Oracle warns that a TikTok ban in the US would have disastrous consequences for revenue and the economy.

Oracle has warned investors about the financial impact of a potential US ban on TikTok, as the law signed by President Joe Biden in April states that providing internet hosting services to TikTok is illegal unless certain conditions are met by its China-based owners, ByteDance. In a regulatory filing, Oracle stated that if they cannot continue to provide services to TikTok and cannot redeploy their capacity quickly, their revenue and profits would be affected, along with an increase in operating expenses.

TikTok relies on Oracle’s cloud infrastructure to store and process data of its US users, making it one of the largest customers of Oracle’s cloud services. Analysts estimate that Oracle’s annual revenue from TikTok could be between $480 million and $800 million. The company’s cloud infrastructure business generated around $6.9 billion in sales in the last fiscal year, with demand for artificial intelligence significantly boosting Oracle’s stock price by 34% this year.

US lawmakers have raised concerns about TikTok’s security risks, as China’s legal requirements could potentially compromise the data of US users. The April law gives TikTok 270 days to find a buyer or face a ban in the US, with the possibility of an extension. In response, TikTok has filed a lawsuit to overturn the law and has emphasized its collaboration with Oracle to segregate US data from ByteDance, known as “Project Texas.”

Despite their close working relationship, Oracle has been secretive about its partnership with TikTok and has not previously highlighted the app among its notable cloud customers. When the US government pressured ByteDance to sell TikTok to an American buyer in 2020, Oracle was mentioned as a potential buyer but did not comment on its relationship with the app. Oracle’s future financial performance may be significantly impacted by the outcome of the TikTok ban and the ongoing legal battles surrounding the app’s ownership and security concerns.

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