suite to refine their marketing outcomes.

At Greyhound Research, we believe it’s highly unlikely that Oracle will want to land itself in the media activation business and compete with other AdTech players with a deep focus on ad networks.

In addition to acquiring BlueKai, Oracle spent US 850 million in 2017 to buy Moat, and about US 400 million in 2018 to buy Grapeshot. As is expected from someone like Oracle, the focus is to provide marketing organizations with software, tools, and, most importantly, data from third-party data sources. The intent shouldn’t be on competing with Google, Facebook, and others, but instead, work with those who use these data sources and be their trusted partner for data and analytics infrastructure.

To put this in perspective, irrespective of which ad network wins, Oracle stands to gain since it is a provider for many of them, if not all.

<strong>Analyst: Sanchit Vir Gogia</strong>
Analyst: Sanchit Vir Gogia

Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Digital & Technology Research & Advisory firm.

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