Cloud giant Oracle has expressed concerns about a potential ban on TikTok in the United States and how it could impact the company’s financial performance. In its annual report to the SEC, Oracle stated that being unable to provide services to TikTok, along with the inability to redeploy that capacity promptly, could negatively affect its revenue and earnings.
This concern arises from President Biden’s recent legislation, which requires TikTok’s Chinese parent company, ByteDance, to divest its US operations within nine months to avoid a ban in the country. Oracle provides cloud infrastructure services for TikTok’s US operations, and compliance with these laws could lead to increased expenses for Oracle.
The controversy surrounding Chinese ownership of TikTok and data privacy concerns has been ongoing, with former President Trump previously demanding ByteDance to sell its US assets. TikTok selected Oracle as its secure cloud provider in 2020, but the exact percentage of Oracle’s revenue derived from TikTok is unclear. Oracle recently reported a 6% year-over-year revenue increase, indicating steady growth in a sector valued at around $300 billion.
Analysts estimate that TikTok’s annual US sales of $16 billion could result in significant spending on cloud infrastructure, potentially accounting for a substantial portion of Oracle’s revenue. As part of addressing US scrutiny, TikTok introduced Project Texas to emphasize transparency and confirm user data management on Oracle’s domestic cloud infrastructure.
TechRadar Pro reached out to Oracle for further insights and context, but the company has not responded yet. The potential ban on TikTok in the US has raised concerns for Oracle, highlighting the interconnectedness of technology companies and the impact of regulatory actions on their financial performance.
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