Thread

Oracle cites 'force majeure' to shield itself on controversial data center

155 points · 153 comments · simonpure

tiffanyh · 1790264251 · focus · HN ↗
I realize there’s a lot of hate in this thread, but I think there’s another side to this.
Force majeure is basically there for situations where something outside a company’s control prevents them from delivering on a contract.
I can see Oracle’s argument here. A number of states and local governments that were originally very supportive of new data centers, including places like Texas and Pennsylvania, have since started blocking or restricting new construction.
If Oracle signed these contracts and the government later changed the rules and have stopped those projects from moving forward, it’s hard to argue they should still be held to the same delivery commitments.
(That seems pretty close to the type of situation force majeure is meant for.)
1. ipython · 1790264798 · focus · HN ↗
  In that case, would the people caught unemployed and with upside down loans in the 2008 financial crisis would have a reasonable argument for "force majeure" to cancel their mortgages? ... After all, they had a reasonable expectation that the economy would continue to support their employment, either with their current employer or by finding a new job that paid just as well?
  at some point the phrases loses its meaning if it becomes applicable to pretty much anything.
  1. tiffanyh · 1790264952 · focus · HN ↗
    In your example, governments we not enacting new regulation that banned you from getting a new job.
    In this situation, governments are now enacting new regulation that ban companies like Oracle from building new data centers.
    deknos · 1790265475 · focus · HN ↗
    No, but the economic situation is banning you from getting a job, which is even more powerful than the government, especially when the government does not support a rising economy which will create jobs, people can build wealth with.
    so the argument is even stronger than for oracle.
    [deleted] · 1790272221 · focus · HN ↗
    [deleted]
  2. twoodfin · 1790271410 · focus · HN ↗
    Cancel their mortgages and keep their houses?
    I don’t think Oracle is proposing they get a data center they didn’t finish paying for.
  3. eli_gottlieb · 1790282482 · focus · HN ↗
    I mean yeah it's a political choice. Big firms get to call force majeure. Households do not.
2. AnimalMuppet · 1790265002 · focus · HN ↗
  A reasonably-written contract would have weasel words in it - something like "subject to zoning approval, and approval of the needed power and water and etcetera". Oracle has very expensive lawyers; they should have had those clauses in there.
  Still, you write those for the known possible obstacles. Having the state government change the ground rules may not have been one of your known possibles. So, yeah, I could see force majeure being at least possibly reasonable.
  1. dh2022 · 1790266129 · focus · HN ↗
    If developer's lawyers were better than Oracle's lawyers and stopped those weasel-words in the contract - that would be poetic justice for Oracle.
    Obscurity4340 · 1790291839 · focus · HN ↗
    Contracts are nothing more than programs
3. mhurron · 1790265767 · focus · HN ↗
  > the government later changed the rules
  Did they, or was it found that they had ignored them and are now being forced to follow the law? Those state and local governments were so supportive that the processes for approvals and reviews was all done in secret and without necessary inputs. You know, the things the laws in those areas said you had to do.
  In this particular project, it looks like Oracle and Blue Owl Capital singed the contract before state regulators reviewed and provided necessary approvals.
  <a href="https://www.datacenterdynamics.com/en/news/new-mexico-regulators-reject-natural-gas-pipeline-for-oracles-25gw-project-jupiter-data-center/" rel="nofollow">https://www.datacenterdynamics.com/en/news/new-mexico-regula...
  And not seeking necessary regulatory approval doesn't really seem like things 'beyond their control.'
  1. tiffanyh · 1790266324 · focus · HN ↗
    Maybe some are not as familiar with this, but I'll use Texas as an example.
    In 2025, Texas state government announces a $40B infrastructure investment specifically calling out building data centers for AI as a key part of that package.
    <a href="https://gov.texas.gov/news/post/governor-abbott-google-announce-40-billion-investment-in-texas" rel="nofollow">https://gov.texas.gov/news/post/governor-abbott-google-annou...
    Then, just this week, Texas government reverse their position and halts permits for all data centers:
    <a href="https://gov.texas.gov/news/post/governor-abbott-directs-tceq-to-halt-data-center-permits" rel="nofollow">https://gov.texas.gov/news/post/governor-abbott-directs-tceq...
    I'm not trying to defend Oracle, but I can understand their perspective on this.
    If the state government is only now blocking what their contract commits them to deliver, it's unreasonable.
    LunaSea · 1790269438 · focus · HN ↗
