America’s largest cloud companies would lose millions from a TikTok ban

America’s largest cloud companies would lose millions from a TikTok ban

A court’s decision to divest or ban TikTok could result in many of America’s largest cloud providers being stripped of millions of dollars in contracts with the social media company and its Chinese parent company 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 violate this provision could face astronomical fines. The fines would be equal to the number of TikTok users who continue to use TikTok after the divestment deadline – currently January 19 – times 5,000: a number that could quickly reach into the tens or hundreds of billions.

TikTok’s largest hosting deal is a $1 billion agreement with Oracle to host the private data of U.S. TikTok users and protect it from interference by the Chinese government. Ken Glueck, executive vice president at Oracle, said Forbes The company plans to stop providing this information on January 19 unless lawmakers or a court intervene to prevent the law from taking effect.

“The statutes say that we are no longer allowed to offer cloud services after the 19th,” noted Glueck. “Whatever the law is, we will follow it. It is what it is, we all move on.”

Glueck mentioned that lawmakers could change the law, that President Biden could offer TikTok an extension, or that courts could issue a stay to prevent the law from taking effect while TikTok appeals. “But we are just a seller, we will abide by the statutes,” he reiterated.

Oracle is not the only provider that is likely to face this problem. At Microsoft, a contract worth more than $20 million per month could be affected by the law. The deal gives ByteDance access to OpenAI’s large language models via a Microsoft Azure license and supports several other ByteDance apps, including Cici, ChitChop, Coze, BagelBell and AI homework help app Gauth.

ByteDance also uses Amazon’s AWS web hosting service – and TikTok’s ties to the retail giant have recently put it in danger: Amazon was questioned by members of Congress last month about a partnership between the companies. Google has also provided cloud services to TikTok in the past – in 2019, TikTok committed to spending more than $800 million on the company’s cloud offerings.

Microsoft, Amazon and Google have not yet responded to requests for comment.

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