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There’s a good reason I quickly dismissed the possibility of Oracle buying TikTok: I am not an investment banker.
Oracle is not a consumer company. “Oracle provides products and services that address enterprise information technology (IT) environments,” is the first line in its annual report. The word “enterprise,” a business term for business entities, as opposed to people, appears 34 times in the report. “Consumer” appears three times, none of them in conjunction with Oracle’s own business.
Among other things, Oracle is an also-ran in the business of cloud-computing services, a market dominated by Amazon Web Services (AWS) and Microsoft’s Azure service. TikTok’s U.S. business doesn’t generate a ton of revenue yet, but it is a big buyer of cloud services from Google Cloud, another meg-cap contestant in the cloud wars. Oracle, by buying TikTok, would add to its smallish customer list that includes videoconferencing champ Zoom, which also buys from AWS.
Microsoft, though not a consumer champion—see Bing, MSN, and so on—has a longstanding relationship with consumers, especially with its Xbox gaming and Windows software businesses. It also sees an opportunity to transfer TikTok’s cloud usage to Azure.
Getting back to how a banker sees this, imagine you are private-equity-slash-VC firms KKR, General Atlantic, SoftBank, Hillhouse Capital, and Sequoia, the big investors in TikTok owner ByteDance. The president of the United States has bizarrely forced ByteDance to sell, Microsoft has emerged as the favored bidder, and you’re about to be forced to accept what Microsoft offers. A banker calls with a great idea: Sell 15 to 20% of TikTok to Oracle, with private-equity investors, including yourselves, owning the rest, and value the company at a higher price than Microsoft. TikTok, under ex-Disney honcho Kevin Mayer, already is set up to run as an independent business, so Oracle’s lack of consumer experience doesn’t matter. Oracle gets the cloud revenue and otherwise minds its own business. And you get a higher price for your forced sale.
My old pal Jim Cramer, now a self-described “Jimmy Chill” who doesn’t care if The New York Times claims his reporting as its own, presented much of this hypothesis on CNBC Monday, though I confirmed elsewhere that this is how Oracle is thinking about it. (Oracle declined to comment.)
It’s an upside-down world where a dealmaker-in-chief helps bidders who are friendly with him (Oracle cofounder Larry Ellison and CEO Safra Catz) in a multi-billion-dollar, cross-border transaction. One constant: It’s good to be a banker.
Adam Lashinsky
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
Sleeping in the bed you made. U.S. District Judge Yvonne Gonzalez Rogers heard arguments from Apple and Epic Games on Monday afternoon and decided to force both companies to buy us all a pony. Just kidding. Saying she didn't see a "slam dunk" for either side, Gonzalez Rogers ordered Apple to reinstate Epic's developer account while litigation was ongoing though not demanding the return of Fortnite to Apple's app store. Why not? "Epic Games has not yet demonstrated irreparable harm," she wrote. "The current predicament appears of its own making."
When it rains it pours, prospectus edition. I don't know if they have some secret gate at the Securities and Exchange Commission that accidentally flew open on Monday to let all the unicorn IPOs out or what, but it was a veritable stampede for people who like to read the fine print on Monday. Among the offering documents released were those from cloud database developer Snowflake, workplace software maker Asana, cloud manager Sumo Logic, game developer Unity Software, telehealth platform Amwell, and JFrog, which develops software to help software developers. Asana is going to do a direct offering, but the rest appear headed for traditional Wall Street underwriting deals. None of the six reported being profitable yet. Stay tuned for Gandalf's, I mean Narsil's, no, I mean PALANTIR's filing any minute, as it has already leaked. Damn, those Silicon Valley Tolkien stans are the worst.
You're not my homeland anymore. Among already public companies, Dow Jones shook up the Dow Jones Industrial Average, swapping out Pfizer for Amgen, Raytheon for Honeywell, and ExxonMobil for... Salesforce? I guess data really is the new oil.
Watching the detectives. Cybersecurity firm Palo Alto Networks is making some moves. The company on Monday announced the $265 million acquisition of forensics consulting firm Crypsis Group. Palo Alto also reported its quarterly revenue rose 18% to $950 million, better than analysts expected. Shares of Palo Alto, which have gained 15% this year, slipped 3% in premarket trading on Tuesday. In other M&A news, Apple acquired Spaces, a virtual reality producer spun out of DreamWorks Animation almost five years ago. And in un-M&A news, SoftBank-owned chipmaker ARM, which is on the block itself, canceled the spinoff of its Internet of Things units.
I'm walking on sunshine. Probably none of today's news items will matter much in a decade or so, but this one might: researchers at the University of Cambridge built a device that turns sunlight, carbon dioxide, and water into fuel. As reported in the journal Nature Energy, it's a step towards artificial photosynthesis and the end of fossil fuels. Maybe. Some day.
FOOD FOR THOUGHT
The Jeffrey Epstein scandal revealed a deep rot in some of the most revered institutions in the country and highlighted multiple societal problem, Harvard history professor Naomi Oreskes notes in an essay for Scientific American. She makes the point that "letting the rich pay for science that interests them is a bad idea—even if they aren’t convicted sex offenders."
What made it even worse was that Epstein was a latter-day eugenicist whose interests were tied to a delusional notion of seeding the human race with his own DNA. Given this stance, it is particularly disturbing that he focused his largesse on research on the genetic basis of human behavior. Human genetics is an ethically sensitive and intellectually contested domain where it behooves us to ensure that the highest standards of scientific rigor are in place and that nongenetic explanations for behavior are given a fair chance to compete.
Scientists might claim that Epstein's money in no way caused them to lower their standards, but we have broad evidence that the interests of funders often influence the work done.
ON THE MOVE
Longtime Bezos lieutenant Jeff Wilke, the "other Jeff," is retiring early next year and will be replaced as CEO of Amazon's consumer side of the company by logistics wiz Dave Clark... Amazon also named Alicia Boler Davis to its senior leadership group, the S-team, the first black woman in the group. The longtime GM veteran joined the company last year as vice president of global fulfillment... Amazon and Airbnb veteran Vinayak Hegde this month joined drug delivery startup Blink Health this month as COO and president... Alphabet's Wing effort named David Kunst, who joined from Lyft, as head of operations. Former COO Faisal Masud has left the company... The Trump administration’s chief information security officer, Grant Schneider, is departing for the private sector to become senior director of cybersecurity services at law firm Venable... Facebook's chief marketing officer Antonio Lucio will leave next month after two years at the company. Lucio, who also ran marketing at HP and Visa, plans to focus on improving diversity in the marketing and ad business... Speaking of advertising, ad giant WPP nabbed AT&T's chief business officer, Kirk McDonald, as CEO of North America for its GroupM unit.
IN CASE YOU MISSED IT
As a new school year begins, Zoom endures a 4-hour outage By Andrew Nusca
As Apple stock tops $500, bulls cite these key reasons it could still go higher By Anne Sraders
Fitbit debuts new smartwatches that tracks how stressed the owners are By Aaron Pressman
Brynne Kennedy could be the first female tech founder to serve in Congress By Emma Hinchliffe
Here’s how much these tech giants are making in profit per employee By Jonathan Vanian
TikTok reveals new stats in court filing—including the claim that one third of Americans use the platform By Jeff John Roberts
Why 2020 might be the year cryptocurrency goes mainstream By Catherine Coley
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
Sure, you have a personal yacht to carry you across the ocean, but what about a flying yacht to carry you across the sky? A couple of startups and aeronautics firms are working on bringing newly designed blimps to market for personal use. Up, up and away.
Aaron Pressman
