Data Privacy and Legal Issues Lead to Oracle’s Advertising Shutdown
Tech giant Oracle will exit the ad tech industry on September 30th this year. The company made this announcement last week when it shared its first-quarter earnings. According to Ad Week, the Oracle advertising shutdown decision was informed by declining revenue.
“In Q4, we decided to exit the advertising business, which had declined to about $300 million in revenue in fiscal year ’24,” Safra Catz, Oracle CEO said.
These results represent a massive drop from the $2 billion that the company made from advertising in 2022. In the same year, Oracle executed widespread layoffs to boost operational efficiency.
The Data Challenge
A range of challenges led to the Oracle ads business shutdown. The company had been operating in the ad tech sector for years. It succeeded in growing its ad business through acquisitions. In 2014, the software company paid $1.2 billion to acquire DataLogix. In 2017, the company acquired Moat for $850 million.
But things took a turn in 2018, following data access challenges. This year, the Cambridge Analytica scandal brought an end to third-party data access. Since Meta was at the heart of the scandal, it stopped sharing data with third-parties like Oracle. This reduced Oracle’s ability to collect user data. Its cloud business suffered a devastating blow.
The software giant exits the ad tech business having spent up to $4 billion in acquisitions.
Legal Hiccups
Another factor that may have contributed to Oracle’s advertising business shutdown is Europe’s General Data Protection Regulation (GDPR). This data privacy law affected Oracle’s ability to provide third-party data targeting services to European customers.
The company stopped providing third-party data services in Europe in 2020. This was after a GDPR lawsuit. In 2022, Oracle shut down its publisher platform called AddThis. The company publisher had acquired the platform in 2016 for $200 million. In the U.S., a lawsuit was filed against Oracle in 2022 over its data-sharing practices.
Oracle’s advertising shutdown marks the end of an unprofitable venture for the company.
Exit Process
The tech giant has told its clients that six ad tech products will be unavailable after September 30th. These products include Oracle Contextual Intelligence, Moat Analytics, and Oracle Cloud Data Management Platform. Others are Data Enrichment and Optimization, Data Append, and Digital Audiences.
The company said it will complete existing orders for these products. It will do so until the termination date. However, it will not enter into new contracts on the products. Customers who are still using Oracle data will continue to pay. The company will remove customer data from its system upon meeting all obligations.
Oracle will also end its work with data providers. However, it will pay those that have active contracts.
Focus on AI
The software giant is actively finalizing the Oracle advertising shutdown process. But, its eyes are set on artificial intelligence.
“Throughout fiscal year 2025, I expect continued strong AI demand to push Oracle sales and RPO even higher – and result in double-digit revenue growth this fiscal year,” Catz said.
The company will be moving its headquarters to Nashville, Tennessee. This move brings it closer to the healthcare sector that’s currently undergoing an AI revolution.
