A former employee’s lawsuit against Oracle (NYSE: ORCL) contains accusations of dodgy accounting practices; that have the potential to disrupt and discredit the entire cloud-computing sector.

“Upper management was trying (and trying to push her) to fit square data into round holes, in an effort to bolster ORACLE Cloud Services financial reports that would be paraded before company leadership as well as the investing public,” a lawsuit filed by Oracle’s former Senior Finance Manager for North America Saas/Cloud Revenue; Svetlana Blackburn claims.

Blackburn’s attorney; Daniel Velton, alleges that his client was fired for trying to blow the whistle on questionable accounting in Oracle’s cloud business. Among other things, Velton is charging that Oracle inflated cloud sales figures in order to push up its stock prices.

“Plaintiff’s superiors instructed her to add millions of dollars in accruals to financial reports, with no concrete or foreseeable billing to support the numbers, an act that Plaintiff warned was improper and suspect accounting,” Velton wrote in the suit filed in US District Court for Northern California on June 1, 2016.

What is Cloud Revenue?

One way Oracle did that was to count any revenue generated by hardware with the potential to run cloud-based solutions as “cloud revenue,” the lawsuit implies. Fortune writer Barb Darrow noted that this practice is pretty common and that IBM (NYSE: IBM) engages in it.

Such allegations do not have to be true to seriously damage the cloud-computing sphere. Just the mention of Blackburn’s claims in news articles caused a slight drop in Oracle’s stock. Oracle itself is not taking the matter lightly; Fortune reported that the company is threatening to sue Blackburn.

“This former employee worked at Oracle for less than a year and did not work in the accounting group,” an unidentified Oracle spokeswoman told Fortune. “She (Blackburn) was terminated for poor performance and we intend to sue her for malicious prosecution.”

The Blackburn suit raises two important questions that needed to be answered. The first is: “what is cloud revenue?” The second and perhaps even more important query is: “how should cloud revenue be defined?”

Suit Threatens Cloud Industry’s Future

Answering these questions is vital because they will determine the value of cloud services and cloud-based companies. Untold billions of dollars might be at stake here.

Doubt is being cast upon many of the cloud-computing figures that get thrown around in the media including the $10 billion a year number often mentioned for Amazon Web Services (AWS). That includes $2.6 billion in revenue that Amazon (NASDAQ: AMZN) claims AWS generated in second quarter 2016. Those numbers and claims of 69% AWS growth during the quarter are among the factors that have pushed Amazon’s share prices to incredible heights. The Everything Store’s shares were trading at $743.80 on July 13, 2016.

That means any court decision in this suit will have serious ramifications for the cloud industry. A federal judge or even a jury may decide what cloud revenue is and how it is defined. That would force a change in accounting practices across the industry that might raise or lower cloud revenue figures.

Obviously it is in Oracle’s interest to settle this matter out of court, because the whole suit is a ticking time bomb that has the potential to disrupt cloud-services provider’s business. A ruling in Svetlana Blackburn vs. Oracle America Inc. might become a precedent that determines how cloud revenue is tallied.

Such a precedent would certainly affect other American-based cloud-services providers like Amazon. It might also influence courts in other countries and create a standard for determining cloud services revenue. Courts, especially those in other English-speaking countries often follow the standards set by US courts.

The matter might not be settled for years because the case has not yet gone to trial if ever. Any ruling the case would presumably be appealed, a process that can also take years. By the time a ruling comes down, industry changes or technological progress might make it meaningless.

The future of the cloud, or at least an important aspect of the cloud-services industry – may be in the hands of American court. A simple dispute between an American company and an employer might change cloud services beyond recognition.

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