Oracle's cloud business in crosshairs of new Biden China rule

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Oracle's cloud business, which runs TikTok, could be hurt the most from Biden's new proposed restrictions for China

reports. That loophole involves cloud-computing companies, which allow Chinese companies to use AI technologies without importing them. They merely have to pay for cloud-computing services offered by the largest cloud providers.

The new rule would require the US to grant permission to American cloud companies to provide such services to Chinese companies to run AI models. For the most part, this rule wouldn't have a material impact on the biggest cloud-computing providers such as Amazon Web Services, Google, and Microsoft, the Bernstein analyst Mark Moerdler points out in a research note about the situation. Most of the time, cloud customers rent from data centers in the country or region where they serve customers. And American companies are fairly squeezed out of offering such services to Chinese companies.

Microsoft, for instance, has a separate business entity called 21Vianet to offer services in China. This network is not only physically separated from the rest of its massive Azure cloud infrastructure, but it is mostly attractive to non-Chinese companies wanting access to China's market. Chinese companies have plenty of local cloud providers to use for their cloud-computing needs, like Tencent and Alibaba Cloud.

The one cloud provider that could be most caught in the uncomfortable crosshairs is Oracle. Oracle is the cloud provider for

 

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