Cloud giant Oracle has claimed a potential ban on TikTok in the US could significantly impact its business financially.
In its latest annual report, released for the 12 months ending May 31 to the SEC, the company stated, “if we are unable to provide those services to TikTok, and if we cannot redeploy that capacity in a timely manner, our revenues and profits would be adversely impacted.”
Oracle’s concern stems 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 total US ban.
Oracle worried about TikTok US ban
Oracle, which provides cloud infrastructure services for TikTok’s US operations, commented on the legislation’s impacts: “Compliance with these laws may increase our expenses as we engage specialized or other additional resources to assist us with our compliance efforts.”
The controversy surrounding TikTok’s Chinese ownership and potential data privacy concerns isn’t 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’s unclear how much of Oracle’s revenue is attributable to the social media platform. Oracle recently posted a 6% year-on-year increase to its fiscal year revenues, marking steady growth in a sector that’s worth around $300 billion.
Evercore analysts estimate that TikTok’s annual US sales of $16 billion could translate to $480 million to $800 million in cloud infrastructure spend, representing a substantial portion of Oracle’s income.
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 offered Oracle an opportunity to share further thoughts and context, but the company did not immediately respond.
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