Tiktok ban and Trump executive order lead to tech company's dilemma

For more than six years, amazon Web Services, the world's largest cloud computing company, provided technical support to deliver Tiktok videos to tens of millions of Americans.

But over the weekend, amazon faced a dilemma. A new law was coming into effect Banning Tiktok, owned by the Chinese company Bytedance, in the United States. tech companies were prohibited from distributing and updating it or face financial penalties. At the same time, President-elect Donald J. Trump was telling tech companies that he planned to halt enforcement with an executive order.

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

The change, which was picked up by digital forensics conducted by The Times, was one of the small behind-the-scenes maneuvers that showed how tech companies have diverged in their approach to the Tiktok ban.

Apple and Google also chose to follow the law. They quickly removed Tiktok and other Bytedance-owned apps from their app stores. But Oracle, another tech giant, was still processing and serving Tiktok user data. Akamai and Quickly, which speed up processing times for Tiktok videos, were also still doing it.

The schism highlights the dilemma that the Tiktok ban has forced on major American tech companies: risk alienating a mercurial president who gave support to Tiktok an extremely public part of his inaugural policymaking, or risk breaking the federal law and face billions of dollars in penalties. Several legal experts said it was unclear whether Trump's executive order protects companies from the law's monetary penalties 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 complying with Trump's wishes and being in his good graces,” said Neil Suri, an analyst at Capstone, a policy research firm.

technology companies made a different assessment of that risk. Apple did not believe Mr. Trump's executive order was enough to override its responsibility to follow the law, according to two people who spoke to Apple representatives about their plans but were not permitted to speak publicly. Google came to a similar decision, said one of these people, who also spoke with 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, saying two people involved in their work over the weekend who were not allowed to speak publicly, a key reason the app went down for half a day during on the weekend, When the ban came into effect.

But they believed Mr. Trump's promise of an executive order had new power, leading them to help the app restart operations in the United States, the people said.

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

The different responses seem to be driven by money, politics and fear.

Apple and Google were under intense scrutiny in the weeks leading up to 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 earned $354 million in fees from Tiktok, while Google raked in $63 million, according to AppFigues, a market research firm focused on the app industry. That was primarily through digital currencies on Tiktok that users can buy and gift to creators they like, the firm said.

But removing the app would be consistent with the positions Apple and Google have taken in the past, around the world, to follow the laws of the countries where they operate.

And it was likely that Tiktok could survive for several months without their support. Over the years, Tiktok has shifted much of the app's operation to servers, managed primarily by Oracle, so it's less reliant on smartphone software, said Ariel Michaeli, founder of AppFigures. He said he 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 may lose significant sales and profits if they stop hosting and distributing Tiktok content.

They also play critical roles in making sure the Tiktok app is operational. If they stop working with Tiktok, the app would not work and a protest would follow. Much of the internet exploded on Saturday and Sunday when Tiktok briefly went dark.

Oracle also has a unique relationship with Mr. Trump and with Tiktok. Larry Ellison, the company's founder and chief technology officer, joined Mr. Trump for an announcement Tuesday about 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 also works with Tiktok to store US user data and has been in talks with Tiktok to help review the company's video recommendations in the United States as part of a broader security plan.

amazon's role was small but important. It had been hosting a critical database, called a domain name service registry, that directs hundreds of millions of web browsers and smartphone apps to Tiktok servers.

But the consequences of flouting the law, which passed with broad bipartisan support in Congress and unanimously upheld by the Supreme Court, could be painful. Oracle and other companies could open themselves 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 then seek financial sanctions under the law's timeline, they say.

Sen. Tom Cotton, R-Arkansas and chairman of the Senate Intelligence Committee, made calls to some major tech companies in the last week to say they needed to comply with the law. He said in .

Senator John Thune, Republican of South Dakota and the majority leader, <a target="_blank" class="css-yywogo" href="https://x.com/AnthonyAdragna/status/1882215098523271509″ title=”” rel=”noopener noreferrer” target=”_blank”>saying This week, “the law is the law” and “ultimately it will have to be followed.”

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 statute, Capstone analysts wrote, saying it was the most likely type of lawsuit to arise.

“Oracle is making the calculation that the likelihood of them being responsible is pretty slim,” said Capstone's Mr. Suri. “Obviously, Apple and Google have not made that calculation. That's a matter of them seeing the risk-reward differently.”

David McCabe and Nico Grant Contributed reports.