Oracle Warns That US Law to Ban TikTok Could Affect Its Finances

TapTechNews June 25 - The US software giant Oracle Corporation has warned investors that a possible new law in the US to ban TikTok could hurt its financial performance.

In a regulatory filing on Thursday, the company wrote that the law, signed by President Joe Biden in April, will prohibit providing Internet hosting services to TikTok unless its parent company, ByteDance, takes certain measures. If we cannot provide these services to TikTok and if we cannot redeploy these capabilities in a timely manner then our revenue and profit will be negatively affected. The company added that compliance with the new law may also increase expenses.

According to TapTechNews, TikTok uses Oracle's cloud infrastructure to store and process US user data and is considered by many Wall Street analysts to be one of Oracle's largest customers in this business area. Derrick Wood of Deutsche Bank (TDCowen) said in April that Oracle could lose most of the revenue associated with hosting most of TikTok's US business.

Kirk Materne of Evercore ISI estimates that Oracle's annual revenue from TikTok could be between $480 million and $800 million. For the fiscal year ending May 31, the company's sales in the department that rents computing power and storage space was approximately $6.9 billion. The growth of the cloud infrastructure business, driven by the demand for artificial intelligence work, has boosted Oracle's stock price by 34% so far this year.

US lawmakers have long worried about the security threat TikTok poses to US users, and the law signed in April gives TikTok 270 days to find a buyer or be banned in the US.

TikTok has been dismissing these concerns and filing a lawsuit to try to overturn the law. As part of its defense in past years, TikTok has said that its cooperation with Oracle isolates US data from its parent company ByteDance. The program is called the Texas Project, named after the state where Oracle's headquarters is located.