Oracle warns that a TikTok ban would hurt business

A
U.S.
ban
of
TikTok
might
hurt


Oracle‘s
business,
the
software
company
acknowledged
in
its

annual
report
on
Monday.

In
April,
President
Joe
Biden

signed
a
bill
demanding
that
China’s
ByteDance
sell
TikTok
in
nine
months,
or
one
year
if
an
extension
is
approved,
if
the
short-video
company
wants
to
avoid
a
ban
in
the
U.S.
TikTok’s
ownership
structure
has
long
been
a
source
of
tension
in
the
U.S.
due
to
concerns
about
user
data
making
its
way
to
China.

Oracle
provides
cloud
infrastructure
for
TikTok,
which
has
over

150
million
users
in
the
U.S.

“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
said
in
its
annual
report
for
the
fiscal
year
ended
May
31.

Concern
over
TikTok
and
its
Chinese
ownership
dates
back
to
2020,
when

Donald
Trump,
who
was
then
president,
pushed
for
a
sale
or
divestiture
of
the
U.S.
assets.
That
pressure
prompted

deal
talks
with


Microsoft.
Weeks
later,
Oracle

announced
that
it
was
part
of
ByteDance’s
proposal
to
the
U.S.
Treasury
Department
to
provide
cloud
services
that
could
help
TikTok
remain
available
in
the
U.S.

TikTok
moved
forward
with
an
initiative
called
Project
Texas,
designed
to
keep
TikTok
services
for
U.S.
users
running
on
Oracle
cloud
infrastructure
located
inside
the
country.
TikTok

said
Oracle
would
also
be
responsible
for
compiling
the
app
and
delivering
it
to
third-party
app
stores.

“The one thing I can tell you is we have an excellent relationship with the folks at TikTok,”
Oracle
CEO
Safra
Catz
said
on
a
2022
conference
call
with
analysts.

Following
the
bipartisan
legislation
this
year
targeted
at
TikTok,
and
Biden’s
signing
of
the
bill
mandating
its
sale,
TikTok
filed

a
lawsuit
arguing
that
the
law
violates
First
Amendment
free
speech
protections.

Real
estate
investor
Frank
McCourt
and
former
Treasury
Secretary
Steven
Mnuchin
have

expressed
interest
in
buying
TikTok,
but
no
deal
has
materialized.

Oracle
hasn’t
disclosed
details
of
its
financial
ties
to
TikTok.
Evercore
analysts
estimated
in
April
that
if
TikTok
is
generating
sales
of
$16
billion
in
the
U.S.
annually,
it
could
be
spending
3%
to
5%
as
a
percentage
of
revenue
on
cloud
infrastructure,
which
would
work
out
to
$480
million
to
$800
million.
Oracle’s

cloud
infrastructure
revenue
for
the
fiscal
year
came
to
$6.9
billion.

TikTok
didn’t
immediately
respond
to
a
request
for
comment.

WATCH:

Investors
want
to
see
a
sale
of
TikTok,
says
Carnegie’s
Peter
Harrell