Oracle turns rivals into partners in pursuit of cloud ambitions

The Austin-based tech giant, which has lagged behind Amazon, Microsoft and Google in cloud-computing for years, has now built partnerships with all of them. And it is doing so by wielding the flagship database software that has for decades powered large businesses’ operations, transactions and customer data.

Safra Catz, Oracle’s chief executive, said in an interview that the major cloud providers recognize that their customers aren’t doing away with Oracle databases. Rather than running them on-premises, or inside data centers, they want to use them in cloud platforms such as Microsoft Azure, Google Cloud or Amazon Web Services.

That is the basis of Oracle’s alliances with those three companies, which give customers the option to use its relational databases inside its partners’ cloud platforms. To enable faster processing between them, Oracle puts its own hardware inside of its partners’ data centers.

In some ways, the Oracle and Amazon partnership lowers the temperature between the two companies: Oracle co-founder and Chief Technology Officer Larry Ellison has directed insults at Amazon’s services, and the two have waged a decadelong battle over their competing cloud and database products.

Since its rivals Google and Microsoft teamed up with Oracle earlier, Amazon was left with no choice but to join up as well, Catz said. “If they’re competing with either Azure or Google or [Oracle], and they’re the only ones who can’t run important Oracle workloads fast and secure, that’s a business killer."

At Oracle’s annual conference last Tuesday, AWS Chief Executive Matt Garman joined Ellison onstage. Some of AWS’s customers use Oracle for their most important data, Garman said at the event, but they “wanted to run all of those mission-critical workloads inside of AWS."

“While this isn’t the first time we’ve made it possible for customers to run Oracle from AWS—in fact, we’ve had joint customers since 2008—this announcement is focused on removing barriers for our customers," Ruba Borno, vice president of global specialists and partners at AWS, said in a statement.

The financial services company State Street runs in AWS and uses Oracle’s Exadata database, said its Chief Technology Officer Andrew Zitney. “As opposed to spending all the time integrating, we can spend time innovating because you did the integration for us," Zitney said onstage at the conference.

Catz said that Oracle’s databases and other software applications bring in the biggest sales margins, followed by its cloud provider partnerships. “We’re using their property, so we don’t pay rent, we’re using their power," she said, referring to Oracle’s strategy of putting its hardware in Microsoft, Amazon and Google’s data centers. “All we do is put computers in a building."

Oracle is continuing to pitch its own cloud platform as a cheaper alternative. It is also touting its private cloud offering—where Oracle sets up and manages a separate cloud inside a customer’s data center—for businesses and governments that prefer not to use the public cloud, typically because of regulatory and data privacy requirements.

“Many of the biggest enterprises, they don’t want to share," Catz said.

The U.K. telecom provider Vodafone uses Oracle’s private clouds, according to Ellison, who predicted on the company’s earnings call that “private clouds will greatly outnumber public clouds."

The company also announced last week “AI agents" for its suite of business software. AI agents are considered the next evolution of chatbots because they can perform tasks without human involvement. “It’s not only AI agents to run your business, but AI agents to build your applications to run your business," Catz said.

For businesses to really get returns on generative AI, however, they will need to use their proprietary data to train AI models, said TD Cowen analyst Derrick Wood. Enterprises are increasingly moving their databases to the cloud, he said, giving Oracle an opening to turn its longstanding database customers into cloud and AI customers.

In fact, using its databases to enter other markets is “the traditional Oracle playbook," said Bernstein analyst Mark Moerdler. Decades ago, the company began selling software that runs on its databases, he said, and used the same tactic to enter certain industry sectors.

“Oracle’s been around since 1977—it has got so much deployed and it’s so operationally embedded," said Steven Dickens, an analyst at market research and advisory firm Futurum. “It’s really hard to unravel."

Write to Belle Lin at belle.lin@wsj.com