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How ByteDance bypassed US ban, kept Tiktok secret sauce safe

The most valuable asset for ByteDance is the intellectual property (IP) within TikTok and the China-based company


Sentinel Digital DeskBy : Sentinel Digital Desk

  |  16 Sep 2020 7:12 AM GMT

NEW DELHI: The most valuable asset for ByteDance is the intellectual property (IP) within TikTok and the China-based company has successfully offloaded geopolitics while keeping its secret codes safe by choosing Cloud major Oracle as its trusted tech partner.

The algorithmic models at the core of TikTok for content recommendation are continuously refined over a huge data set that will continue to grow.

In an effort to show some transparency, ByteDance recently unveiled details of how these algorithms work.

"This is a massive competitive moat for ByteDance, and this partnership excludes this item. The company must exclude it because the Chinese government updated its regulated catalog for technology export on August 30, and ByteDance cannot sell the core TikTok IP without permission," Jeff Pollard, VP, Principal Analyst, said in a Forrester paper on Tuesday.

That makes a deal with some degree of oversight by a US company friendly with the intel community tolerable if it means continued operations in the US market.

"So, as a short-term measure to avoid the forthcoming ban, this partnership makes a great deal of sense, but it doesn't necessarily end the saga of where TikTok eventually lands," added a Forrester team of analysts in the paper.

The confirmation by Oracle to become a trusted tech partner of ByteDance came on Monday, a day after Microsoft, which was among the frontrunners to seal a deal for TikTok's US operations, revealed that its bid was rejected by ByteDance.

"The announcement is murky at the moment, but the particulars indicate that Oracle and ByteDance will enter into a technology partnership to host the US operations of TikTok. This allows TikTok to escape planned shutdowns and gives the US government some degree of oversight into the operations of TikTok," Forrester explained.

The deal is important for Oracle that is frustrated at being behind the global top four hyperscalers in public cloud revenue (behind Amazon Web Services, Microsoft Azure, Alibaba Cloud, and Google Cloud) and has been vying with IBM to grow its cloud in two dimensions at once: expand its penetration in traditional enterprise and prove its cloud platform's scalability and "hip factor" with well-known brands such as Zoom.

"Nothing is more hip than TikTok at the moment, and TikTok has 100 million monthly active users in the US, putting a check mark by both of Oracle's goals," Pollard noted.

This also gives Oracle access to a (small) monetisation stream that its hyperscaler competitors all possess: owned advertising inventory. (IANS)

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