Oracle wins cloud computing deal with Zoom as video calls surge

By Stephen Nellis

(Reuters) - Zoom Video Communications Inc (NASDAQ: ZM) said on Tuesday it has started using Oracle Corp's (NYSE: ORCL) cloud computing service to help handle the surge in online video call volumes brought on by the novel coronavirus pandemic.

As corporations and schools shift to remote work and billions of people subject to stay-at-home orders seek ways to remain connected, Zoom has seen daily meeting participants rocket from 10 million in December to 300 million. But it has also experienced a backlash as the increased use exposed privacy and security flaws.

Zoom set out a 90-day plan to fix the security issues, but in the meantime, the thirty-fold jump in traffic has required more computing power.

The deal is a big win for Oracle, which wants to catch up with rivals such as Amazon.com (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) that have greater market share, and is selling a new generation of cloud technology after its first generation efforts failed to gain traction.

Zoom and Oracle did not disclose the size of the deal, but said traffic for "millions" of meeting participants is being handled by Oracle's cloud service and about 7 million gigabytes of Zoom data per day is flowing through Oracle servers.

"It's exciting to be able to come on to a platform and scale very rapidly," Zoom's Chief Technology Officer Brendan Ittelson told Reuters in an interview.

Zoom's service runs on a mixture of its own data center gear and cloud computing services from Amazon Web Services and Microsoft's Azure, but it also began working with Oracle about six weeks ago.

Zoom and Oracle executives said their engineering teams worked together on a daily basis to get up and running systems that now handle a significant portion of Zoom's traffic.

Jean Atelsek, an analyst with 451 Research, said if Zoom's use of Oracle proves successful, it could give Oracle a high-profile customer to show that its new technology is competitive with larger rivals.

"What’s remarkable about this deal is just the velocity with which it happened," Atelesk said.

(This story corrects wording in paragraph 7 to make clear that Zoom added Oracle as a supplier and did not replace existing suppliers).

(Reporting by Stephen Nellis in San Francisco; Editing by Edwina Gibbs and Raju Gopalakrishnan)

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