During a visit to New York in late September, the head of Uzbekistan’s presidential administration, Saida Mirziyoyeva, met with Google Vice President Karan Bhatia to discuss the possibility of launching YouTube monetization in Uzbekistan. Uzbekistan has been actively seeking to expand its partnership with global digital companies in line with the country’s growing digital economy. Tashkent even re-wrote the laws that once made it difficult for international technology platforms to operate in the country. 

The 2021 amendment to Uzbekistan’s Law on Personal Data imposed a restriction on the storage and processing of Uzbek citizens’ data abroad, raising the question of how domestic regulation could accommodate services operating across borders. PayPal, Stripe, Netflix, Spotify, and Amazon Web Services refused to enter the Uzbek market while Apple Pay, Google Pay, and Google Cloud limited their functionality.

However, it soon became clear that the regulations introduced to protect personal data got in the way of generating money. Last year, the Center for Economic Research and Reforms (CERR) calculated Uzbekistan’s annual losses without YouTube monetization alone as $50 million annually. Mirziyoyeva’s efforts reflect the country’s wider attempt to re-attract global tech-companies by revising local regulations.  

The Economic Cost of Data Sovereignty 

In May 2021, Uzkomnazorat, Uzbekistan’s digital and telecommunications regulator, announced that VKontakte (Mail.ru Group), Twitter (Twitter Inc.), and WeChat (Tencent Inc.) were processing Uzbek citizens’ data abroad in violation of the data protection law. On July 2 of that year, Uzkomnazorat blocked access to those social media sites over alleged non-compliance with data-localization requirements.

“If the internet companies are planning to work in Uzbekistan, they have to observe the legislation of Uzbekistan,” noted Temur Akhmedov, then with the Institute for Strategic and Interregional Studies under the President of the Republic of Uzbekistan. In August 2022, just over a year later, Uzkomnazorat walked its enforcement decision back, removing Twitter, VKontakte, and WeChat from its “register of violators of the rights of personal data subjects.” The platforms were unblocked with no explanation given for the change.    

By 2024, the data protection law’s cost for Uzbekistan’s economy became more apparent. As the government sought to integrate international payment systems like PayPal, AliPay, UniPay, Apple Pay, and Google Pay into the country’s banking system to attract more tourists, requirements to store citizens’ personal data locally emerged as a major obstacle. 

During the negotiations with Apple and Google, the Central Bank of Uzbekistan noted that “in order to connect Visa and Mastercard cards issued by Uzbek banks to the Apple Pay and Google Pay systems, it is necessary to review some requirements of the current legislative documents, in particular, the Law of Uzbekistan ‘On Personal Data.’” 

TBC Bank Group PLC’s representative Oliver Hughes, during a December 2024 presidential meeting with entrepreneurs, suggested allowing banks to store their data in the cloud both in Uzbekistan and offshore jurisdictions. 

“We are talking about the personal data of citizens,” President Shavkat Mirziyoyev said. “This is a very serious matter. We have no right to make mistakes.” He emphasized the need for a carefully considered solution. 

By 2025, the debate on data localization increasingly focused on its economic costs. In July 2025, Kotib AI Research, an AI company, estimated the potential cost of the localization law  to Uzbekistan’s economy at $3.2 to $4.5 billion a year. The absence of PayPal alone had cost the country at least $1.8 billion in revenue over the previous five years. Uzbekistan is the only country in Central Asia without access to the service. PayPal’s global payment system is built on a single data infrastructure, and it does not keep each country’s data separate. It is reportedly technically inconsistent to store only Uzbek users’ data on a separate local server, as a single server cannot isolate the national user traffic.

International payment systems have further been affected by the data protection law, increasing the cost of operating digital services and limiting access to the international payment infrastructure. Limited access to international payment systems costs Uzbekistan around $500-800 million annually.

Apart from affecting the e-commerce and fintech sectors, the data localization rules also impact AI development. Since AI technologies rely on cloud servers, APIs, and international platforms, strict localization can increase compliance costs and complicate the entry of international service providers into the Uzbek market. Requiring data to be stored locally conflicts with the objective of the country’s AI Strategy 2030. The strategy aims to strengthen cooperation with international organizations and leading foreign technology companies and encourage the exchange of knowledge through joint research projects. 

Article 27 of the Data Protection Law also complicates YouTube monetization. The platform cannot run its ads in the country, which limits the creative economy’s ability to generate jobs and revenue. In 2024, the estimated value of the advertising market in the country reached 2.1 trillion Uzbek soms ($164.3 million), with 29 percent coming from digital ads. According to the CERR, the introduction of YouTube monetization might increase Uzbekistan’s gross domestic product by 0.05-0.1 percent. 

What began as an effort to protect citizens’ data was increasingly being questioned on economic and legal grounds. In July 2025, government representatives, lawyers, technology companies, and financial services firms met to further highlight concerns about Article 27 of the Personal Data Law. During the meeting, the experts discussed the ambiguity of the law’s language and the problems with its drafting. To the business experts, the law seemed unclear, which raised the question of the absence of a dedicated body for obtaining authoritative guidance. While some experts suggested the full repeal of the data localization clause, others argued that only government agencies and companies with more than 20 percent state ownership should follow the law’s rules, while those with commercial operations should have more flexible rules, provided user consent is in place for cross-border data transfer.

From Regulatory Uncertainty to Legislative Reform

In January 2026, on the third reading, the Legislative Chamber of the Oliy Majlis passed an amendment allowing certain data to be stored and processed abroad, provided that certain security requirements are met. In March, the proposed amendment to the law on personal data was officially adopted. Biometric and genetic data of individuals, along with data associated with telecommunications operators, must be stored domestically. Other categories of personal data may now be stored and processed abroad if the foreign state provides adequate protection. 

In July 2026, the Cabinet of Ministers published a list of 49 countries where the personal and anonymized data of Uzbekistan’s citizens can be transferred automatically without informing the authorized body, these included the United States, Austria, and the United Kingdom.

The amendments to Uzbekistan’s data protection legislation mark a bold step toward the development of the country’s digital economy and integration with global digital services. Central Bank official Jamshid Usmanov said that the regulators, together with the national card payment networks Humo and Uzcard and commercial banks, had begun negotiations on launching Apple Pay and Google Pay following the legislative amendments. 

The reforms have not yet brought in the major international services Tashkent hopes to attract. The legal changes reflect the country’s vision to align national legislation with global standards to strengthen its digital economy. While the state might not have abandoned the principle of data sovereignty, this development reflects a shift from rigid, sovereignty-based control to a more pragmatic, economically oriented regulatory model. That said, the liberalization of data localization might bring changes, but the success of the reform will depend on whether international technology and payment services believe Uzbekistan’s regulatory environment is predictable enough to risk entering the market.