Oracle says the US TikTok ban could hurt its business
Cloud giant Oracle has claimed that a potential ban on TikTok in the US could have a significant financial impact on its business.
In his last yearbook reportreleased for the twelve months ended May 31 to the SEC, the company stated: “If we are unable to provide these services to TikTok, and if we are unable to redeploy that capacity in a timely manner, our revenues and profits would be negatively impacted. ”
Oracle’s concerns stem from President Biden’s recent legislation, which requires TikTok’s Chinese parent company ByteDance to divest its U.S. operations within nine months to avoid a total U.S. ban.
Oracle was concerned about the US ban on TikTok
Oracle, which provides cloud infrastructure services for TikTok’s U.S. operations, commented on the impact of the legislation: “Compliance with these laws could increase our costs if we engage specialized or other additional resources to assist us in our compliance efforts.”
The controversy surrounding TikTok’s Chinese ownership and potential data privacy concerns is not new. In 2020, former President Donald Trump demanded that ByteDance sell its US assets.
TikTok later confirmed that it had chosen Oracle as its secure cloud provider in late 2020, but it is unclear how much of Oracle’s revenue can be attributed to the social media platform. Oracle recently posted a 6% year-over-year increase in fiscal year revenue, marking steady growth in an industry worth about $300 billion.
Evercore analysts estimate that TikTok’s annual U.S. revenue of $16 billion could translate into $480 million to $800 million in cloud infrastructure spending, representing a substantial portion of Oracle’s revenue.
The social media platform also announced Project Texas as a way to address US criticism, underscoring its commitment to transparency and confirming that user data is managed on Oracle’s domestic cloud infrastructure.
Ny Breaking offered Oracle the opportunity to share further thoughts and context, but the company did not immediately respond.