I've seen a number of people worried and concerned about this language on Ao3s current "agree to these terms of service" page. The short version is:
Don't worry. This isn't anything bad. Checking that box just means you forgive them for being US American.
Long version: This text makes perfect sense if you're familiar with the issues around GDPR and in particular the uncertainty about Privacy Shield and SCCs after Schrems II. But I suspect most people aren't, so let's get into it, with the caveat that this is a Eurocentric (and in particular EU centric) view of this.
The basic outline is that Europeans in the EU have a right to privacy under the EU's General Data Protection Regulation (GDPR), an EU directive (let's simplify things and call it an EU law) that regulates how various entities, including companies and the government, may acquire, store and process data about you.
The list of what counts as data about you is enormous. It includes things like your name and birthday, but also your email address, your computers IP address, user names, whatever. If an advertiser could want it, it's on the list.
The general rule is that they can't, unless you give explicit permission, or it's for one of a number of enumerated reasons (not all of which are as clear as would be desirable, but that's another topic). You have a right to request a copy of the data, you have a right to force them to delete their data and so on. It's not quite on the level of constitutional rights, but it is a pretty big deal.
In contrast, the US, home of most of the world's internet companies, has no such right at a federal level. If someone has your data, it is fundamentally theirs. American police, FBI, CIA and so on also have far more rights to request your data than the ones in Europe.
So how can an American website provide services to persons in the EU? Well… Honestly, there's an argument to be made that they can't.
US websites can promise in their terms and conditions that they will keep your data as safe as a European site would. In fact, they have to, unless they start specifically excluding Europeans. The EU even provides Standard Contract Clauses (SCCs) that they can use for this.
However, e.g. Facebook's T&Cs can't bind the US government. Facebook can't promise that it'll keep your data as secure as it is in the EU even if they wanted to (which they absolutely don't), because the US government can get to it easily, and EU citizens can't even sue the US government over it.
Despite the importance that US companies have in Europe, this is not a theoretical concern at all. There have been two successive international agreements between the US and the EU about this, and both were struck down by the EU court as being in violation of EU law, in the Schrems I and Schrems II decisions (named after Max Schrems, an Austrian privacy activist who sued in both cases).
A third international agreement is currently being prepared, and in the meantime the previous agreement (known as "Privacy Shield") remains tentatively in place. The problem is that the US government does not want to offer EU citizens equivalent protection as they have under EU law; they don't even want to offer US citizens these protections. They just love spying on foreigners too much. The previous agreements tried to hide that under flowery language, but couldn't actually solve it. It's unclear and in my opinion unlikely that they'll manage to get a version that survives judicial review this time. Max Schrems is waiting.
So what is a site like Ao3 to do? They're arguably not part of the problem, Max Schrems keeps suing Meta, not the OTW, but they are subject to the rules because they process stuff like your email address.
Their solution is this checkbox. You agree that they can process your data even though they're in the US, and they can't guarantee you that the US government won't spy on you in ways that would be illegal for the government of e.g. Belgium. Is that legal under EU law? …probably as legal as fan fiction in general, I suppose, which is to say let's hope nobody sues to try and find out.
But what's important is that nothing changed, just the language. Ao3 has always stored your user name and email address on servers in the US, subject to whatever the FBI, CIA, NSA and FRA may want to do it. They're just making it more clear now.
Fun fact! You don't currently have to worry that a US spy agency has taken your data from AO3. (Have they spied on you in other ways? Eh, probably.)
AO3's parent nonprofit, the Organization for Transformative Works has a neat thing on their website called a warrant canary.
This thing. It's hard to read on my screenshot, so I'll copy the text here.
"The Organization for Transformative Works has not received any National Security Letters or FISA court orders, and we have not been subject to any gag order by a FISA court."
What's that mean? National Security Letters and FISA courts are how US security agencies secretly subpoena data from US-based websites. They send the website owners and order to turn over data and NOT TELL ANYONE that they've done so. That's called a gag order. Disobeying this gag order is big time illegal and the US government WILL ruin your life over it. You cannot tell people, "The US government gave me a secret order to turn over my data."
BUT! The government cannot compel you to lie. A FISA court order cannot make you say on your website, "We have never received a FISA court order." So websites put the warrant canaries on their sites, and if they ever get an order for data that they aren't allowed to tell you about, they take the order down. Like a canary fainting from gas in a mine, the warrant canary stops singing.
So right now, we know that the OTW, and therefore AO3, has never had to secretly turn over data to the US government. Keep an eye on that canary. Check in on it occasionally. As long as the little bird's singing, don't panic.
