A US ban on TikTok could hurt Oracle’s business, the software giant said in its annual report.
Oracle provides cloud infrastructure for TikTok, which boasts over 150 million users in the US.
If TikTok is forced to exit the US market, Oracle’s revenues and profits could suffer, as the company may struggle to redeploy the unused capacity quickly.
In April, President Joe Biden signed a bill mandating TikTok’s Chinese parent company, ByteDance, sell the short-video platform within nine months to avoid a US ban.
The company’s ownership structure has been a contention due to concerns that the Chinese government could access user data.
The controversy surrounding TikTok and its Chinese ownership dates back to 2020 when then-President Donald Trump pushed for selling TikTok’s US assets.
This led to negotiations with Microsoft and a proposal for Oracle to provide cloud services to keep TikTok operational in the US.
Oracle provides cloud infrastructure for TikTok, which boasts over 150 million users in the US
TikTok initiated Project Texas to maintain its services for US users on Oracle’s cloud infrastructure within the country.
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As part of this initiative, Oracle would compile the app and deliver it to third-party app stores.
Oracle CEO Safra Catz emphasized the strong relationship with TikTok during a 2022 conference call with analysts.
Despite bipartisan legislation this year targeting TikTok, the company has filed a lawsuit arguing that the law mandating its sale violates First Amendment free speech protections.
Real estate investor Frank McCourt and former Treasury Secretary Steven Mnuchin have shown interest in acquiring TikTok, but no deal has been finalized.
Oracle has not disclosed specific financial details regarding its relationship with TikTok.
However, analysts at Evercore estimated in April that if TikTok generates $16 billion in annual sales in the US, it could spend three to five percent of its revenue on cloud infrastructure, amounting to $480 million to $800 million.
Oracle’s cloud infrastructure revenue for the fiscal year reached $6.9 billion.
TikTok has not immediately responded to requests for comment.
