Oracle canceled multibillion-dollar deal with Chinese Tencent under US pressure

American corporation Oracle canceled a contract with Chinese Tencent to lease computing power for artificial intelligence worth an estimated $7 billion. The decision was made after officials of US President Donald Trump's administration expressed concern about the Chinese company's access to advanced American technologies.

This was reported on November 4 by Financial Times citing sources familiar with the terms of the deal.

The contract provided for a five-year lease of Oracle capacity in Southeast Asian data centers with access to approximately 100,000 advanced artificial intelligence chips.

For Tencent, this agreement was to become the largest overseas AI capacity lease deal. It would have allowed the Chinese corporation to use processors whose access within China is limited by technological and export rules.

According to FT, American officials approached Oracle and expressed concerns about cooperation with Tencent. At the same time, authorities in Guangdong province also pressured the Chinese company, urging it to use domestically produced processors more actively.

The cancellation of the contract indicates increased political risks for American cloud providers that offer Chinese clients access to advanced computing resources outside China.

Chinese technology companies actively lease capacity from foreign data centers because American export restrictions make it difficult to supply the most advanced AI chips directly to China.

However, the Oracle situation shows that even using equipment on third-country territory does not eliminate the risk of US government intervention. At the same time, the report of the deal cancellation does not in itself mean that such leases were officially declared illegal.

For Oracle, terminating the agreement means losing a potential large contract in the fast-growing cloud computing segment. Tencent, for its part, will have to look for alternative sources of capacity to develop its own artificial intelligence models.

At the time of the report, Oracle and Tencent had not publicly confirmed the circumstances of the contract cancellation. Information about the companies' decision is based on Financial Times sources.