Market Overview

Zoom Uses Oracle's Cloud Computing Services To Handle Demand Surge During Pandemic

Zoom Uses Oracle's Cloud Computing Services To Handle Demand Surge During Pandemic

Zoom Video Communications (NASDAQ: ZM) is using Oracle Corporation's (NYSE: ORCL) cloud computing services to meet the increased demand for its product, the company said Tuesday.

What Happened

"It's exciting to be able to come on to a platform and scale very rapidly," the communications platform maker's chief technology officer Brendan Ittelson told Reuters.

Zoom said Oracle's cloud service is handling "millions" of calls on its platform and routing about 7 million gigabytes of its data every day, but didn't give further specifics on the size of the deal, according to Reuters.

The move comes a week after Zoom announced the launch of its latest version to address some of the pressing security and privacy concerns on its platform.

Why It Matters

The company previously relied on some of its own infrastructure, alongside Inc.'s (NASDAQ: AMZN) Amazon Web Services and Microsoft Corporation's (NASDAQ: MSFT) Azure. It also started working with Oracle in a limited manner six weeks ago, Reuters noted.

Oracle founder and chairman Larry Ellison earlier this month praised Zoom as an "essential service" for his own company, CNBC reported at the time.

The Redwood City-based company significantly lags behind rivals Amazon, Microsoft, Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG), and International Business Machines Corporation (NYSE: IBM) in terms of market share in cloud computing, making Zoom's choice surprising to many.

Jean Atelsek, an analyst with 451 Research, told Reuters that a successful partnership with Zoom is likely to boost Oracle's new generation of cloud computing services, as it will have a "high-profile customer" to show its technology can compete with that of the larger rivals.

Price Action

Oracle shares closed 0.3% lower at $53.20 on Tuesday. Zoom shares closed 4.79% lower at $156.72 and traded slightly higher in the after-hours session at $157.47.


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