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. 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.

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