    Seems like Oracle didn't have anything in writing. Looks more like a risk of doing business and over promising.
    sieabahlpark · 1790272831 · focus · HN ↗
    [dead]
    Analemma_ · 1790306617 · focus · HN ↗
    I mean if you're loaning Oracle the money for this construction I think it's on you as much as it is on them to make sure they got it in writing.
    expedition32 · 1790343154 · focus · HN ↗
    Yeah I'm thinking Oracle never really got the building permit but just assumed it would go ahead.
    wat10000 · 1790272832 · focus · HN ↗
    If I contract with a construction company to build a house, and they can’t get permits because the local government turned anti-housing, would that be force majeure and allow the construction company to get out of the contract without big penalties? (Actual question here, not rhetorical.)
    JumpCrisscross · 1790272995 · focus · HN ↗
    This is closer to you got a permit and then it got revoked for no reason under your control.
    addaon · 1790282152 · focus · HN ↗
    Except without the "getting the permit" part. A promise of a permit is not a permit. Try filing one at city hall and see how it goes.
    tiffanyh · 1790288581 · focus · HN ↗
    It's not that simple though.
    It's not like you get the permit before you have even bought the land and designed the plans/architecture/engineering for the data center.
    You have to do all of that first, and only once all of that is done, can you submit for a permit.
    Which can take not just months, but maybe even a year (or more).
    So the situation is, regulation changed during the planning phase. So what do you do now? You obviously can't deliver on a contract that would cause you to break new laws/regulations - that didn't exist when you started all of this.
    watwut · 1790319669 · focus · HN ↗
    The laws did not changed. It is an important detail here.
    But, laws changed is typically not "force majeure". It is just a business risk.
4. cmiles8 · 1790271316 · focus · HN ↗
  A hurricane wipes out your data center and someone sues you for it not being finished on time. Thats what force majeure is for.
  You made a series of bad business decisions != force majeure.
  As the AI bubble starts to pop we’re going to see a lot of creative claims as everyone rushes for the exits and the debt bomb behind all this infra lights off.
  1. red-iron-pine · 1790274479 · focus · HN ↗
    force majeure may not cover you even in the case of hurricanes.
    the idea is that force majeure is for things that you could not forsee, could not plan for, and could not stop even if you were aware.
    if your company sets up shop in a hurricane prone area but then fails to keep servers in other colo / cloud locations -- and then goes down cuz a hurricane inevitably hits Florida, you absolutely can get sued and lose.
5. SlightlyLeftPad · 1790272592 · focus · HN ↗
  It’s so well known that Oracle is such a hostile and predatory company, it’s sooo hard for me to look at this objectively.
  1. p4ul · 1790279783 · focus · HN ↗
    Be careful, you're in danger of anthropomorphizing the lawnmower. [1]
    [1] <a href="https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2308s" rel="nofollow">https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2308s
    SlightlyLeftPad · 1790315995 · focus · HN ↗
    Ah, so eloquently stated.
6. meep_meep_meep · 1790273311 · focus · HN ↗
  No special rules for billionaires.
7. staticautomatic · 1790278968 · focus · HN ↗
  My recollection from law school is that force majeure is more like a specific subset of "impossibility of performance", which is to say it's not generally the same as "something outside a company's control."
8. gehsty · 1790280827 · focus · HN ↗
  I can’t see what the event that has caused a force majeure claim is, though local opposition is not unexpected in any infrastructure buildout - I would be surprised if that is permitted / accepted.
  All the reporting is about delaying payments, not a good look, and definitely undermines the FM claim. FM generally speaking needs something truly in expected and outside of control - COVID / maybe a literal war in the region your a working in. Increased cost exposure and push back from local opposition would not clear the FM bar in my experience.
9. impure · 1790310493 · focus · HN ↗
  Reuters is reporting that it is due to difficulty getting power. Which, if correct, should have been a foreseeable risk.
10. Xelbair · 1790318699 · focus · HN ↗
  There's zero reason why a company, who failed to account for regulatory risk, should be able to call that to avoid consequences.
  We have to stop shielding and bailing out companies(ans banks) when their bet fails.
11. bitfilped · 1790323279 · focus · HN ↗
  Maybe they should have negotiated legal deals from the get go?
12. hilbert42 · 1790338371 · focus · HN ↗
  "Force majeure is basically there for situations where something outside a company’s control prevents them from delivering on a contract."
  More broadly, Force majeure refers to an act of God or such outside of human control.

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