Tiktok Ban and Trump Executive Order Lead to Tech Company Dilemma
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Tiktok Ban and Trump Executive Order Lead to Tech Company Dilemma

For more than six years, Amazon Web Services, the world’s largest cloud computing company, has provided technical support to deliver TIKTOK videos to tens of millions of Americans.

But over the weekend, Amazon faced a dilemma. A new law came into force to force Tiktok, owned by the Chinese company Bytedance, in the United States. Tech companies were banned from distributing and updating or would face financial penalties. At the same time, President-elect Donald J. Trump told tech companies that he planned to pause enforcement of the law with an executive order.

Just hours before the ban took effect, Amazon appeared to be complying with the law, according to a New York Times review of the way it handles Tiktok’s web traffic. Instead, Akamai Technologies, a Massachusetts-based company that was already helping deliver Tiktok videos to phones, took on more technical support.

The change made by The Times, which was caught by digital forensics, was one of the small behind-the-scenes maneuvers that showed tech companies diverging their approach to the Tiktok ban.

Apple and Google also chose to follow the law. They quickly removed Tiktok and other apps owned by Bytedance from their app stores. But Oracle, another tech giant, was still processing and serving Tiktok user data. Akamai and fast, whatever speed processing times for Tiktok videos still do.

The schism highlights the dilemma that forced the Tiktok ban on major American tech companies: risk alienating a Mercurial president who has supported Tiktok, an extremely public part of his first politicians. Several legal experts said it was unclear whether Mr. Trump’s executive order would exempt companies from the law’s fines or potential lawsuits.

“On the one hand you have this massive theoretical liability of up to $850 billion and on the other hand you have the potential benefits of doing Trump’s wishes and being in his good graces,” said Neil Suri, an analyst at Capstone, a Political Research company.

Technology companies have assessed this risk differently. Apple did not believe Mr. Trump’s executive order would be enough to override its responsibility to follow the law, according to two people who spoke to Apple representatives about its plans but were not authorized to speak publicly. Google made a similar decision, said one of these people, who also spoke to its representatives, and a person familiar with the company’s thinking.

Oracle and others had been hesitant to break the law under the Biden administration, said two people involved in their work over the weekend who did not have permission to speak publicly – a big reason the app took a half over the weekend day has ended. When the ban took effect.

But they believed Mr. Trump’s promise of an executive order conveyed new power and led them to restart app operations in the United States, the people said.

Amazon, Fast and Tiktok did not respond to requests for comment. Google, Apple, Oracle and Akamai declined to comment.

The various answers seem to be driven by money, politics and fear.

Apple and Google studied intensively in the weeks before the Tiktok ban. They control the software that powers millions of American smartphones.

They also have a financial interest in the app as they benefit from Tiktok’s use of its in-app payment services. Last year, Apple collected $354 million in fees from TIKTOK, while Google collected $63 million, according to AppFigures, a market research firm focused on the app industry. This was done primarily through digital coins on Tiktok that users can buy and gift to the creators they like, the company said.

However, removing the app would be consistent with positions Apple and Google have taken in the past, globally, to follow the laws of the countries in which they operate.

And it was likely that Tiktok could survive for several months without their support. Over the years, Tiktok has moved much of the app’s operations to servers run primarily by Oracle, making it less reliant on smartphone software, said Ariel Michaeli, the founder of AppFigures. He said it also updated the app in the days before the ban, delivering the latest version at the last possible moment.

Oracle and Akamai told investors they will lose significant revenue and profits if they stop hosting and distributing Tiktok content.

They also play a critical role in ensuring that the Tiktok app is operational. If they stop working with Tiktok, the app would not work and an outcry would follow. Much of the internet exploded on Saturday and Sunday when Tiktok briefly went dark.

Oracle also has a uniquely close relationship with Mr. Trump and Tiktok. Larry Ellison, the company’s founder and chief technology officer, joined Mr. Trump on Tuesday on a new $100 billion artificial intelligence initiative. At the event, Mr. Trump mentioned that Elon Musk or Oracle could buy Tiktok and emphasized his “right to make a deal.”

Oracle is also working with TIKTOK to store sensitive US user data and has been in discussions with Tiktok to review the company’s video recommendations in the US as part of a broader security plan.

Amazon’s role was small but important. It had hosted a critical piece of data called the domain name service record, directing hundreds of millions of web browsers and smartphone apps to Tiktok servers.

But the consequences of the law, which passed Congress with broad bipartisan support and was upheld unanimously by the Supreme Court, could be painful. Oracle and other companies could open themselves up to new liability by relying on the executive order, legal experts say. Mr. Trump could change his mind or selectively enforce the law against companies that fall out of favor, and a future administration could implement financial penalties later on the law’s timeline, they say.

Senator Tom Cotton, Republican of Arkansas and chairman of the Senate Intelligence Committee, called some major technology companies last week to say they must comply with the law. He said on to violate, sued.

Sen. John Thune, Republican of South Dakota and the majority leader, said this week that “the law is the law” and “ultimately it must be prosecuted.”

A group of Tiktok users or social media companies like Meta or SNAP could also bring lawsuits challenging the executive order. Users could argue that the U.S. government was inadequately protecting their data by failing to enforce the law, Capstone analysts wrote, saying that was the most likely type of lawsuit to emerge.

“Oracle makes the calculation that the likelihood of them being liable is pretty minimal,” said Capstone’s Suri. “Obviously Apple and Google have not made this calculation. This is a question from them who see the risk differently. “

David McCabe And Nico Grant Contributed reporting.