Oracle (ORCL) Hit by Lawsuit in the U.S. for Violating Privacy

Oracle ORCL has been hit by a privacy class-action lawsuit in the United States by the Irish Council for Civil Liberties (ICCL), claiming that the company's worldwide surveillance machine has collected detailed reports on nearly 5 billion people for marketing purposes.

The cloud infrastructure provider, also registered as a data broker in California, allegedly gathers and sells personal information using tracking technologies without permission in violation of state law and federal wiretap law, according to a class action complaint filed in the U.S. District Court for the Northern District of California.

These reports contain information on people, including names, home addresses, emails, purchases online and in the real world, physical movements in the real world, income, interests and political views, and a detailed account of online activity.

The complaint against Oracle alleges violations of the Federal Electronic Communications Privacy Act, the Constitution of the State of California, the California Invasion of Privacy Act, competition law and the common law.

Oracle Corporation Price and Consensus

Oracle Corporation Price and Consensus
Oracle Corporation Price and Consensus

Oracle Corporation price-consensus-chart | Oracle Corporation Quote

Legal Tangles and Lawsuit Expenses Raise Concerns

Oracle has been embroiled in various legal tangles. In 2016, Oracle faced defeat in two of its most high-profile lawsuits. In December 2017, the company renewed the legal fight over Android against Alphabet GOOGL. In the recent filing, Oracle challenged the idea of “fair use” and alleged that Google lied when it said Android didn’t compete directly with Oracle’s ability to license its products to customers.

Lawsuit expenses such as those incurred in the U.S. Department of Defense’s (DoD) Joint Enterprise Defense Infrastructure (JEDI) cloud contract do not bode well for Oracle’s business opportunities with DoD. In October last year, Oracle’s long-standing appeal against an unfair awarding of the $10-billion JEDI cloud deal (now abandoned) by the Pentagon was quashed by the U.S. Supreme Court, which ruled that the company could not have qualified for the JEDI deal.

Microsoft MSFT was first awarded the JEDI contract by the Pentagon in October 2019. Amazon AMZN has strived to prevent Microsoft from working on the contract ever since. Amazon was granted a preliminary injunction order issued by the Court of Federal Claims on Feb 13, 2020 that did not permit the immediate commencement of the contract by Microsoft.

DoD is now planning to float a multi-cloud/multi-vendor Indefinite Delivery-Indefinite Quantity (IDIQ) contract — Joint Warfighter Cloud Capability (JWCC). DoD is looking toward Microsoft as well as Amazon for bids for the new contract as it finds these two cloud service providers (CSPs) competent enough to cater to the organization’s requirements.

Nonetheless, on May 17, Oracle announced that Oracle Cloud Infrastructure (OCI) attained DOD Impact Level 5 (IL5) Provisional Authorization (PA) for additional services. With the DOD authorizations in place, Oracle is expected to deliver a highly secure, compliant and cost-effective cloud built for the U.S. government at a much lower price.

This Zacks Rank #2 (Buy) company has also been endeavoring to augment its government services portfolio, despite its late entry into the cloud domain. According to a ResearchAndMarkets report, the global government cloud market is expected to witness a CAGR of 16.3% between 2022 and 2027 and reach $71.2 billion. Higher expenditure on cloud infrastructure services offers alluring business prospects for CSPs.

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