Over the weekend extending into early this week, TikTok's user experience in the United States was adversely affected due to a power outage at an Oracle Corporation data center. Oracle, which manages critical infrastructure for TikTok, acknowledged the occurrence of a temporary power failure at one of its U.S. data centers, resulting in service interruptions that impacted TikTok's platform performance stateside.
In an official communication to Reuters, Oracle outlined the disruption caused by the outage, which led to slower load times, issues with content posting, and diminished engagement among U.S. users during that period. TikTok separately confirmed on its website that the technical difficulties were attributable to the power failure at a domestic facility.
The company issued several status updates on its platform, describing the situation as a "major infrastructure issue" linked directly to the outage. Progress toward restoring full service functionality was reported as "significant" by Tuesday, although TikTok did caution users that some problems, particularly those associated with posting new content, might linger temporarily.
This service disruption unfolded shortly after TikTok finalized a pivotal corporate restructuring aimed at its U.S. operations. This restructuring established a new joint venture known as TikTok USDS Joint Venture LLC, which is managed by Adam Presser, a former TikTok operations leader. The joint venture is structured so that U.S. and international investors own a combined 80.1% stake, with the Chinese parent company ByteDance retaining a 19.9% share, designed to mitigate regulatory concerns and avoid a potential national ban within the United States.
Among the managing investors are Oracle itself, private equity firm Silver Lake, and Abu Dhabi-based MGX, each holding a 15% stake, playing an instrumental role in the governance of the new U.S. joint venture.
Parallel to the service issues, a rise in U.S.-based daily app deletions has been observed, as reported by market intelligence provider Sensor Tower. This increase, nearly 150% greater over the last five days compared to the prior three-month average, aligns with the period following TikTok's release of an updated U.S. privacy policy that accompanies the new operational structure.
The updated privacy terms have sparked user concern due to language indicating the possible collection of sensitive personal data, including demographic and financial details. The evolving data policy landscape amid TikTok's shift to American management appears to be contributing to a heightened user skepticism regarding data privacy and handling.
On the financial markets side, Oracle's shares reacted to the news by closing Tuesday's session at $174.90, marking a decline of 4.13%. However, in after-hours trading, the stock price rebounded modestly, gaining 1.16% to $176.93, according to Benzinga Pro data. Additionally, Oracle's stock performance ratings, as per Benzinga's Edge Stock Rankings, indicate lower momentum and value scores, reflecting a negative trend over short-, medium-, and long-term evaluation periods.
In summary, the Oracle data center power outage not only affected TikTok’s U.S. user experience but also coincides with the company's strategic operational restructuring in the U.S. and accompanying privacy policy changes. These events collectively contribute to technical challenges and increased user apprehension within a critical market segment.