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Oracle cites 'force majeure' to shield itself on controversial data center
(bloomberg.com)
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by simonpure
by simonpure
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.)
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.
https://www.datacenterdynamics.com/en/news/new-mexico-regula...
And not seeking necessary regulatory approval doesn't really seem like things 'beyond their control.'
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.
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:
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.
at some point the phrases loses its meaning if it becomes applicable to pretty much anything.
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.
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.
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.
More broadly, Force majeure refers to an act of God or such outside of human control.
We have to stop shielding and bailing out companies(ans banks) when their bet fails.
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.
Take Java as a solid example, they removed JavaFX from the core of Java, which made everyone think JavaFX was dead, recently they started providing enterprise support for JavaFX, which signals its production ready, but, who wants to trust Oracle? I sure don't. I can use C# for free without any of that baggage, and if I get all sorts of stable options for a GUI, and with Avalonia (and Uno?) I can run my GUI on any OS.
I hope whoever buys Oracle fires Larry by email.
> "Oracle signed a deal with solid oxide fuel cell (SOFC) developer Bloom last year for 1.8GW of power, expanding it to 2.8GW of capacity in April."
https://www.datacenterdynamics.com/en/news/new-mexico-regula...
Apparently this one would have been the largest SOFC installation, by far.
[1] https://www.ft.com/content/82dbd39c-f8dd-4ef1-8a80-d430a2257...
[1] https://www.spglobal.com/ratings/en/regulatory/article/-/vie...
https://www.reuters.com/business/oracle-cites-force-majeure-...
[0] https://finance.yahoo.com/technology/ai/articles/oracle-cite...
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If Oracle was able to build the data center under-cost and faster than expected, that would be a better sign the bubble was bursting!
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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.
I don’t think Oracle is proposing they get a data center they didn’t finish paying for.
In this situation, governments are now enacting new regulation that ban companies like Oracle from building new data centers.
so the argument is even stronger than for oracle.
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"Enterprise" is still very much in the camp of "using Oracle". Which is likely how they survive despite being so customer unfriendly. "Enterprise" users are simply using what "the enterprise" purchased and have little choice in the matter.
https://www.404media.co/we-hacked-the-fbi-hackers-say-they-h...
https://techcrunch.com/2026/09/22/hacking-group-shinyhunters...
https://cloud.google.com/blog/topics/threat-intelligence/shi...
The substance of the contracts is an afterthought.
Nobody picks oracle anymore, and everybody who's using oracle wishes they were off it and is working on projects to detach themselves from paying oracle heaps of money for software that's no better than open source alternatives.
Their quarterly statements say otherwise. The layoffs are not a function of declining sales, but of cutting back to conserve cash for AI build out.
You can still use OpenJFX with OpenJDK, can't you?
When you're talking about business, the software itself doesn't really matter at all. Accountability is everything. There has to be a throat you can choke, an ass you can drag onto the carpet, when it fails. That is the reason why Oracle persists as an organization: they assume accountability for the data storage layer, freeing their clients to worry about other things.
This also has implications for developers grousing about "being an accountability sink" for AI-generated code. Being an accountability sink is the business and as Larry has demonstrated, quite lucrative indeed. Developing the code is a side effect that can now be done close to 100% by machine.
Btw I hate oracle but they’ve got their business model down to a T.
And SQL DBs are not going anywhere in next few decades.
Thank you for redefining my entire career, in fact, everywhere I've worked at as a developer, if they ever used Oracle either migrated completely away from it or are in / were in the process of migrating from it, including Fortune 500 companies. Which is why I asked what I asked. I'm genuinely curious.
Perhaps you and employers that happen to stick with Oracle aren't looking for the same thing?
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I certainly hope not; you can't fire[1] someone via email.
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[1] Out of a canon. Into the sun.
Takes too much delta-V. Like... a lot of delta-V. Shooting out of the solar system takes less energy. #begreen
One can't say whether it's valid or not without reading the actual contract and looking at the state's case law.
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I'm assuming this is a reference to the classic Clarke and Dawe skit:
They are using tiny fractions of the data centres they claim to have "built".
There's a significant risk of a Chinese real-estate bubble here.
The money doesn't seem to back this up. Why would Anthropic pay through the nose and make such desperate moves for compute?
That's pretty consistent with them having not been able to get the physical data centre capacity they have supposedly had built actually online, I think?
