In Part 1, we wrote that with Oracle set to oversee TikTok’s U.S. user data from Texas, it will move from “just” being an ERP vendor to becoming royalty in the kingdoms of both social media and global data security. What might this mean for the software industry as a whole and, as importantly, for the average Oracle ERP licensee? And how might this benefit Oracle?
Oracle’s involvement in a TikTok deal reflects a likely long-term business strategy: Oracle hopes to increase “stickiness” in its cloud business and feed a virtuous cycle of growth. As reported at Morningstar:
TD Cowen analysts also sounded upbeat about the arrangement, saying there could be "stickier and stronger revenue growth" for Oracle, which has long counted TikTok as one of its largest cloud customers. They also said the video-sharing app would be a "highly strategic growth asset."
As part of the deal, White House press secretary Karoline Leavitt stated:
"TikTok will be owned by a majority of American investors and controlled by a board of directors with extensive national security and cybersecurity credentials. In partnership with the US government, Oracle will serve as TikTok trusted security provider, and they will independently monitor the safety and data security of all US user data on TikTok platform. Americans' data will be stored securely in the United States without access from China. All US user data will be stored on servers operated by Oracle in the United States, protected from surveillance or interference by foreign adversaries," she said.
This move would not only enhance data sovereignty but also deepen dependence on Oracle’s cloud and long-term commitment.
As we noted in part three of our TikTok blog series, for years, Oracle had a history of leveraging aggressive audits and harsh licensing tactics in order to move its current license base in the hopes of obtaining at least a respectable standing in the cloud wars. However, due to a securities class action that contains devastating whistle-blower allegations, it has been our experience (and the experience of many of our colleagues) that Oracle has chilled the practice of offering unwanted cloud services in order to resolve contentious audits. We wrote:
Naturally, Oracle was never going to limits its cloud aspirations to a single approach. Acquisitions and deals have been fueling Oracle’s aspirations for decades. And, while some observers insist that, best case scenario, Oracle will still trail the big three with a market share of 2% compared to Google at 9%, Microsoft 18% and AWS 33%, we believe this misses the importance of scaling in the cloud wars. Once a cloud provider reaches a certain threshold, the so-called “virtuous cycle” (a.k.a. economies of scale) kicks in and allows a provider to generate profit while growing its client base. The cloud is particularly susceptible to this cycle, as larger size drives prices down and allows further investment into infrastructure and amenities. The TikTok deal could provide Oracle with precisely these scaling opportunities, incentivizing it to further continue its drive to move licensees to the cloud.
Cloud revenues have proven to be the fastest-growing part of Oracle’s business. According to Forbes:
For FY25, the company reported total revenue of $57.4 billion. Cloud services revenue rose to $24.5 billion, 24% higher y-o-y, while license support revenue was flat y-o-y at $19.5 billion.
During the Q4 conference call, Oracle’s CEO Safra Catz highlighted FY26 as a tipping point in the company’s cloud transition journey. Given the continued demand for cloud applications and infrastructure, including database services, the management raised the FY26 revenue guidance to $67 billion, $1 billion higher than the previous guidance. Catz also showed strong optimism towards growth in its cloud business in FY26, with combined cloud growth (applications plus infrastructure) expected to grow over 40% in FY26, compared to 24% in FY25.
These gains signal that Oracle has begun to build momentum, even if from a smaller base than its rivals. Still, as some commentators have pointed out, TikTok alone cannot deliver cloud dominance. Oracle must also win over its base of legacy licensees, persuading them to migrate their workloads to the cloud — something that has historically been a tough sell. That said, the TikTok deal gives Oracle more credibility, scale, and a “stickiness” that may help move the needle and win over more migrations.
It is not much of a reach to conclude that Oracle’s TikTok partnership is about more than cloud hosting or a political fix. It’s also likely about the data. As a senior White House official described it, Oracle’s role involves not only inspecting but also retraining TikTok’s algorithm for American users. This would give Oracle access to one of the largest pools of consumer data in the U.S.: 170 million U.S. users, to be exact.
Giving a U.S. company control over TikTok’s U.S. data might sound like a plausible security upgrade. But is it? We cannot help but reflect on Oracle’s own troubling track record on data governance, which we wrote about three years ago. Back then, whistleblowers detailed how Oracle’s data collection practices pushed ethical and legal boundaries:
This complaint sets forth how the regularly conducted business practices of defendant Oracle America, Inc. (“Oracle”) amount to a deliberate and purposeful surveillance of the general population via their digital and online existence. In the course of functioning as a worldwide data broker, Oracle has created a network that tracks in real-time and records indefinitely the personal information of hundreds of millions of people. Oracle sells this detailed personal information to third parties, either directly, or through its “ID Graph” and other related products and services derived from this data.
As summarized by TechCrunch, the totality of the allegations suggest that the “tech giant’s ‘worldwide surveillance machine’ has amassed detailed dossiers on some five billion people, accusing the company and its adtech and advertising subsidiaries of violating the privacy of the majority of the people on Earth.”
As well, in February 2021, Pulitzer Prize-nominated journalist and friend of Beeman & Muchmore, Mara Hvistendahl of The Intercept, published a scathing expose of Oracle entitled “How Oracle Sells Repression in China” with the blistering tagline: “In its bid for TikTok, Oracle was supposed to prevent data from being passed to Chinese police. Instead, it’s been marketing its own software for their surveillance work.” Ken Glueck of Oracle jumped into the fray and declaimed a nearly 2,000-word screed attacking Ms. Hvistendahl and The Intercept. Shortly thereafter, he attempted to dox Ms. Hvistendahl via Twitter.
Ms. Hvistendahl’s excellent reporting on Oracle’s surveillance behavior earned her five citations in the operative complaint, supporting the allegation that Oracle “has marketed its surveillance products to governments, police or paramilitary forces, including China, Brazil, Mexico, Pakistan, and the United Arab Emirates.”
Oracle’s checkered history clearly complicates its current role. On the one hand, the company is appearing to be the protector of U.S. user data against Chinese influence. On the other hand, its record suggests a willingness to monetize or even enable surveillance of that same data. Add in the sinister notion that it might even wish to control content for millions of U.S. users (as the billionaire investors involved see fit), and the so-called ‘security argument’ makes one question the validity. The fox may be guarding the henhouse and feasting while it does so.
The TikTok deal aside, Oracle plans to spend about $35 billion in its current fiscal year to enhance existing data centers, meaning its free cash flow for the current fiscal year will likely be in the region of negative $16 billion. Oracle needing an influx of cash will likely ripple out to Oracle’s licensees. Here are some possible scenarios as to how this could play out:
More aggressive monetization: Oracle will surely attempt to drive more revenue from existing licensing streams. That would mean tougher audits, stricter compliance enforcement, and possibly fewer discounts.
Bundled AI and analytics tools: Oracle might consider packaging “TikTok-tested” AI, data analytics, or cloud services into software licensing deals, pushing clients toward Oracle’s cloud.
Increased vendor lock-in: Oracle’s U.S. TikTok data deal could be used to leverage its apparent database dominance, making it harder for clients to resist Oracle add-ons.
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In sum, enhancing Oracle’s ubiquity is never a good thing for Oracle licensees. Suffice to say, Oracle licensees will likely feel the pressure with tougher audits, higher compliance demands, and the pressures of increased vendor lock-in. Companies should prepare to negotiate strategically and ward off licensing risks. We understand the complexities and are here to help!
Published on October 9, 2025
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