You’ll need to con­sult an or­a­cle to find TikTok vic­tor

Fight for the Chi­nese so­cial me­dia app’s in­ter­na­tional arm just got fiercer as bil­lion­aire Larry El­li­son joins Bill Gates in the run­ning

The Daily Telegraph - Business - - Business Comment - Robin Pagnamenta

He’s been de­scribed as a con­trol freak and he once hired pri­vate in­ves­ti­ga­tors to rum­mage through Bill Gates’s rub­bish bins. But dur­ing an ex­tra­or­di­nary rags to riches ca­reer, Larry El­li­son has rarely had re­grets. Nor is he fond of los­ing. That’s why his lat­est gam­bit – as a late en­trant in the fran­tic scram­ble to ac­quire TikTok’s in­ter­na­tional busi­ness – should be taken se­ri­ously.

Or­a­cle’s emer­gence as a po­ten­tial suitor for the US, Cana­dian, Aus­tralian and New Zealand as­sets of the Chi­nese-owned so­cial me­dia app, fol­low­ing a shake­down by the White House, has left many in Sil­i­con Val­ley scratch­ing their heads.

Af­ter all, quite how Or­a­cle would seek to in­te­grate the so­cial me­dia app into its ex­ist­ing busi­ness – flog­ging en­ter­prise soft­ware and data­bases that sit at the heart of big or­gan­i­sa­tions’ IT sys­tems – is any­one’s guess.

TikTok, a short video stream­ing app beloved of teenagers and twen­tysome­things who use it to share vi­ral dance rou­tines, pranks and com­edy sketches, is hardly an ob­vi­ous fit.

How­ever, Larry El­li­son, a col­lec­tor of mil­i­tary jets and tro­phy homes, is not the sort of man to al­low such pesky de­tails to get in the way.

The red-blooded soft­ware ty­coon may have zero ex­pe­ri­ence run­ning con­sumer-fac­ing busi­nesses but he is ea­ger to rein­vent Or­a­cle for the fu­ture, while also de­fy­ing crit­ics who say the com­pany missed the boat on the cloud com­put­ing boom, leav­ing it stranded in a Nineties time warp.

Set­tling scores

Above all, ac­quir­ing TikTok would of­fer El­li­son the chance to set­tle scores with his arch ri­val Mi­crosoft – seen as the front-run­ner to ac­quire TikTok – and his neme­sis Bill Gates.

With a for­tune of $69bn (£52bn), El­li­son, the world’s sixth rich­est per­son, is hardly down on his luck, but it’s fair to say the for­tunes of Or­a­cle and Mi­crosoft have di­verged sharply in re­cent years. Once neck and neck in the bit­terly con­tested soft­ware wars of an ear­lier era, over the past decade Or­a­cle’s rev­enues have stag­nated.

Its $169bn mar­ket value is chunky enough but it pales in com­par­i­son to the mighty Mi­crosoft, which is now nearly 10 times big­ger at $1.6 tril­lion, hav­ing niftily surfed the mass shift into cloud com­put­ing un­der Satya Nadella, the chief ex­ec­u­tive.

It’s a trend that has only ac­cel­er­ated dur­ing the pan­demic as more and more busi­nesses switch to dig­i­tal tech­nol­ogy to strengthen their re­silience.

Mi­crosoft’s shares have surged by about one third in value this year, pro­pelled by strong growth from its Azure cloud com­put­ing arm, which re­ported a 47pc rise in rev­enues in the three months end­ing on June 30.

Or­a­cle is now chas­ing the cloud boom too, but is trail­ing a long way be­hind. Its shares – at $55.18 a piece – have largely flat­lined this year, prompt­ing El­li­son, its chair­man, to con­sider a po­ten­tially rad­i­cal shift in direction.

Ei­ther way, Mi­crosoft’s re­cent run of suc­cess is un­likely to have pleased Mr El­li­son.

The vis­ceral feel­ing be­tween the two com­pa­nies is per­haps best summed up by an in­ter­nal email sent by one Mi­crosoft ex­ec­u­tive, which emerged dur­ing a his­toric dis­pute and which talked of its wish to “kill … Or­a­cle”.

With ex­tremely deep pock­ets, plenty of ex­pe­ri­ence run­ning con­sumer busi­nesses and the ex­per­tise to pull off a deal to ac­quire TikTok – which would in­volve the highly com­plex trans­fer of all the Chi­nese group’s data to its own sys­tems within a year – Mi­crosoft is the more ob­vi­ous buyer.

‘Au­da­cious move has left many in Sil­i­con Val­ley scratch­ing their heads’

Trump card

Or­a­cle’s pro­posal to jointly in­vest with ex­ist­ing in­vestors in TikTok’s par­ent, Byte Dance, in­clud­ing Gen­eral At­lantic and Se­quoia Cap­i­tal, looks less likely.

But El­li­son may hold a trump card – his friend­ship with the US pres­i­dent, who this week said Or­a­cle would be a “great com­pany” to con­sum­mate a deal.

Sil­i­con Val­ley ty­coons who openly sup­port the Trump White House are few and far be­tween but in Fe­bru­ary, El­li­son held a fundraiser for the pres­i­dent at his pri­vate golf course and es­tate in Cal­i­for­nia.

As well as a taste for flashy life­styles and pri­vate air­craft, the two New York na­tives (El­li­son was born in the Bronx and Trump grew up in the neigh­bour­ing borough of Queens) share other things.

One is a pref­er­ence for hard­ball ne­go­ti­at­ing tac­tics which could come in use­ful in clinch­ing a TikTok deal.

El­li­son’s un­com­pro­mis­ing ap­proach shouldn’t be un­der­es­ti­mated.

Hours be­fore their wed­ding, El­li­son once fa­mously sur­prised one of his four ex-wives with an un­usual gift: an 11 page prenup­tial agree­ment drafted by his lawyer. She promptly signed, al­though the mar­riage didn’t en­dure.

Or­a­cle will be hop­ing to have more luck with an eleventh hour union with TikTok – of­fi­ci­ated by Pres­i­dent Trump. It’s no slam dunk but stranger things have hap­pened.

Ben Mar­low is away

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