More to the point, Anthropic appears to mostly be capable of serving its customers, doesn't it? It's not so resource-starved that people aren't able to use it at all.
So what does it tell you that only 300 megawatts was enough to make a very meaningful difference to that?
If Anthropic's fortunes can be meaningfully changed by only 300MW which allowed them to uncap their customers, what is the case — even including OpenAI and Google -- for the demand for the 23GW of unbuilt AI data centre build commitments out there?
Satya Nadella himself said there will be some oversupply.
What if there is actually lots of oversupply?
My instinct is that the internet/software/IT industry sees its own demand for Anthropic and OpenAI and is misleading itself into thinking that this is representative of customer demand in the rest of the industry, let alone others, when what possible other human industry tasks are there that match the compute demands of writing software?
Another way to look at it: if the general demand for AI compute is so insatiable, how in this world of existing insatiable demand did xAI have spare capacity to lease? Why does Meta have spare capacity to lease?
The issue here is very evidently one of allocation. But allocation tends to get solved over time. That could leave quite a lot of very big data centres relatively empty.
But if you're talking about the capital investment that's being talked about as too high, I would agree that it's way too high, as all these big tech breakthroughs result in too much building at first. Which hurts the builder's profitability but helps consumers.
There is more demand for compute than there is supply, and that demand is going up.
Look at all of the things that have been and are being automated and realize that we're year 6 into a hundred year journey.
Look around you at all the things that aren't automated. They will be.
The world you grew up in won't be here for much longer. We're going through a transformation even more dramatic than the industrial revolution. There were no airplanes and then we landed on the moon.
Edit: downvotes as expected, but I'm shocked that a bunch of smart people at HN aren't taking the bet where this leads to a complete upending of the status quo. The holdout crowd needs to dream bigger.
The models are solving Millennium Prize problems, finding novel biological pathways our scientists can't see, putting every single software engineer out of the job of "coding by hand", and doing the same to designers, marketers, filmmakers, and 3D artists who used to have to operate pixel by pixel / photon by photon.
Everything is going to be AI soon.
If your take on the abilities of AI is correct, we aren't talking about upending the status quo, we're talking about an ELE for the human race.
What's being talked about is a massive extension of human capability, into the intellectual sphere rather than the physical environment. The atom bomb had a clear way to get to extinction, a sudden chain reaction that leads to collapse of the entire biome.
The only way AI gets there is something like control of the nuclear weapons on all sides and that control becoming suicidal. Every other major event leads to at most civilization collapse, after which I assume we will have some sort of Butlerian Jihad restrictions on getting into the same situation.
But, I would love to know what I'm missing here, if ELE has clearer routes!!
The real answer to “how many data centers do we need” is hard. Anyone giving confident answers to this should be suspicious.
The easy type of answer you get from those kind of people will always be “we are building too much”. They’d have said that 3 years back and have no shame in admitting it.
The thing is, you can overestimate or underestimate. Both have cons. The people sincerely believing this is all hype will always underestimate because all their epistemic muscle haven’t been used.
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Stupidity on the behalf of management to get into AI at any cost even if it means becoming a land-lord of AI data-centers. They have good company with allbirds and other crypto-miner-turned datacenter operators. This is what a mania looks like. Hustlers of all shapes and sizes line up for dumb money which wont ask any questions. At the backend of this, these operators will be cleaned out, and sold to the highest bidders and that explains why microsoft is renting capacity, because they know at some point in the future there will be foreclosures, and they can buy on the cheap.
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Stock market valuations measure future revenues. So if the reason is that the demand is so high that we are facing new bottlenecks, it doesn’t imply that the underlying capabilities are fake or that the demand is fake. Just that it’s another hurdle to cross.
I don't think many people are saying all AI demand is fake.
People are saying that there isn't as much demand for AI as is claimed by the frontier labs, which is pretty reasonable when you consider Anthropic has been floating the idea that their TAM is $30 trillion, approximately the entire US GDP.
How profitable a datacenter is, is kind of irrelevant to the convo, if you are unable to power it due to material shortages.
It isn't irrelevant, because they have to make money to be built. The debt for these projects was already issued, so you have to pay the coupons. If Oracle doesn't pay the developer is gonna suffer on their end.
But, laws changed is typically not "force majeure". It is just a business risk.
