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Monday, April 15, 2024

Sen. Steve Daines Profits From Oracle, Tech Giant at Center of TikTok Debate

One of the most powerful corporate entities in the country, which has a number of controversial ties to China, appears to have been providing a passive revenue stream to an influential Republican senator for years.

Sen. Steve Daines (R-MT), who sits on the powerful Finance Committee and chairs the Senate GOP’s campaign arm, has deep ties to Oracle, dating back to his life as a private sector entrepreneur. Those relationships continued while Daines was in office, reaping hundreds of thousands of dollars, if not more, from the Austin, Texas-based software and analytics giant.

Today, Oracle is at the center of the complex but heated national political debate about TikTok and its relationship with the Chinese government, with its $1 billion TikTok data management contract playing a key role in the controversy. While the TikTok discourse has dominated the national stage lately, that contract is just the tip of the iceberg for Oracle, a powerful beltway player that has seen a number of recent scandals—including deadly failures from a Veterans Administration project and ties to dicey security contractors in China.

Daines, who ranks among the wealthiest members of Congress, struck it rich when his then-business partner, former Rep. Greg Gianforte (R-MT), sold a tech company to Oracle in 2011 for $1.5 billion. After the sale, Daines drew an annual salary of more than $550,000, with additional rental income from office space that he leased to Oracle, Salon previously reported.

Daines—who filed his first Senate candidacy papers from those Oracle offices—still co-owns the office park that hosts Oracle’s Bozeman campus, through his stake in Genesis Partners LLC. (Gianforte is a partner in Genesis, as well; Montana business filings show that the agent of record is Daines’ father, Clair Daines.) Financial disclosures show that Daines is still raking it in through his leases—even as he advocates today for legislation that would benefit his corporate benefactor.

The Daily Beast sent questions to Oracle and to a Daines spokesperson, but did not receive a reply.

Because financial disclosures provide values in wide ranges instead of precise amounts, it’s hard to hang an exact number on Daines’ income from Oracle since he became a senator, though it’s likely in the millions.

Montana real estate records show that Genesis Partners holds five commercial lots in Bozeman, boasting a combined assessed market value of around $19.5 million. Leases from those lots provide Daines a personal revenue stream. His most recent annual disclosure—filed last April and covering the 2022 calendar year—reports those leases generated between $415,000 to a little more than $4 million in personal income. Since Daines took office in 2015, his Genesis Partners leases have cumulatively reaped at least $3.5 million on the low end, with that total potentially running as high as 10 times that amount. (His top leases bring in between $100,000 and $1 million a year.)

It’s difficult to say which of those leases are with Oracle, because the lack of specificity in disclosure rules makes it difficult to peg a particular lease to an individual parcel in public records. However, Daines’ disclosures put the top value ranges for his Genesis properties between $1 million and $5 million, with each of those four properties yielding between $100,000 and $1 million in annual rental income. Address records show that the two most valuable Genesis parcels are both associated with Oracle, meaning that Daines appears to have derived a minimum $200,000 in rent from Oracle each year, with an annual ceiling potentially in the millions.

A personal financial relationship between a sitting senator and a giant multinational company like Oracle, which holds a number of contracts with federal agencies, can spill over into the policy sphere.

Daines, an outspoken critic of the Chinese government, largely stayed on the sidelines when then-President Donald Trump first floated the idea of a national TikTok ban in 2020. Elected officials backed off from that idea in favor of an arrangement in which TikTok would put a U.S. company in charge of its stateside data operations. The company that won the $1 billion TikTok contract was Oracle.

In 2022, a BuzzFeed News investigation exposed TikTok’s ongoing ability to access private U.S. user data within China. The report singled out the Oracle arrangement, casting serious doubts on whether Oracle had full control of its TikTok data.

Citing leaked audio from dozens of internal TikTok meetings, BuzzFeed reported that Oracle’s agreement still gave TikTok “considerable flexibility” regarding data center operations. In one taped conversation, TikTok’s head of global cybersecurity and data defense said that Oracle—a software company—really only had purview over the physical data storage, with the software layer itself still controlled by TikTok.

“It’s almost incorrect to call it Oracle Cloud, because they’re just giving us bare metal, and then we’re building our VMs [virtual machines] on top of it,” the TikTok official said.

In response, Daines blasted TikTok for potentially compromising national security, without mentioning Oracle’s own reported role.

“TikTok’s deep ties to communist China and their unwillingness to be transparent in regards to data transmission is more than cause for concern—it’s a threat to our national security,” Daines told NBC News in a statement. “We need answers from TikTok immediately on its policy of sharing Americans’ private information with the CCP.”

More recently, Daines has kept his views on a federal TikTok ban close to the vest—though last year he backed a controversial and unprecedented state-level ban on all use of the app within Montana’s borders, a bill that his old business partner Gianforte, now governor, signed into law. Before the ban took effect, a state judge enjoined it as unconstitutional. Montana appealed that ruling in January, and legislators in the heavily Republican state have taken up the ban as a cause célèbre, even as Donald Trump and other GOP figures have reversed or softened their positions.

Sen. Steve Daines (R-MT) speaks to reporters.

Sen. Steve Daines (R-MT) speaks to reporters.

Drew Angerer/Getty

However, Daines also sponsored legislation that Oracle stands to benefit from directly—including a 2023 bill, to be reintroduced this spring, which would force open new lanes for Oracle to land lucrative federal contracts for data management.

