A US federal judge has signaled his intention to reject part of a proposed $400 million settlement between TikTok, its Chinese parent company ByteDance, and the US Justice Department. The settlement aimed to resolve allegations that TikTok violated US children's online privacy laws. The deal, agreed upon in August, includes an immediate payment of $300 million and a further $100 million if a court terminates a 2019 consent decree imposed by the Federal Trade Commission on TikTok's predecessor, Musical.ly.
The consent decree in question was imposed by the Federal Trade Commission in 2019 after Musical.ly, later folded into TikTok, was found to have collected personal information from young children without obtaining parental consent. Musical.ly paid a $5.7 million fine to settle the allegations. The decree requires TikTok to maintain certain reporting and record-keeping obligations through 2029. US District Judge George H. Wu in Los Angeles expressed concerns that the court cannot determine if the proposed termination of the consent decree constitutes a durable remedy or is suitably tailored to the asserted change in circumstance.
Judge Wu scheduled a hearing for Monday to further consider the matter. The $400 million settlement stems from a Justice Department lawsuit filed in 2024 accusing TikTok and ByteDance of failing to protect children's privacy and illegally collecting their personal information. The lawsuit alleged that the companies violated a law requiring online services aimed at children to obtain parental consent before collecting information from users under 13.
In response to the lawsuit, ByteDance agreed to establish a majority American-owned joint venture aimed at safeguarding US user data and averting a US ban on the app. The TikTok US joint venture has implemented measures such as requiring all users to enter their date of birth to use the site and developed sophisticated age-moderation systems to identify children under 13 who misrepresented their age.
The proposed settlement and Judge Wu's inclination to reject part of it have significant implications for TikTok and its operations in the US. The company has undergone significant changes since the lawsuit was filed, including to its ownership structure, management, compliance functions, and privacy practices. However, the judge's concerns suggest that these changes may not be sufficient to address the allegations.
TikTok and the Justice Department did not immediately respond to requests for comment on the matter. The company's efforts to address concerns around children's privacy and data protection will likely continue to be scrutinized by regulators and lawmakers. The outcome of the hearing on Monday will provide further clarity on the fate of the proposed settlement and the consent decree.
The case highlights the ongoing challenges faced by social media companies in ensuring compliance with children's online privacy laws. TikTok's efforts to strengthen its age-moderation systems and obtain parental consent are steps in the right direction, but the company must navigate complex regulatory requirements to avoid further action from US authorities.
Key points
- US judge signals rejection of part of TikTok's $400 million settlement over children's online privacy laws.
- TikTok's proposed settlement with US Justice Department includes $300 million immediate payment and $100 million conditional payment.
- Judge Wu schedules hearing for Monday to consider termination of 2019 consent decree imposed on TikTok's predecessor, Musical.ly.
