APPLE and Oracle have reacted differently to President Donald Trump’s pledge that the US government will not enforce a national security law that raised potential penalties for US partners of the popular video app TikTok.
Oracle, which provides cloud services for TikTok, took Trump’s go-ahead to heart. It’s kept TikTok operational since the app briefly went offline over the weekend. Apple and Alphabet’s Google, however, which removed the app from their respective app stores to comply with the Jan 19 ban, have held off on relisting TikTok. The app has been unavailable for the past five days.
This diverging approach by some of the country’s biggest and most powerful tech companies underscores the current confusion around Trump’s order, the uncertainty about TikTok’s future and just how much political capital matters in the Trump era. Tech titans are stuck between complying with the law and appeasing a sitting president who values loyalty and expects others to follow his lead.
“I do not think there’s any doubt that the statute remains in effect, so there is some legal risk and that’s incontrovertible,” said Glenn Gerstell, who served as general counsel of the National Security Agency during Trump’s first term. “Whether that legal risk is acceptable or not is going to vary with your circumstances.”
Lawmakers and other Washington insiders have raised concern about Oracle’s role in keeping TikTok available to US users. Even with a nod from Trump, critics argue that the company could open itself up to lawsuits from current shareholders and massive fines from a future administration that may want to retroactively enforce those penalties. There is also the possibility that Trump could change his mind on enforcement and go after tech firms for billions in damages.
Oracle’s longstanding cosiness with Trump and its lucrative business entanglements with TikTok appear to be enough incentive to take on that potential legal risk. “They have obviously made the business decision that that risk, relative to the reward, is an acceptable one for them,” Gerstell said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Apple and Google, meanwhile, have come to a different conclusion. While the app is popular, it’s also free to download and the companies likely make minimal revenue from TikTok via in-app purchases compared to any potential fine they may face for violating the law. The potential upside for Apple and Google to ignore the law is “probably far less significant”, Gerstell said.
According to the law, daily fines for supporting TikTok could quickly climb into the billions of US dollars if the statute is ultimately enforced. ByteDance, TikTok and Oracle did not respond to requests for comment.
Project Texas
Oracle leaders have long aligned themselves with conservative politics. chief executive officer Safra Catz served on Trump’s transition team after the 2016 presidential election, and billionaire co-founder and chairman Larry Ellison has donated to Republicans, including Trump. Ellison is also famously close to Elon Musk, a newly central figure to the Trump orbit, and previously sat on Tesla’s board of directors and has let Musk vacation at his private Hawaiian island.
“He’s sort of CEO of everything – he’s an amazing man, an amazing businessperson,” Trump said of Ellison during an event at the White House earlier this week.
Oracle’s proximity to Trump has paid off in the past. The cloud giant was Trump’s original pick to buy TikTok in 2020 when he also tried to ban the app over national security reasons. Though the deal ultimately fell apart after Trump left office, the outcome for Oracle was arguably more transformative than the partial ownership Trump had proposed: Oracle landed TikTok’s enormous cloud infrastructure business, and was selected as a partner to help the app cordon off sensitive US user data from its Chinese parent company, ByteDance, in an effort marketed by TikTok as Project Texas.
TikTok has since become one of Oracle cloud’s most important clients as a crucial early customer of that unit, helping to validate a then-nascent part of Oracle’s business. Last summer, Oracle warned investors that a TikTok ban could hurt revenue and profits and increase expenses. The multiyear cloud contract was already worth over US$1 billion by the time TikTok announced in 2022 that US user data was flowing through Oracle’s servers, according to sources familiar with the work who asked not to be named discussing private information. Oracle also won work from TikTok to host data in the EMEA region, the sources said.
Due to political and press intrigue, work with TikTok was considered highly confidential internally. TikTok was codenamed “Telesis” inside Oracle, and staff working on relevant projects had to sign separate nondisclosure agreements, the sources said. Ultimately, a proposal for TikTok to cordon off US user data from its Chinese parent company was never accepted by US regulators, though the two companies still have a cloud partnership.
It could not be determined how much TikTok’s spending on Oracle Cloud has grown since its initial commitments, but Kirk Materne, an analyst at Evercore ISI, estimates Oracle’s annual revenue from TikTok may now be in the range of US$500 million to US$800 million.
A TikTok lifeline
Trump’s executive order on his first day in office directed his Justice Department not to enforce penalties from the divest-or-ban law. The order gave ByteDance an additional 75 days to orchestrate a deal for the app while the new administration evaluates the situation.
Under the new law, TikTok can remain in the US if ByteDance executes a “qualified divestiture”, but it will largely be up to Trump to determine what kind of deal satisfies the country’s national security concerns. ByteDance would need to finalise a sale by early April, when Trump’s temporary non-enforcement order lifts. But there’s been little indication publicly that ByteDance is willing to sell, nor that it’s entertaining proposals from Trump or offers from interested bidders.
“I think we are quite optimistic we will find a solution,” ByteDance board member and General Atlantic chief executive officer Bill Ford told Bloomberg Television this week.
It’s unclear if Trump’s extension is even legal under the current law. Discussion during TikTok’s Supreme Court hearing made clear that even the justices did not know if an extension was allowable after the law went into effect on Jan 19.
“I am at a loss to describe to you where the law is at this moment,” said Dick Durbin, the Senate Judiciary Committee’s top Democrat, earlier this week. The law was overwhelmingly passed by Congress, signed by President Biden and upheld by the US Supreme Court, he added, but “now the new president is saying, ‘ignore it if you wish’”.
Even members of Trump’s own party are criticising his handling of the matter. Trump loyalist and former VP hopeful, Senator Tom Cotton of Arkansas, believes tech companies helping TikTok operate are opening themselves up to legal penalties and “hundreds of billions of US dollars of ruinous liability”, he wrote on X. “Think about it.”
Apple and Google clearly are. Bloomberg Intelligence analysts believe it’s unlikely either company will reinstate TikTok on their app stores because of the potential legal exposure. “When facing risk on this scale, the better course is to heed the law,” wrote analysts Matthew Schettenhelm and Tamlin Bason.
Oracle may see value in following a different path. At an event this week, with Ellison standing feet away, Trump said he was open to the idea of Musk or Ellison buying TikTok. “I’d like Larry to buy it, too,” he said. BLOOMBERG