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That makes the schema calcify, and the DB becomes the most stable format of the data. I've worked more than one place where "upgrade the core DB between major versions" was a multi-quarter effort.
It tends to come from a couple of common places...
* efficiency - triggers, stored procedures and constraints can often speed up throughput in terms of transactions per second by reducing the number of round trips from the application to the db. I know above i mentioned its not about qps necessarily, but a telephone billing db probably includes records of calls and txts and so on, which across millions of people adds up.
* Older architecture patterns didn't put a single service in front of a database for that service. Instead theres a single database for the company, or for a function within the company, and many programs and services interacted with that database. In such an architecture, stored procedures and triggers are really useful for some business logic, to ensure consistency between various systems... Need to update tax rules for one state? Just donit in the db instead of the sales pos system at the stores and the billing system and the phone operator sales system and the website and the gateway for 3rd party sellers, etc. there's a certain logic to it too... This data is fundamental to the business and has lots of rules associated with it, those make sense to place together - the rules change independently of the systems accessing those rules, and over the life of the company those rules tied to laws and accounting may last far far longer than any given pos system or website rewrite.
Now imagine an army of those that can't function without access to a couple of cloud providers.
That simply won't happen. It's a massive vulnerability both in terms of downtime and poisoning, and it's a problem in terms of latency.
Serious robotic compute will be much, much closer to the robot. If not we're all screwed.
That’s why Altman is burning the excess on those research projects.
Your take is spot on. Inb4 boosters like echelon come in.
Oversupply is always going to happen- humanity over invests. When has it ever underinvested? Lmao.
Not the way I was thinking off; I was thinking more along the lines of brain atrophy until humans are helpless (maybe 2 complete generations of humans).
And that's a short extinction; the KT extinction took place over thousands of years. If, 1000 years from now, we are finally at the place described in "The Machine Stops", only then will an observer be able to decide that we don't have the necessary critical mass of intelligent humans anymore.
Humans got to be the apex predator simply on intelligence alone. It's possible that without thinking ability we'd go extinct.
That's not how humans work. We developed math, art, literature, etc., because people love the act of doing it. We will continue to do that.
We're not going to stop thinking because we don't have to. We stop thinking because we subject ourselves to political propaganda, or religious belief systems, or other group control methods that turns off critical thought. But even then, it's only a subset of the population, it won't get us all.
Sure, for art, literature, etc. For math, physics, biosciences, etc, we pay people to do it. There are too few people who would work for free to push progress in those areas. We are most certainly not going to do that, we're going to leave it to the AIs and hope for the best.
This sort of thing (human brains atrophying over generations) is like something out of a dystopian nightmare[1], but hey, that's natural selection for you: if intelligence is not a selection criteria (and it won't be if machines do all the thinking), it's unlikely that it will be present in future generations.
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[1]. "The Machine Stops", E. M. Forster, 1907. Or "Pump 6" (can't remember the author, Italian author). Just because it's fiction does not mean it's impossible.
My take is that after a period of turmoil, most humans will be doing higher level cognitive work than we’re doing now, because all the lower level work will be done by AI agents, and so progress will accelerate multifold.
Crazy times.
Govt’s are waiting for this stuff to mature and shake out. USA can’t be trusted anymore.
It just seems like the AI guys could easily win this debate if they could just articulate the why of it beyond just the near-parodic "everything will be AI in the future!". Like why not be a positive articulator and defender of what the extreme influx of datacenters will bring to the people? Don't you think that would be at least a stronger argument to make here? Why police the ideology or scare people with your position when you could, I don't know, win their hearts and minds?
Isn't that why you (presumably) like AI? Because it brings good things to people?
> They’d have said that 3 years back and have no shame in admitting it.
3 years back, we had strong push for absolutely unprepared AI into areas where it sux. All the while onslaught of lies about its capabilities and hype.
In the meantime we had "artists are all obsolete suckers hahaha" and "humans are obsolete" and "AI will raise your kids so that you dont have to interact with them".
And we had "we the AI company will destroy us" as if it was a good thing.
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(And what you imply is also true, isn’t it - OpenRouter and equivalents will address this demand while also resolving some underlying underutilisation)
But the claims of awful shortages feel wrong when there’s little evidence of radical undersupply for the two big firms who are offering heavily subsidised plans.
It all seems pinned on the idea that some compute-guzzling application users clearly don’t have right now will emerge.