During the fiscal 2024 Q4 earnings call, Oracle CEO Safra Catz announced the termination of the company’s advertising division. This move comes after the division experienced a drastic revenue fall, dropping to $300 million in fiscal 2024 from $2 billion in 2022. Despite this, Oracle shares have risen, bolstered by new partnerships with Google Cloud, Microsoft Azure, and OpenAI.
Shifts and Evolution in Strategy
Oracle entered the advertising field in 2012 through a series of acquisitions to bolster its ad capabilities. The tech giant acquired companies like Vitrue, Eloqua, BlueKai, DataLogix, and Moat. Regulatory scrutiny heightened after the Cambridge Analytica scandal in 2018. The advent of the EU’s General Data Protection Regulation (GDPR) in 2016 and other privacy laws created operational difficulties for data brokers.
Privacy regulations significantly affected Oracle’s advertising ventures. Enhanced privacy measures by Apple, Mozilla, and Google’s Privacy Sandbox initiative, which aims to replace third-party cookies, added pressure. Oracle began downsizing its advertising-related processes in 2019, starting with the discontinuation of its AddThis audience data service in Europe. This scaling back culminated with the global shutdown of AddThis last year, leading to layoffs. The director of data science engineering at Oracle Advertising confirmed his team is now seeking new employment opportunities.
Industry-Wide Obstacles
Arielle Garcia, intelligence director at ad watchdog Check My Ads, told The Register that Oracle has been navigating privacy-related legal and business obstacles since 2018. Meta’s removal of partner categories significantly impacted data brokers’ revenue. Garcia highlighted the increasing difficulty for data brokers to justify “legitimate interest” claims for audience-based advertising. Eric Schmitt, VP analyst at Gartner, added that privacy rules are rapidly altering the advertising data business, diminishing the commercial value of second- and third-party data.
Oracle’s advertising goals were further undermined when Meta, then Facebook, halted third-party access to its data in 2018 after the Cambridge Analytica scandal. This severely limited Oracle’s ability to offer comprehensive insights through its advertising division. Additionally, Oracle faces ongoing class action lawsuits over user privacy issues, compounding its challenges in the advertising sector.
Last Updated on November 7, 2024 3:58 pm CET
