Microsoft’s bid to take over TikTok’s US operations has been rejected by Chinese owner ByteDance putting Oracle in pole position for a deal with the popular video sharing app.
The move comes a week before Donald Trump’s threatened ban on the app – claiming national security risks – is due to come into force.
Mr Trump had ordered the sale of TikTok’s operations in the US, where it has 100 million users.
ByteDance has been in talks to either sell to Oracle or a consortium led by Microsoft and including retail giant Walmart.
But those talks were thrown off track after China updated export control rules last month, giving it a say over the transfer of TikTok’s algorithm to a foreign buyer.
Microsoft disclosed on Sunday that its bid had been rejected.
Instead, news agencies reported, ByteDance will pursue a partnership with Oracle that it hopes will spare it a US ban while also allaying any concerns from Beijing.
TikTok is best known for short video clips that go viral among young people but US officials are worried that user information could find its way into the hands of the Beijing government.
The app has said it would never share such data with Chinese authorities.
Sources told Reuters that ByteDance’s latest proposal would see Oracle become its technology partner and manage TikTok’s US user data.
It was not yet clear whether Mr Trump, who favours a US tech firm owning a majority of TikTok in the US, would approve the deal.
Oracle, whose chairman Larry Ellison is a supporter of the president, has significant technical expertise but no experience in running social media – instead dealing largely with corporate clients.
ByteDance, Oracle and the White House did not comment.
Walmart said it was still interested in investing and that it would talk further with ByteDance and other parties.