The main concern US politicians have raised about TikTok is that because it’s owned by China's ByteDance, the Chinese government could conceivably access any American data held by the company. The other big concern has been security risk. This deal would address both. Under the agreement, Oracle would store TikTok data for US users, ensure that data is not transferred to ByteDance, and be responsible for protecting user data from cybersecurity threats. Because this sensitive task will be performed by a US company with close ties to the government, TikTok should finally be able to put to rest the concern that its operations in the United States constitute a grave threat to American security. //

However, the agreement is almost certain to provide momentum to foreign governments who want to do exactly what the United States is doing: require companies to store data within their borders. Numerous countries have pushed these types of data localization requirements over the last decade, including Russia, India, and France. In response, the tech sector has made the case that this approach to data storage creates privacy risks, degrades performance, and imposes compliance costs that make it harder for small companies to compete.

If the US government succeeds in forcing TikTok to enter this local data-storing arrangement with Oracle, other governments will be more likely to impose comparable requirements on US companies operating within their borders. A principle that might be appealing to TikTok’s critics in the United States could seem much less desirable if it were applied to Apple, Meta, or Snap in countries like China or Russia. The war in Ukraine has highlighted why countries like Russia want to use localization to exert more control over global tech companies, and also why it’s so important that local data storage requirements remain the exception rather than the norm. //

In a written opinion halting President Trump’s ban, a federal judge found that while the government had successfully demonstrated that China posed a national security threat to the United States, its evidence linking TikTok to that threat was “less substantial.” TikTok currently has a data storage agreement with Google Cloud, and the government has not indicated why a hosting deal with Oracle provides better protection for US user data than the current agreement with Google.