If TikTok gets banned in the US, Oracle could be the secret loser

• TikTok has been under scrutiny in the US for the past few years over national security concerns.
• Now as bans on TikTok are being considered, it could hurt one of its biggest US partners: Oracle.

President Donald Trump's administration made a big and controversial — but ultimately unsuccessful — attempt to have viral video app TikTok banned in the United States over concerns about its relationship with parent company ByteDance, headquartered in China.

Now, the political pressure is back on for TikTok, as Congress considers two bills that would follow through with banning the app. One bill would ban it on the devices of federal government workers, while the other more sweeping bill would have it banned for use by American consumers entirely. Meanwhile, several states have already banned TikTok on government-issued devices.

Any federal TikTok ban would have far-reaching implications for the future of tech regulation, for America's relationship with China, and for the growing ecosystem of creators on the app. But the entity that might take the hardest impact from any TikTok ban is one you may not expect: Oracle, one of its biggest partners in the US.

One previous case could provide some hint at how Oracle could be affected is to look at the impact of how Fastly, a cloud computing company, was affected when TikTok took its business elsewhere in mid-2020. TikTok was its single biggest customer; without its business, Fastly's revenue dipped and its stock price fell.

While it's unclear how much of Oracle's cloud infrastructure business is from TikTok, it is clear that the two companies' fates are linked, and a ban on TikTok would likely spell bad days ahead for Oracle.

"This is a strategic partnership that works extremely well, I think, for both companies," said Wedbush analyst Dan Ives. "It's been a coup for Oracle to get this, and if they lost it because of the TikTok ban, those are tough shoes to fill."

Losing TikTok would mean losing a big opportunity

Earlier this year, TikTok said that it will move all its US user data to Oracle servers, in a bid to assuage lawmakers' concerns around privacy and security. The deal was a huge boon to Oracle's cloud business, and is likely one important reason the cloud infrastructure business is growing so quickly, analysts told Insider.

That cloud business, in turn, is key to Oracle's overall growth story. The company's stock is down some 7% for the year, amid a larger market downturn. Oracle execs including CTO and cofounder Larry Ellison have pegged the cloud business as its biggest growth opportunity ahead, as it pushes to take market share away from industry leader Amazon Web Services. That business has grown 50% in the last two quarters, its financial filings show.

The deal also gave Oracle a chance to take on a large customer with national security and privacy concerns and show how its technology could manage that. That gives Oracle more credibility when going after deals, analysts said. It had a similar boon from working with Zoom when its business was booming during the beginning of the pandemic.

So a ban on TikTok in the US would hurt Oracle because it would see a decline in the user data going through its cloud platform, and therefore a slowdown in growth, analysts said. The experts also suggest that it would mean losing TikTok as a potential customer for Oracle's other products, including its core lineup of database software.

"Knowing that officially TikTok just moved US customer data to Oracle in June you gotta figure that's a significant contributor" to Oracle's cloud revenue, said Valoir analyst Rebecca Wettemann. "There are a lot of TikTok users in the US and that number is growing. So you cut that out, you cut out a significant chunk of Oracles not just current, but growth potential for cloud infrastructure."

A ban on federal devices won't have as much of an impact on Oracle as a complete ban would, but the severity of any legislation will ultimately determine how much impact Oracle feels, Futurum Research analyst Dan Newman said.

"The severity of the restrictions will correlate with Oracle in the sense that if the restrictions become broader based than your federal or core defense related employees. Then it could end up becoming a larger and larger impact," he said.

Got a tip or thoughts about Oracle or TikTok? Contact this reporter via email at pzaveri@insider.com or Signal at 925-364-4258. (PR pitches by email only, please.)