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Software giant Oracle issues early warning: TikTok ban will hurt our revenue and profits
- WBOYOriginal
- 2024-06-25 14:10:27806browse
US software giant Oracle warned investors on June 25 that a new law that could ban TikTok in the United States could have a negative impact on its financial results.
The law, signed by President Joe Biden in April, "will prohibit the provision of internet hosting services for TikTok," the company wrote in a regulatory filing on Thursday. Unless its parent company ByteDance takes certain measures. "If we are unable to provide these services to TikTok, and if we are unable to redeploy these capabilities in a timely manner, then our top and bottom lines will be negatively impacted ." The company added that compliance with the new law may also increase expenses .
It is understood that TikTok uses Oracle’s cloud infrastructure to store and process U.S. user data and is regarded by many Wall Street analysts as one of Oracle’s largest customers in this business area. Deutsche Bank analyst Derek Wood said in April that Oracle could lose significant revenue associated with hosting much of TikTok's U.S. operations.
Evercore ISI analyst Kirk Materne estimates that Oracle’s annual revenue from TikTok could be between $480 million and $800 million. The company's unit, which leases computing power and storage space, had sales of about $6.9 billion in the fiscal year ended May 31. Growth in its cloud infrastructure business has driven Oracle shares up 34% so far this year, thanks to demand for artificial intelligence jobs.
Long-standing concerns by U.S. lawmakers that TikTok posed a security threat to U.S. users led to the passage of a law requiring TikTok to find a buyer within 270 days or face being banned in the United States.
TikTok has been dismissing these concerns and has filed a lawsuit to try to overturn the law. As part of its defense over the past few years, TikTok said its partnership with Oracle insulated U.S. data from its parent company, ByteDance. The plan is called "Project Texas," named after the state where Oracle is headquartered.
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