Blue Whale News, June 25th (Reporter Zhang Xinyu) As the ban date approaches, TikTok's long silent cloud service provider in the United States, Oracle, has finally spoken out.
According to foreign media reports, Oracle wrote in a regulatory document on Thursday that the bill signed by US President Biden in April this year "will make it illegal to provide TikTok with Internet hosting services", unless TikTok's Chinese parent company takes some measures. Oracle stated that complying with the new laws may also increase costs, "If we are unable to provide these services to TikTok and cannot redeploy these capacities in a timely manner, our revenue and profits will be adversely affected."
Oracle is a technology giant in the global enterprise services sector, with a current market value of over 380 billion US dollars. TikTok uses Oracle's cloud infrastructure to store and process US user data, and is one of Oracle's major clients.
In 2020, the last time ByteDance faced the pressure of the Trump government of the United States to sell TikTok, it discussed with Oracle to acquire a minority stake in TikTok, but the final transaction did not form, but Oracle became a "trusted technology provider" of TikTok. In 2022, TikTok completed the migration of data information from US users to Oracle's servers to address concerns from US regulatory agencies. TikTok will collaborate with Oracle as the "Texas Project," named after the state where Oracle's headquarters are located.
However, TikTok in 2024 has once again faced pressure from the US government and Congress to sell. In April of this year, US President Biden signed the TikTok Non Sale Bill, which had previously been passed in the US House of Representatives and Senate. The bill provided TikTok with 270 days to search for buyers in the US, otherwise it would be banned and the deadline could be extended.
But TikTok stated that such a sale was "technically, commercially, or legally impossible" and subsequently formally sued the US government, claiming that the bill was unconstitutional.
When the bill was just passed in the House of Representatives, a spokesperson for the Chinese Ministry of Foreign Affairs also stated that the bill puts the United States on the opposite side of the principle of fair competition and international economic and trade rules. If the so-called national security reasons can be used to arbitrarily suppress excellent enterprises of other countries, then there is no fairness and justice. When you see someone else's good things, you have to find ways to take them for yourself, which is completely a thief's logic.
As a technology supplier of TikTok, Oracle has once again stepped forward and issued the aforementioned financial warning.
According to foreign media reports, TD Cowen analyst Derrick Wood stated in April that "Oracle may lose a significant portion of its revenue from hosting most of TikTok's US business." Evercore ISI analyst Kirk Materne estimates that Oracle's annual revenue from TikTok may be between $480 million and $800 million.
On June 11th, Oracle released its fourth quarter and full year results for the 2024 fiscal year. The financial report shows that Oracle's total revenue for the fourth quarter increased by 3% year-on-year in US dollars and 4% at a fixed exchange rate, reaching 14.3 billion US dollars; The total revenue for the fiscal year 2024 was $53 billion, an increase of 6% in US dollars and fixed exchange rates.
Oracle CEO Safra Catz said, "In the third and fourth quarters, Oracle signed our largest sales contract in history, thanks to the huge demand for training AI big language models in Oracle Cloud."
Oracle Chairman and Chief Technology Officer Larry Ellison said, "Our multi cloud collaboration with Microsoft significantly expanded in the fourth quarter, and we agreed to jointly support Open AI and ChatGPT." Oracle recently signed an agreement with Google to interconnect our cloud and initially build 12 OCI data centers within Google Cloud. We expect the Oracle database to be launched in Google Cloud in September this year. "
In addition, in May of this year, according to foreign media citing sources familiar with the situation, Elon Musk's artificial intelligence startup, xAI, which is currently valued second only to OpenAI, is in talks with Oracle and plans to spend $10 billion over the next few years to rent Oracle's artificial intelligence servers.
Although the AI wave since the end of 2022 has also benefited Oracle, the performance and stock price growth it has brought is not as significant as that of chip manufacturer Nvidia, which means that Oracle still needs cloud service big customers like TikTok very much.