President Trump supports Oracle's bid to acquire social media app TikTok. Yahoo Finance’s On The Move panel weigh in.
ADAM SHAPIRO: Akiko Fujita, there used to be a time when Republicans said it was not the business of government to pick winners and losers. But when it comes to TikTok, it seems President Trump did not get that memo. Can you tell us more about what he's saying about Oracle and TikTok?
AKIKO FUJITA: Yeah, these are comments that President Trump made during an address in Arizona yesterday, specifically singling out Oracle's founder Larry Ellison, saying I think he's a tremendous guy. He's a tremendous person. I think Oracle would be certainly somebody that could handle it. And of course, he's talking directly, specifically about TikTok and Oracle's reported bid for the company.
Now, Larry Ellison's relationship with President Trump has been well documented. He held a fundraiser for him earlier this year. Also CEO Safra Catz was on the executive committee for the-- President Trump's transition team back in 2016. And so this relationship could prove to be an asset for Oracle, as it reportedly bids against Microsoft, as well as potentially Twitter for TikTok.
Having said that, there's still a lot of strategic questions about why, in fact, Oracle would bid for TikTok. Oracle, of course, a very enterprise-facing product with software and cloud services. There's no real consumer side to the business. What we do know right now is that they are teaming up, according to "The Financial Times" with Sequoia and General Atlantic, which already have a stake in TikTok's parent company ByteDance.
The big question moving forward, though, is going to be, who can actually pay for TikTok? It reportedly has a valuation of $50 billion in the private market. You look at the cash on hand right now. Microsoft has roughly $136 billion. Oracle ended the last fiscal year with roughly $37 billion in cash. So in that sense, Microsoft could potentially have the upper hand.
DAN HOWLEY: Yeah, Akiko, I wanted to ask, where do you think the relationship between Safra Catz and Trump plays into this? He obviously had his ear during the big showdown, as far as the Jedi project goes with the DOD, that basically lobbying for multiple vendors to get access to that contract rather than the single vendor. It ended up going to Microsoft, but they really didn't want Amazon to end up getting it as well. There was a lot of lobbying back and forth, and then there was some rebuke by the DOD, as far as how Oracle handled that. Do you think that that relationship really is going to help push Oracle ahead of Microsoft?
AKIKO FUJITA: Yeah, I mean, the comments yesterday seemed to suggest that President Trump's relationship with Larry Ellison probably may play a bigger hand in all of this. Having said that, we don't really know how this bid is going to go. I mean, President Trump has said he wants a cut of this deal. He reiterated that yesterday. Whether there are government tools in place to do that is another question as well.
And then, of course, it's going to come down to how the deal is going to be evaluated. We know right not that CFIUS wants this deal that ByteDance had, this acquisition of Musical.ly Number one, they want that unwound because that resulted in the-- what-- TikTok as we know it today. And if, in fact, that doesn't go through, they want TikTok's US operation spun off.
As you know, Dan, there's a lot of technical questions about how that would happen because we talk about specific regions that would need to be spun off from TikTok, the global operation. So a lot of that-- all of those factors need to be considered at this point. But to what President Trump said, he certainly feels comfortable with Oracle and Larry Ellison, given the personal relationship he has.
JULIE HYMAN: Akiko, let's talk about the relationship between the US and China. Because obviously, all of this is a manifestation of that. And we knew that the US-China trade talks did not go on as they had been talked about over the weekend. But what we have now learned is that it's because President Trump said he canceled the talks. He didn't want to do them. So what happens now?
AKIKO FUJITA: So that's what President Trump is claiming right now. So he said in Arizona yesterday, essentially, that he was you the one that called off the talks, that he did not want to talk to China specifically because of China's handling of the coronavirus, which he said was unthinkable. Now, backtrack to where we were last week, we were told there was going to be a meeting on Saturday of last week. Days before that, officials said there was a scheduling conflict that delayed the meeting.
There is no question, Julie, to your point, there are tensions-- heightened tensions between the US and China because of the crackdown on tech, because of Hong Kong, of US Health and Human Services Secretary Alex Azar's visit to Taiwan, which upset the Chinese. Having said all that, the China trade deal, the phase-one deal, has been a relative bright spot in the two countries because Robert Lighthizer has maintained the Chinese and the US are committed to the talks right now. Now when you look at the actual purchases, China is well behind. They are committed to about $142 billion this year. According to the Peterson Institute, they've only purchased about a quarter of the US goods.
Right now, we know there is no talks. There are no talks scheduled or rescheduled right now. But chief of staff Mark Meadows saying that Robert Lighthizer is in consistent contact with the Chinese to fulfill those agreements. So that's as far as this is going to go. And of course, you've got the November elections coming up, and you can expect President Trump to continue to ramp up his rhetoric against China.
JULIE HYMAN: Yes, indeed, a big factor. Thank you, Akiko.