Oracle warned investors that a new law potentially banning TikTok in the US threatens to hurt its financial results.<\/p>\n
The law signed by President Joe Biden in April \u201cwill make it unlawful to provide internet hosting services to TikTok\u201d unless certain steps are taken by its China-based owners, Oracle wrote Thursday in a regulatory filing.<\/p>\n
\u201cIf 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.\u201d<\/p>\n
Compliance with the new law may also increase expenses, the company added.<\/p>\n
TikTok uses Oracle\u2019s cloud infrastructure to store and process US user data, and is considered by many Wall Street analysts to be one of the Austin-based company\u2019s largest customers for that closely watched business.<\/p>\n
\u201cOracle could lose a sizable portion of revenue associated with hosting the bulk of TikTok\u2019s US business,\u201d Derrick Wood, an analyst at TD Cowen, wrote in April.<\/p>\n
Oracle\u2019s annual revenue from the popular video app may be in the range of $480 million (R8.7 billion) to $800 million (R14.5 billion), estimated Kirk Materne, an analyst at Evercore ISI.<\/p>\n
The company\u2019s unit that rents computing power and storage generated about $6.9 billion (R124.7 billion) in sales in the year ended May 31.<\/p>\n
The growing cloud infrastructure business, fueled by demand for artificial intelligence work, has helped propel Oracle\u2019s shares to a 34% gain this year through Friday\u2019s close.<\/p>\n
Oracle didn\u2019t respond to a request for comment.<\/p>\n
US lawmakers have long been concerned that TikTok\u00a0poses a security threat\u00a0to US users because China requires its companies, upon request, to share any national security-related data with the government.<\/p>\n
The law signed in April gives TikTok 270 days to find a buyer or be banned in the US, with some possibility of an extension.<\/p>\n
TikTok has pushed back on these concerns, suing to\u00a0overturn\u00a0the law.<\/p>\n
As part of its defense in recent years, TikTok has invoked\u00a0its work with Oracle to cordon off US data from its Chinese parent, ByteDance.<\/p>\n
The initiative, dubbed \u201cProject Texas,\u201d was named after the state of Oracle\u2019s headquarters.<\/p>\n