Cloud giant Oracle has stated that a possible ban on TikTok in the US could significantly affect its business financially.
In its latest annual report, released for the 12 months ended May 31 to the SEC, the company stated: “If we are unable to provide those services to TikTok, and if we are unable to redeploy that capacity in a timely manner, our revenues and profits would be negatively affected.”
Oracle's concern stems 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 an outright ban in the United States.
Oracle is concerned about the TikTok ban in the US
Oracle, which provides cloud infrastructure services for TikTok's US operations, commented on the impacts of the legislation: “Compliance with these laws may increase our expenses as we hire specialized or other additional resources to assist us with our compliance efforts.”
The controversy surrounding Chinese ownership of TikTok 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, however, it is unclear how much of Oracle's revenue is attributable to the social media platform. Oracle recently posted a 6% year-over-year increase in its fiscal year revenue, marking steady growth in a sector worth around $300 billion.
Evercore analysts estimate that TikTok's annual US sales of $16 billion could translate into spending between $480 million and $800 million on cloud infrastructure, representing a substantial portion of Oracle's revenue. .
The social media platform also announced Project Texas as a way to address US scrutiny, highlighting its commitment to transparency and confirming that user data is managed on Oracle's domestic cloud infrastructure.
TechRadar Pro He offered Oracle the opportunity to share more thoughts and context, but the company did not immediately respond.
