TikTok and its parent company, ByteDance, have experienced a setback in their legal battle with the Justice Department, as a federal judge in the U.S. signaled that he may be rejecting a portion of a proposed $400 million settlement related to kids’ privacy claims.
A 2019 consent decree against TikTok’s predecessor, Musical.ly, was one case in which U.S. District Judge George H. Wu indicated his preference to deny a motion to terminate. He set up another hearing for Monday, while the judge is debating whether the new rules are sufficient to protect kids.
Under the settlement, which was announced by the Justice Department in August, TikTok and ByteDance would have to pay $300 million up front. If the court grants permission to terminate the previous FTC consent decree, another $100 million would be payable. The agreement, overall, is one of the largest recoveries in a children’s privacy case, the Justice Department said.
The judge’s questions about the deal
The controversy is over whether the old FTC order is safe for termination.
In his preliminary assessment, Judge Wu said the court lacked information to conclude that withdrawal of the decree would be a durable remedy or that it is “properly tailored to address the changes advanced by the parties. There are reporting and record keeping requirements in the current order that will expire in 2029.
That does not necessarily preclude the possibility that the settlement could go forward financially, with the separate request to lift the previous restrictions still subject to further review.
The case goes back to Musical.ly
The previous consent decree is from 2019, before Musical.ly was a part of what is now TikTok.
Musical.ly had gathered personal data from kids under 13 without parents’ consent, which is required under the Children’s Online Privacy Protection Act (COPPA), the Federal Trade Commission said. The information consisted of names, email addresses and other personal information, the agency said.
Musical.ly agreed to pay $5.7 million to settle the FTC allegations in 2019. The FTC called it the “largest civil penalty the FTC has ever secured in a children’s privacy action. The settlement also included changes to the company’s practices and the deletion of videos created by kids under 13 years of age.
New privacy case brought years later
This is the latest settlement in the wake of a lawsuit brought by the Justice Department against TikTok and ByteDance in 2024.
The government said the company “failed to provide ‘adequate protection’ to children’s privacy and illegally gathered personal information from children users. Legal claims were for purported non-compliance with COPPA and regulations. The companies have agreed to settle the litigation without an admission of liability.
TikTok has made significant changes since the lawsuit was filed, the Justice Department said, including changes to the company’s ownership structure, management, and compliance operations and privacy practices. The company had also implemented changes aimed to enhance age restrictions and parental supervision, the department added.
TikTok has changed how it handles younger users
TikTok’s U.S. operations have also implemented some extra security features. In a court document, the TikTok U.S. joint venture stated that users must enter their date of birth and that it had “age-moderation systems in place to identify children under the age of 13 who had falsely entered their date of birth.
TikTok is making the alterations in the context of its broader efforts to deal with privacy and regulatory concerns in the U.S.
But for now, the proposed solution is not complete thanks to the concerns of Judge Wu. The hearing set for Monday is expected to give the court a chance to consider whether a termination of the 2019 consent decree is warranted in the new context.
Reuters reports that both the Justice Department and TikTok had yet to comment on the judge’s preliminary stance.
