Oracle Corp. raised concerns that a new law signed by President Joe Biden in April could potentially ban TikTok in the United States and negatively impact its financial results. The law would make it illegal to provide internet hosting services to TikTok unless its China-based owners take specific actions. Oracle, which provides cloud infrastructure services to TikTok for storing and processing U.S. user data, stated in a regulatory filing that the potential loss of revenue associated with hosting TikTok’s business in the U.S. could harm its financial performance.
Analysts estimate that Oracle could generate annual revenue between $480 million and $800 million from TikTok, making it one of the company’s largest clients in the cloud infrastructure business. Any disruption in providing services to TikTok as a result of the new law could have a significant impact on Oracle’s bottom line. In addition, compliance with the law may lead to increased expenses for the company.
The law was enacted amid concerns from U.S. lawmakers about the national security implications of TikTok due to China’s data sharing requirements with its companies. The legislation gives TikTok a 270-day deadline to find a buyer or face a potential ban in the U.S. TikTok has refuted these security concerns and filed a lawsuit to challenge the law’s validity.
Oracle has previously been secretive about its relationship with TikTok and does not publicly list the company among its flagship cloud customers. Despite this, TikTok has highlighted its collaboration with Oracle to keep U.S. user data separate from its Chinese parent company, ByteDance Ltd., through a project named “Project Texas.” Oracle has played a key role in helping TikTok address security concerns raised by U.S. authorities.
If TikTok is eventually sold to a new owner, analysts believe that replacing Oracle as a cloud provider would not be a top priority for the new management. Oracle’s cloud infrastructure business has experienced significant growth, driven by increased demand for artificial intelligence services, which has positively impacted the company’s stock performance.
Oracle did not provide any further comments on the matter. The potential implications of the new law on Oracle’s financial results remain uncertain as TikTok navigates a challenging regulatory landscape in the U.S. amid ongoing concerns about data security and privacy.
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https://finance.yahoo.com/news/oracle-warns-tiktok-ban-dent-184908436.html
