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Oracle says US ban of TikTok would hurt its profits

Software giant Oracle has warned investors that a U.S. ban on TikTok would likely hit revenue if it goes into effect.

In April, Congress passed a bill requiring TikTok’s Beijing-based parent company, ByteDance, to completely exit the app within 12 months or face a total ban in the United States.

Oracle, whose co-founder and chairman is billionaire tech executive Larry Ellison, said in its annual report released on Monday that the legislation “would make it unlawful for us to provide internet hosting services to TikTok.”

Congress passed a law that would ban TikTok entirely if it isn’t sold within 12 months. AP

“If we are unable to provide these services to TikTok and redeploy its capabilities in a timely manner, our revenue and earnings would be adversely affected,” Oracle said in the report.

“Complying with these laws may increase our expenses as we engage additional resources, professional or otherwise, to assist with our compliance efforts,” the company added.

Oracle provides cloud infrastructure support to TikTok, and the company partnered with the company on a data security initiative called “Project Texas” as part of a failed effort to allay Congressional concerns about the security of U.S. user data.

Larry Ellison is the chairman and co-founder of Oracle. AP

Evercore ISI analyst Kirk Mattern estimates that the TikTok partnership could contribute between $480 million and $800 million to Oracle’s annual revenue. Bloomberg.

Oracle shares were flat in morning trading Tuesday. The company’s shares have risen more than 33% since the beginning of the year.

Oracle was close to acquiring TikTok as part of a joint bid with Walmart when the Trump administration tried to ban the app in the U.S. The talks were called off in 2021.

Oracle warned that the ban would hurt revenue and profits. Reuters

As the Post reported, Oracle is now seen as a logical candidate to acquire TikTok if ByteDance is ultimately forced to sell. Oracle has not yet commented on whether it would be interested in such a deal.

TikTok argues that the divestment bill violates the First Amendment and would effectively ban the app.

The company argued in its lawsuit that a 12-month sale deadline was “simply commercially, technically and legally impossible.”

TikTok argues that the divestment bill violates the First Amendment. AP

The company has said it has no plans to consider a sale, even if it were possible.

Meanwhile, former US Treasury Secretary Steven Mnuchin has also expressed interest in buying TikTok, and has been pitching potential partners a plan to rebuild the app’s recommendation algorithm from scratch in the US.