Oracle now appears to be the front runner with founder and chief executive Larry Ellison a friend of President Trump and the President has said he supported Oracle's bid to buy TikTok.

At the centre of negotiations is Australian Vanessa Pappas who took on the role of chief executive at TikTok just two weeks ago.

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However Fergus Ryan, an analyst at the Australian Strategic Policy Institute, cautioned it was unclear what the scope of any deal with Oracle would be. "Oracle is likely to become a trusted technology partner which would seem to suggest that there is not going to be any significant transfer of assets from ByteDance to Oracle," he said. "It will be interesting to see how they propose that they are going to address all the national security issues involved in that case."

Mr Ryan said the spread of disinformation on TikTok was a matter of concern and it was not clear how a transfer to Oracle of TikTok's user base but not its algorithms would counter this concern. "When Beijing puts algorithms like the one TikTok uses on their export control list, that was a clear indication from China that they consider the contents of that to be a question of national security," he said.

TikTok's targeted 'for you' algorithm serves up 15-second videos of users mostly lip syncing, dancing and performing comedic skits.

The app's popularity has soared during the COVID-19 pandemic with more than 2 billion downloads globally and an an estimated 1.6 million users in Australia.

Microsoft posted a statement on its website stating that ByteDance had let Microsoft know it would not be selling TikTok's US operations to Microsoft.

"We are confident our proposal would have been good for TikTok's users while protecting national security interests," the statement said. "To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety and combating disinformation."

Microsoft said it "looked forward" to seeing how TikTok's service evolved in these "important areas".

Dr Belinda Barnet, senior lecturer in media at Swinburne University, said Microsoft was TikTok's obvious purchaser and a partnership with Oracle would be a strange outcome.

"Microsoft is quite right they have the deepest pockets and the most experience in privacy and security functionality," she said. "My immediate thought is that Oracle has won because it has close ties to the Trump administration. It is a large company but it has nowhere near the might and power of Microsoft. It is also a completely new direction for the company."

Prime Minister Scott Morrison has previously said there were no plans to ban TikTok in Australia after security agencies found the Chinese company did not pose serious national security concerns.

Oracle and TikTok declined to comment.