That's the point, this is a slippery slope -- without this system, governments have no way to compel Apple to scan for objectionable photos, Apple could claim, rightly so, that due to encryption technology and privacy, they have no way to do it. But now they've removed both the technological and privacy hurdle, and it's just a matter of logistics.

Now governments know that all they need is a database of banned photos and they can go to Apple and say "In our country, it's illegal to share photos that put our government in a bad light. Here's a database of banned photos. If you don't comply, you can't sell your phones to our 1.4 billion citizens".