Business could suffer if TikTok is banned, Oracle warns.

• A ban on TikTok in the U.S. could negatively impact Oracle's earnings.
• In April, President Biden signed a bill that gave ByteDance nine months to sell TikTok in the U.S., with the possibility of a one-year extension if the company chooses to avoid a ban.
• TikTok, with over 120 million users in the U.S., utilizes Oracle's cloud infrastructure.

TikTok's business may be negatively impacted by a U.S. ban, acknowledged the software company in its annual report on Monday.

In April, President Biden signed a bill requiring ByteDance to sell TikTok within nine months or one year if an extension is granted, in order to avoid a ban in the U.S. due to concerns about user data being transferred to China.

TikTok, with over 150 million users in the U.S., utilizes Oracle's cloud infrastructure.

If we cannot provide those services to TikTok and redeploy that capacity in a timely manner, our revenues and profits would be negatively affected, Oracle stated in its annual report for the fiscal year ended May 31.

Since 2020, there have been concerns about TikTok's Chinese ownership, which led to discussions about a sale or divestiture of U.S. assets. In response to this pressure, Oracle announced that it was part of ByteDance's proposal to provide cloud services to the U.S. Treasury Department, which would allow TikTok to remain available in the U.S.

TikTok has announced that it will continue to provide its services to U.S. users through Oracle cloud infrastructure located within the country. Oracle will also be responsible for compiling the app and delivering it to third-party app stores.

Safra Catz, Oracle CEO, stated on a 2022 conference call with analysts that the one thing she can tell them is that they have an excellent relationship with the folks at TikTok.

TikTok sued the government after the passage of bipartisan legislation and Biden's signing of a bill mandating its sale, arguing that the law violates First Amendment free speech protections.

TikTok has attracted the interest of real estate investor Frank McCourt and former Treasury Secretary Steven Mnuchin, but no deal has been finalized.

TikTok's financial ties to Oracle have not been disclosed by Oracle. Evercore analysts estimated in April that if TikTok is generating $16 billion in annual sales in the U.S., it could be spending between 3% and 5% of its revenue on cloud infrastructure, which would amount to between $480 million and $800 million. Oracle's cloud infrastructure revenue for the fiscal year was $6.9 billion.

TikTok didn't immediately respond to a request for comment.

Peter Harrell of Carnegie says that investors are looking for a TikTok sale.