If TikTok is banned, Americans’ data could end up back in China

If TikTok is banned, Americans’ data could end up back in China

The bill to divest or ban TikTok, which took effect last April and was upheld by a powerful appeals court last week, says companies that host TikTok data could be fined hundreds of billions of dollars, if they continue to host this data beyond January 19th.

If the law is not stayed by a court or extended by President Biden, it could have consequences for several of the world’s largest data hosting services, including Amazon and Microsoft. But it creates a particularly difficult situation for Oracle, which has a $1 billion hosting partnership with TikTok to make U.S. users’ private data inaccessible to employees of TikTok’s parent company, Chinese tech giant ByteDance.

If Oracle has to stop hosting TikTok’s data on January 19, ByteDance could require it to return that data, which would defeat the purpose of the partnership in the first place – and potentially make the data more accessible to the Chinese government. This is what happened in India: After TikTok was banned there in 2020, the company kept the TikTok user data of hundreds of millions of Indians, a Forbes Investigation found.

This debacle could force TikTok and ByteDance to break many of the promises they have made to U.S. consumers in recent years and that have been at the heart of the companies’ years-long negotiations with the U.S. government to protect American data. The companies promised both US users and the government that American data is and will be stored in the United States – which will no longer be possible after the law takes effect. They also promised that it would be kept secret from TikTok and ByteDance’s Chinese employees as part of the Oracle deal, a protection that will be removed if the partnership cannot continue.

Oracle could try to find a way out of this twisted outcome: It can still keep TikTok’s data if a court finds that its services are “necessary for (ByteDance or TikTok) to achieve compliance with the law.” But the future of TikTok’s data is not regulated at all in the law. And it seems unlikely that Oracle’s storage of the data would help companies comply with regulations. The only way for ByteDance to comply with the law is to sell TikTok to a non-Chinese company, and the only way for TikTok to comply with the law is to sell it. ByteDance and TikTok have insisted in legal filings that they have no plans to sell.

Congress cited two reasons for passing the TikTok law: first, to ensure that the Chinese government could not rely on ByteDance to spread propaganda through the app; and second, they wanted to ensure that the Chinese government could not force ByteDance to use TikTok to collect private information about American citizens. It would be ironic if, in order to comply with the law, ByteDance required Oracle to return TikTok’s vast trove of data.

TikTok and ByteDance have vowed to challenge the law in the Supreme Court. They did not respond to a request for comment about what would happen to TikTok users’ data if they were unsuccessful. Oracle declined to comment.

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