That bipartisan bill, the “Multi-Cloud Innovation and Advancement Act,” requires the Office of Management and Budget to begin integrating data management technology that would allow agencies to use a variety of cloud-based platforms—thereby distributing contracts across a number of corporate entities, rather than locking in to a single provider. Amazon and Google dominate that space and would be the biggest losers, while other competitors—such as Oracle and Microsoft—stand to expand their footprint.

Daines and his co-sponsor, Sen. Jacky Rosen (D-NV), contend that diversification will promote efficiency and redundancy and provide individual agencies with better tailored solutions, arguments that the bill’s corporate backers also emphasize. But opponents say that a multi-cloud program distributed across various providers could also give rise to more points of failure, potentially posing a national security risk, though Daines added a statement seeking to ensure that all private information was protected.

Federal lobbying filings show that last year’s version of the bill was of intense interest to a number of tech companies, with heavyweights like Google, Amazon, and Cisco deploying influencer armies on Capitol Hill. The issue also features prominently in Oracle’s most recent $2.4 million lobbying disclosure.

Oracle’s D.C. influence goes far beyond that bill or Daines.

Oracle co-founder and executive chair Larry Ellison is a Republican megadonor, raising oodles of money for Trump in 2020 while effecting a White House corporate partnership to help contain the COVID pandemic. Later that year, Trump issued an executive order banning TikTok, which stalled out among legal challenges and set the table for TikTok’s partnership with Oracle. That order is widely viewed as the reason for the re-animated debate today. (In the 2024 cycle, Ellison threw $35 million behind failed Trump primary challenger Tim Scott.)

Oracle maintains an extensive network on Capitol Hill. In February, Politico Influence reported that the software giant added another lobbyist to its already formidable stable, signing former Rep. Cheri Bustos (D-IL), whose firm, Mercury Public Affairs, last counted Oracle as a client in 2002. The contract brought the number of firms currently on Oracle’s lobbying payroll up to two dozen, Politico reported.

Last year, Oracle’s federal lobbying efforts ate up nearly $13.3 million, a total that ranked among the top two dozen corporations nationwide, according to data from the Center for Responsive Politics. Those outlays came as Oracle faced scrutiny on two fronts—the TikTok partnership, and tragedies stemming from a data management contract with the Veterans Administration.

The VA suspended that records modernization program last year amid public outcry about a series of critical failures—a pile-on of database management errors that led to at least four unnecessary veteran deaths and wreaked havoc across the system, Politico reported. Initially estimated at $10 billion over a decade, the hapless project’s costs quintupled with the setbacks, now topping $50 billion.

But the TikTok partnership has drawn the most attention. When the Trump administration forced TikTok to find a U.S. buyer to run its stateside operations, Oracle’s government ties helped the company lock down the reportedly $1 billion contract.

That arrangement, which has faced court challenges, was designed to protect Americans’ privacy—a bid to allay bipartisan concerns that TikTok’s parent company, the Beijing-based ByteDance, could pipeline sensitive U.S. user data to the Chinese government. But just one year later, Oracle itself was reported to be marketing its products to police and security contractors inside China. That report, from The Intercept, raised concerns among human rights advocates and legal experts that Oracle was helping Beijing shore up its already intrusive surveillance state, potentially playing an exacerbating role in privacy breaches.

An Oracle spokesperson told The Intercept that the company conducts “extensive due diligence” to comply with trade regulations, adding that in addition to legal and regulatory obligations, “Oracle is VERY conservative and cautious in how we even approach such opportunities.” (After the article was published, Oracle executive vice president Ken Glueck personally attacked the reporter.)

It’s unclear whether any other Oracle data has been similarly accessible or open to compromise via its relationship with TikTok. That issue shot to the fore in BuzzFeed’s investigation, which was published just a few months after The Intercept report.

It’s not just academic. Oracle’s work with the U.S. government has touched all five branches of the military. The company has also inked contracts with highly sensitive agencies like NASA and the CIA, and it provides services to police departments across the country, The Intercept reported.

While nearly 60 percent of Americans say TikTok is a threat, as do a raft of lawmakers from both parties, it’s still unclear just how real that risk is. The likelihood of critical data breaches, manipulation, or political interference are still a matter of intense debate. After all, if the Chinese government wanted, it could simply buy much of that same user data on the open market.

This week, Semafor reported that Oracle has largely stayed out of the fray, drawing complaints from TikTok lobbyists on Capitol Hill. The prospect that TikTok could sell off its U.S. operations to another company also poses downsides for Oracle, which might lose its billion-dollar contract as a result, particularly if the new owner also has a robust cloud operation, Semafor reported.

However, TikTok’s cultural influence also raises “soft power” concerns about whether its algorithms could be weaponized politically. Daines has actually raised this point himself, in a joint letter admonishing TikTok for facilitating Russian pro-war propaganda.

“No company should find itself in the position of amplifying the Kremlin’s lies, which fuel public support for Russia’s war of choice in Ukraine,” the senators wrote at the time, adding that TikTok’s failure to police its platform “risks adding to an already devastating human toll for both Ukrainians and Russians.”

But, as the TikTok debate illustrates, political alliances can be fleeting. Prior to taking over as the Senate GOP’s campaign chair, Daines called Russian President Vladimir Putin a “terrorist.” Last month, he voted against military aid for Ukraine.

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