Larry Ellison’s wacky TikTok plan exposes Oracle’s glaring problem

Larry Ellison

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Larry Ellison, the billionaire who co-founded software giant Oracle in the late 1970s, has a long history of kooky but wicked-smart ideas.

Long before cloud computing was a thing, for instance, Ellison proselytized the premature notion of a network computer. Later he picked up a disgraced ex-computer hardware CEO, the late Mark Hurd, and made him an Oracle selling machine. Then there was the time a few years ago when Ellison seriously considered swapping a giant chunk of Oracle stock for SoftBank’s stake in Chinese e-commerce giant Alibaba. This never-before-reported gambit didn’t see the light of the day because Oracle’s board of directors squashed it. Given how much Alibaba’s stock has outperformed Oracle’s, it would have been a hell of a trade. But that’s another story.

All this talk of Ellison’s bold if bizarre moves is highly relevant now because of Oracle’s increasingly quixotic quest to grab a piece of TikTok, the Chinese-owned dance-video phenomenon beloved by youngsters of all ages.

Why and how Oracle, an old-school maker of business-to-business software, wants to involve itself at all with TikTok, which makes money selling advertising, is a convoluted brew that combines Trumpian flights of authoritarian fancy, geopolitical maneuvering, and Silicon Valley competition. In brief, earlier in the year the now-outgoing president threatened to ban TikTok if its owner, China’s Bytedance, didn’t sell it to a US entity. (The Trump administration contends valuable data on American behavior could end up in the hands of the Chinese government.) Microsoft seemingly had a deal in place until a consortium of Oracle, Walmart, and multiple existing Bytedance investors snatched TikTok away with a competing bid. (Oracle’s proposed ownership stake is 12.5%.) That deal, never blessed by Chinese authorities, is on ice now after a deadline to complete it was extended Thursday by the US government.

All these global machinations have obscured the reason Oracle finds itself in the middle of this brouhaha in the first place. The company undoubtedly got an edge because Ellison, the company’s chairman and chief technology officer, and CEO Safra Catz have cozied up to Donald Trump. Lost in the noise, however, is Oracle’s strictly commercial motivation. For years, the company has been trying desperately but with limited success to break through in the market for cloud services that is dominated by Amazon and, to a lesser extent, by units of Microsoft and Google. Oracle’s share of that market is less than 1%, and the $45 billion in annualized revenues Amazon Web Services alone pulls in is more than 100 times bigger than Oracle’s cloud sales.

A deal that transferred TikTok’s fast-growing account from its current provider, Google, would suddenly make Oracle a player.

This matters because after spending most of the last half decade trying to get into the game, Oracle has but one marquee customer, Zoom Video Communications. It’s not even an exclusive relationship, but that doesn’t stop Oracle from crowing about it at every turn. This week Ellison claimed during an online event that …read more

Source:: Business Insider


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