The tech giants all have large cloud contracts with TikTok — and they’ll have to end service on them by January 19 unless a court intervenes.
A court’s decision upholding the divest-or-ban TikTok law may deprive many of America’s largest cloud providers of millions of dollars in contracts with the social media company and its Chinese parent, ByteDance.
The divest-or-ban law prevents companies from providing TikTok or ByteDance with “internet hosting services to enable the distribution, maintenance, or updating” of their apps. Companies that run afoul of this provision could be assessed astronomical fines.The fines would be equivalent to the number of TikTok users who continued to use TikTok after the divestiture deadline — currently January 19 — times 5,000: a number that could quickly reach into tens or hundreds of billions.
TikTok’s largest hosting contract is a $1 billion agreement with Oracle to host U.S. TikTok users’ private information and keep it safe from Chinese government intrusion. Ken Glueck, an executive vice president at Oracle, told Forbes the company plans to cease hosting this information on January 19, unless the legislature or a court intervenes to prevent the law from going into effect.
“The statute says we can’t provide cloud services after the 19th,” Glueck noted. “Whatever the law is, we’ll comply with it. It is what it is, we all move on.”
Glueck mentioned that the legislature might change the law, that President Biden might offer TikTok an extension, or that the courts might issue a stay to prevent the law from going into effect while TikTok makes its appeals. “But we’re just a vendor, we’ll comply with the statute,” he reiterated.
Oracle is not the only vendor likely to confront this conundrum. At Microsoft, a contract worth more than $20 million per month could be impacted by the law. The deal enables ByteDance to access OpenAI’s large language models through a Microsoft Azure license, and powers several other ByteDance apps, including Cici, ChitChop, Coze, BagelBell, and the AI homework help app Gauth.
ByteDance also uses Amazon’s AWS web hosting service — and TikTok’s ties to the retail mammoth have recently brought it under threat: Amazon was questioned by Congressional officials last month about a partnership between the companies. Google has also provided cloud services to TikTok in the past — in 2019, TikTok committed to spend more than $800 million on the company’s cloud offerings.
Microsoft, Amazon, and Google have not yet responded to requests for comment.
This story was originally published on forbes.com and all figures are in USD.
