Dan Kitwood
Oracle (NYSE:ORCL) warned investors that the law that could potentially ban popular social media app TikTok in the U.S. may hurt its earnings.
President Biden in April signed into law a bill that would ban TikTok in the U.S. unless it is divested from its China-based parent firm ByteDance (BDNCE) and finds new ownership.
This will make it unlawful to provide internet hosting services to TikTok, Oracle (ORCL) said in its annual report. “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.”
“Compliance with these laws may increase our expenses as we engage specialized or other additional resources to assist us with our compliance efforts,” the software provider added.
TikTok is said to be one of Oracle’s (ORCL) biggest customers, and its cloud infrastructure stores the app’s U.S. user data.
JPMorgan analyst Mark Murphy in a recent note cautioned that the TikTok ban’s impact on Oracle’s (ORCL) business “is less of a CY24 concern but could be a looming topic further out.”
UBS’ Karl Keirstead said while a TikTok ban/shutdown is a negative, it may not “wreck” the Oracle Cloud Infrastructure story.