Oracle Ads have had it: $2B operation shuts down after dwindling to $300M

Analysis Oracle Advertising is shutting down, CEO Safra Catz said during the database goliath's fiscal 2024 Q4 earnings call with Wall Street this week.

"...in Q4, we decided to exit the advertising business, which had declined to about $300 million in revenue in fiscal year 2024," said Catz.

That's down from a reported $2 billion in 2022.

Investors appear undaunted, as Oracle's stock has soared in the past few days. The announcement of deals with Google Cloud, Microsoft Azure, and OpenAI has eclipsed the earnings miss and the ad business exit.

Oracle as a whole recorded [PDF] $53 billion in sales in the past 12 months, up six percent year on year, and a profit of $10 billion, up 24 percent.

History

The advertising operation shutdown caps more than a decade of ad-oriented acquisitions by Oracle dating back to 2012, before "data is the new oil" became a cliché. Oracle bought firms like Vitrue (2012), Eloqua (2012), BlueKai (2014), DataLogix (2014), and Moat (2017) to build out its advertising capabilities.

But the Cambridge Analytica scandal broke in 2018 and the data free-for-all met resistance. Europe's General Data Protection Regulation took effect in 2016, and by 2018 organizations had to be compliant.

That same year, Meta, then known as Facebook, decided to stop allowing third-party partners to offer ad targeting directly through Facebook. Around this time, Apple, Mozilla, and others began deploying stronger privacy protection that affected native mobile apps and the web ecosystem. And Google began working on its Privacy Sandbox technologies to replace third-party cookies.

By 2019, Oracle started dialing back, shutting down its AddThis audience data business in Europe just three years after the company acquired it.

Lawsuits and further retrenchment followed. In 2020, Oracle discontinued third-party data targeting service in Europe. And last year, the IT titan shuttered AddThis globally.

The end of Oracle Advertising (formerly Oracle Data Cloud) looks like it will lead to layoffs. The director of data science engineering at Oracle Advertising said in a post on LinkedIn that he has a whole team of data science experts looking for a new place to work. Oracle Advertising's LinkedIn summary lists between 1,001 and 5,000 employees. Oracle overall has about 164,000 employees.

Oracle did not respond to a request for comment.

"Oracle’s decision to shut down its ads business is the latest example of the growing pressure on the surveillance advertising model," said Arielle Garcia, director of intelligence at ad watchdog Check My Ads, in an email to The Register.

"Oracle has been facing a steady stream of privacy-related legal and business challenges since 2018. This includes Meta’s removal of partner categories, which hurt data brokers’ bottom line, cutting off a major part of their revenue stream."

Oracle has been facing a steady stream of privacy-related legal and business challenges

Garcia also pointed to the class action lawsuit against Oracle's BlueKai in 2022, noting that Oracle SVP and general manager Eric Roza warned in 2019 that anyone relying on "legitimate interest" to deliver audience-based advertising is putting themselves and their company at risk.

"Reading between the lines, data brokers unable to rely on 'legitimate interest' would need to rely on 'consent' – and who actually wants to consent to data brokers collecting their data and selling it to advertisers?" said Garcia.

"Because data brokers operate in the shadows, they’ve been able to hide the degree of trouble their businesses are facing," Garcia explained. "But that facade is beginning to fade. Between legal challenges, signal loss, and the growing recognition that their data is effectively invasively-collected garbage, we will continue to see the surveillance ad economy flail and fracture.

"This should be a call to marketers to lessen their reliance on this risk-riddled, useless data they’ve been led to believe that they need, and to vet the vendors they choose to work with for their campaigns - not only to protect their brands against risk, but also to prevent their investment from waste."

Eric Schmitt, VP analyst at consultancy Gartner, told The Register in an email that the advertising data business is changing fast and that second- and third-party data is no longer a high-growth business.

"Despite the latest Google delay in shutting off third-party cookies in Chrome, the writing is on the wall," said Schmitt. "Meanwhile many other data privacy constraints are already substantially limiting the commercial potential of non-consented personal data. These constraints include Apple-related limitations, as well as a complicated and evolving patchwork quilt of international, national and state laws and regulations."

Despite the latest Google delay in shutting off third-party cookies in Chrome, the writing is on the wall

According to Schmitt, the challenge for commercial data businesses like Oracle Advertising takes the form of reduced spending from advertisers and smaller budgets from advertising technology, media, and publishing firms.

"The global advertising business is disproportionately dominated by a very short list of companies, all of whom collect rich data from their billions of end users – think Google, Meta, Amazon," said Schmitt. "These companies have relatively little need for third-party data. Meanwhile smaller publishers are getting squeezed by cookie deprecation, generative AI and other factors, and have very limited funds to spend on data solutions built on third-party cookie data backbones."

Zach Edwards, senior threat analyst at Silent Push and a data supply auditing consultant, told The Register that after a decade of buying some of the largest and most invasive data amalgamators, privacy rules in Europe and the US slowed the data collection by Oracle's advertising services.

... a wake up call that certain types of user data aren't nearly as profitable as they once were

"Everyone on Wall Street should take notice that companies who comply with data privacy laws while trying to operate data vacuums and data marketplaces, are bound to lose money," said Edwards. "Oracle losing $1.7 billion in revenue between 2022 and 2024 should be a wake up call that certain types of user data aren't nearly as profitable as they once were."

Edwards said Meta should be commended for cutting off Oracle's Facebook data access following the Cambridge Analytica scandal. Despite the harm incurred during that period, he said, the blowback laid the groundwork for the way responsible businesses now handle data sharing with third-parties.

"Once all of these Oracle products are fully offline, the world will be slightly more private – and while folks losing jobs and companies shutting down isn't a good thing – those of us who know what Oracle advertising subsidiaries have been doing all these years, know that shutting them down is a net positive, and especially beneficial for folks with sensitive backgrounds and interests," he said. ®