Oracle has included a warning in its annual report that the TikTok ban could impact its cloud revenue and profits.
Oracle has been hosting TikTok since 2020, at least in part, since former President Donald Trump signed an executive order banning US companies from doing business with the Chinese platform.
At the time of that initial executive order, several companies came forward to help, with Microsoft offering to acquire the company, and Oracle then teaming up with Walmart proposing to spin out "TikTok Global' from ByteDance to satisfy Trump's policy.
A core part of that deal was to see TikTok migrate to Oracle Cloud. Regardless, TikTok Global never came to pass and the executive order was dropped when Trump lost the next election.
Concerns about a potential ban didn't disappear, however, and in 2022, TikTok began to move US data to Oracle Cloud with plans for a full migration. In 2023, the company announced 'Project Texas' which was a $1.5 billion commitment to hand control of data to Oracle. TikTok has made similar moves in Europe to avoid similar situations.
Despite these efforts, in April 2024, President Joe Biden passed a law that would force TikTok's Chinese owners to sell the US operations or face a ban.
TikTok was given nine months (until January 2025) to complete a sale, though TikTok is contesting the ruling and arguing that it is unconstitutional and violates the First Amendment rights of content creators on the platform.
In Oracle's annual report, the company has stated that the ban would have a negative effect on its revenue and profits.
"In April 2024, the US president signed into law a bill that will make it unlawful to provide Internet hosting services to TikTok that are used to enable the distribution, maintenance, or updating of TikTok for users within the US if certain steps are not taken by TikTok’s owners within a set time frame.
"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."
A Bloomberg report estimates that Oracle's revenue from TikTok could be in the range of $480 million to $800 million annually.
In March 2024, DCD's Sebastian Moss wrote an opinion piece predicting such a risk for Oracle.
Oracle's most recent earnings call showed that Cloud services and license support revenues were up nine percent to $10.2bn for the quarter, and total revenues for the year were up six percent to $53bn. Fiscal year 2024 GAAP operating income was $15.4bn, and GAAP operating margin was 29 percent. Non-GAAP operating income was $23.1bn, and non-GAAP operating margin was 44 percent.
The company noted that the last two quarters had seen Oracle signing the largest sales contracts in its history driven by AI training in Oracle Cloud.
