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- Experts say that TikTok’s US tie-up with Oracle and Walmart looks unusual on the surface, but might have unexpected benefits.
- The children of Oracle founder Larry Ellison are both film producers, giving a clue as to TikTok’s future direction in the US.
- The Walmart connection also gives TikTok a route into commerce.
- “You can take the top one percent of the talent and content that [TikTok] generates and turn them into films, TV, books, music, theme parks and plush toys,” one expert said.
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The month-long psychodrama of TikTok’s future has had more twists than an average episode of “The Apprentice” and this weekend, seemed to settle on a typically Trumpian finale.
TikTok had earned a stay of execution – but was compelled to buddy up to enterprise giant Oracle to supply its cloud hosting services and retailer Walmart. The two would combined take a 20% stake in a newly-formed IPO-ready company called TikTok Global.
The outcome seems an odd meeting of the minds, with the future-focused TikTok sharing little in common with the legacy tech mindset of Oracle.
And TikTok’s tie-up with America’s largest big-box retailer seems even more curious.
But there could be hidden depths to the deal.
One is that Trump’s allies directly benefit from the president’s interference.
“This is a sweetheart deal for Trump’s biggest tech and corporate donors, who run Oracle, Walmart and Sequoia,” said David Craig, clinical associate professor at USC Annenberg School for Communication, and co-author of a forthcoming book about “wanghong“, China’s social media entertainment industry.
“They get a piece of the fastest growing tech company in the world without paying a thing.”
But the odd dance partners may have business synergy too.
Business financial make money capital trading The Ellison family have connections to Hollywood
Oracle gets a big boost to its cloud computing arm and a politically expedient way for Trump to lambast the big tech companies currently supplying TikTok who he doesn’t like.
Yet Craig added that it’s worth looking at the children of Larry Ellison, Oracle’s founder and chief executive, and their business interests for further insights.
Megan and David Ellison are movie producers, and the owners of Annapurna Pictures and Skydance Media respectively.
A family connection to the platform giving birth to the biggest celebrities of the digital era is a beneficial thing to have — for both TikTok and the Ellisons.
Following in the footsteps of YouTube and its creators, Craig reckons there are three ways TikTok will evolve: through advertising, through product integration, and through exploiting intellectual property valuable to Hollywood.
The third path is one that many thought TikTok could be pursuing when it hired Kevin Mayer, the former Disney executive, earlier this year as CEO of its American operation. In the end, Mayer left the company when the Trump-forced deal reached its nadir.
“You can take the top one percent of the talent and content that they generate and turn them into films, TV, books, music, theme parks and plush toys,” Craig said.
Ellison’s two children “would be ideal members of any new TikTok board or management to leverage their IP on the platform to promote their projects, or to find and build out IP from the platform,” he added.
Business financial make money capital trading Walmart gives TikTok a clear route into commerce
Those plush toys and books could well be sold at Walmart: the retailer’s statement on the completion of the TikTok deal said it would “bring its omnichannel retail capabilities” to the table.
Translated, that means despite Trump’s desperate attempt to remove China from TikTok, TikTok Global may mimic other Chinese entertainment startups and move towards ecommerce — as the Chinese version of TikTok, Douyin, has done.
In 2019, Douyin helped 20 million creators on the platform earn just over $6 billion.
“E-commerce here played an important role, where users have their own stores, [are] able to advertise products in their videos or directly sell through live streams,” said Fabian Ouwehand, a marketing expert who monitors Douyin and TikTok. “It seems that TikTok is going into a similar direction, working directly with Walmart for ecommerce and logistics to enable users to monetize easily on the platform.”
“It’s a gamechanger in efforts to compete not only with Amazon, but China’s faster growing ecommerce platforms, Alibaba, JD, and Pinduoduo,” added Craig.
Whether it’s the path that TikTok’s founder Zhang Yiming wanted to pursue when he set out for the company to be “as borderless as Google” is another question. But the deal, despite the ongoing confusion and disruption, isn’t the end of the world for TikTok.
“As Douyin is a well-known platform for exploration and top funnel conversion, logistics and ecommerce are topics they are not yet that strong at,” said Ouwehand. “Working directly with well-known and experienced e-commerce partners, they create a win-win situation for both sides.”