The TikTok-Oracle deal would set two dangerous precedents

In August 2020, Donald Trump issued an executive order banning TikTok in the United States. Since then, as TikTok has competed against other Big Tech companies and grown among teen users while Facebook and others have struggled, its ability to survive in the United States has remained under a cloud of uncertainty. Would regulators kill off a product that had become a staple form of communication for 100 million Americans?

Reports that TikTok will enter into a data storage deal with Oracle lifted that cloud last week. The agreement would allow TikTok to invest more of its resources and energy into improving its product, rather than fighting with the government.

But in the long run, the forecast looks bleaker. The deal would establish precedents likely to harm technology companies and their users. Advertisement

The Chinese government could potentially access any American data held by the company, which is owned by China's ByteDance. Security risk has been a big concern. The 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 cyberattacks. TikTok should be able to put to rest the concern that its operations in the United States constitute a grave threat to American security because this sensitive task will be performed by a US company with close ties to the government.

Financial and technical costs from TikTok are exacted in the agreement. The company will pay for third-party data storage, even as its competitors try to reduce their own costs and improve performance by storing data in their own data centers. In the summer of 2020, there were two possible outcomes of the agreement: being banned or forced to cede a majority stake to a US company. TikTok will have the freedom to compete on its product because of the costs.