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ByteDance has quietly leased 'massive' amounts of US data-center space. Analysts say the investment could signal the company is shifting its TikTok operations to the US.

  • In 2019 and 2020, TikTok parent company ByteDance has leased a total of 62 megawatts of data-center space in Northern Virginia, Business Insider has learned.
  • Analysts say the space gives ByteDance a "massive" data footprint and according to a source is big enough to make it a top-10 tenant in the biggest data-center market in the US.
  • Meanwhile, TikTok has reached a political stalemate with the Trump administration, whose threat to ban TikTok has been put on hold until after Election Day and could be scuttled if Trump loses the race.
  • By leasing space to store user data in the US, ByteDance is adhering to data sovereignty requirements for TikTok imposed by the US government, IDC analyst Jennifer Cooke told Business Insider.
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As TikTok's parent company, ByteDance, negotiated a deal to potentially move the video app's global operations to the US, the China-based company went on a leasing spree of data storage space in the United States.

ByteDance was behind three separate transactions in the first half of 2020 to lease 53 megawatts of data centers in northern Virginia, a source with knowledge of the transactions told Business Insider. Analysts say this amount of space — facilities that could consume more annual power than 25,000 homes — could amount to hundreds of thousands of servers for cloud-computing and data processing and hundreds of thousands of square feet in real estate.

According to the source, this data-center deal — in addition to a 9-megawatt data-center lease in 2019 — makes TikTok's parent company one of the top-10 largest tenants in northern Virginia, a region dubbed "Data Center Alley" that's home to the largest data-center market in the US. That area, in and around Ashburn, Virginia, is home to some of the largest data center occupiers, including enterprise giants Amazon Web Services and Oracle, which is one of the companies currently in talks to acquire part of TikTok.

Analysts told Business Insider that a data-center lease of this size is a "massive" pickup for ByteDance, and seems to indicate the China-based company's intention to establish a base for data on US soil. This investment comes even as TikTok's future in the US remains in flux, and a deal to settle its ownership in the US has yet to be finalized.

But by leasing space to keep user data in the US, ByteDance is adhering to US government data sovereignty requirements related to TikTok, IDC analyst Jennifer Cooke told Business Insider, which mandate that information about US citizens be stored domestically. 

The current proposal — in the works for months as it hits snags and pushback — would break off TikTok's global business into a new US-based company, in which Oracle, Walmart and US investors would have substantial stakes. However, there's still disagreement whether the deal would give majority ownership to US investors, or allow TikTok's China-based parent company ByteDance to maintain its majority ownership.

As Election Day has drawn near, the Trump administration's battle with TikTok has been overshadowed by the president's reelection campaign, which has lagged in the polls in key swing states to Democratic candidate Joe Biden. A federal judge has scheduled a hearing for November 4, the day after the presidential election, to decide whether to block the US government's planned ban, which would take effect on November 12, barring a decision by the court to prohibit or delay the order.

If the ban is implemented, the US government would target internet hosting services and content delivery networks to dismantle TikTok's operations in the United States.

Calls from Trump and government officials for a ban of TikTok in the US have mounted for months, stemming from concerns the Chinese government could access data belonging to TikTok's American users. These concerns turned into action back in November 2019, when the US government quietly launched an investigation into TikTok's potential national-security risks. Trump administration officials first threatened to ban the app in the US in early summer.

Nonetheless, TikTok continues to operate unimpeded in the US and has maintained its popularity among users.

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