ByteDance, the China-based owner of TikTok, is facing potential consequences from the US ban on the popular social media platform. Oracle, who provides hosting services for TikTok, has warned that the ban could impact its revenue and profits. The US Senate passed a bill in April requiring ByteDance to transfer its US operations or face a ban due to concerns about potential spying and misinformation spreading.
ByteDance has until January 25, 2025 to comply with the legislation, but has filed a legal challenge arguing it violates First Amendment rights. Oracle, chosen as TikTok’s cloud technology provider in 2020, now faces uncertainty if TikTok is shut down. The company has stated in its annual report that the threat of a TikTok shutdown poses a risk to its results, as providing hosting services to TikTok is a significant source of revenue.
Analysts estimate that TikTok is one of Oracle’s largest cloud customers, with potential revenue of $480 million to $800 million annually. ByteDance has been working on a clone of its algorithm specific for the US market to ensure content remains separate from the Chinese version. Advertisers representing TikTok’s top clients are preparing contingency plans as the deadline for a potential ban approaches, including adding termination clauses to their contracts.
TikTok generates around $16 billion in sales annually in the US, primarily from advertising. The situation highlights the broader impact of the ban not only on ByteDance but also on companies like Oracle who are connected to TikTok’s operations. The legal battle and uncertainty surrounding the fate of TikTok in the US continue to unfold, with potential repercussions for both the company and its partners.
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https://www.theregister.com/AMP/2024/06/25/oracle_fears_that_us_tiktok/