Oracle hit with lawsuit over 'false and misleading' cloud revenue claims

Law firm claims that Oracle lied to investors over what is driving its cloud revenue growth and boosted sales through 'threats and extortive tactics'

Oracle has been hit with a lawsuit which accuses it of misrepresenting its cloud-based revenue growth and driving sales through "threats and extortive tactics".

The City of Sunrise Firefighters' Pension Fund has filed a lawsuit, through law firm BLB&G, to a Californian district court accusing Oracle of issuing "false and misleading" press releases and SEC filings as well as statements from executives during investor and analyst conference calls.

It claims Oracle misrepresented the true drivers of its cloud revenue growth and inaccurately linked it with an "unprecedented level of automation and cost savings".

Instead, Oracle "drove sales of cloud products using threats and extortive tactics," which concealed "the lack of real demand for Oracle's cloud services", the lawsuit claims.

Oracle also "threatened current customers" with audits on their use of non-cloud software licences "unless customers agreed to shift to Oracle's cloud products".

BLB&G claims that it has filed the lawsuit on behalf of investors that purchased Oracle stock between 10 May 2017 and 19 March 2018.

The law firm states that the real performance of Oracle's cloud business was revealed on 19 March 2018 when it disclosed that cloud revenues had stagnated, prompting the vendor to lower forecasts.

Oracle changed how it reported cloud revenues after posting its Q4 results in June. The firm no longer breaks out separate figures for software as-a-service, platform as-a-service and infrastructure as-a-service and will instead report cloud revenues as just one figure.

An Oracle spokesperson said in a statement sent to CRN: "The suit has no merit and Oracle will vigorously defend against these claims."

The software giant came under fire from some of its shareholders two years ago, when they filed a class-action lawsuit alleging that Oracle was artificially inflating its cloud revenues.

Last year the vendor was also sued for $150m on claims that it "systematically stiffed" sales staff.

While earlier this year, Oracle was accused of deliberately double-billing multi-national customers through its European subsidiaries.