TikTok agrees to $400 million child privacy settlement

TikTok and its Chinese parent company ByteDance have agreed to pay $400 million to settle U.S. government claims that the video-sharing platform violated children’s online privacy laws, the Justice Department said Friday.

The settlement ends a 2024 lawsuit alleging TikTok collected and retained data from young users without notifying parents or obtaining their consent, in violation of the Children’s Online Privacy Protection Act. The department said the case grew out of a Federal Trade Commission investigation and alleged that TikTok had knowingly allowed children to create accounts and interact with adults on the platform since 2019.

The BBC reported that the lawsuit accused TikTok and ByteDance of collecting “vast amounts of data” on millions of users under 13. The law, known as COPPA, is a federal statute enacted in 2000 that requires online services directed at children to follow specific rules for parental notice and consent.

“Children and parents are better protected today than they were when this case began,” Assistant Attorney General Brett Shumate said, according to the BBC.

Under the settlement, TikTok and ByteDance will pay $300 million immediately. The remaining $100 million will be paid “upon entry of an order vacating a prior consent decree entered against TikTok’s predecessor, Musical.ly,” the Justice Department said. The BBC reported that the payment is tied to the government vacating a 2019 consent decree with the FTC.

That earlier agreement required Musical.ly to pay a $5.7 million fine for COPPA violations and to seek parental consent for users under 13, according to the BBC.

The Justice Department described the new payment as among the largest settlements ever obtained in a case involving COPPA. Other major penalties under the law include Google’s YouTube, which paid $170 million in 2019, and Epic Games, which paid $275 million in 2022, the BBC reported.

The department did not announce additional action against TikTok beyond the fine. It said the company had made significant changes since the lawsuit was filed, including changes to its management structure and stronger safeguards for younger users. Those measures include age-related controls and enhanced parental oversight.

“Those developments have materially advanced the public interests underlying the Department’s litigation and have strengthened protections for millions of American families,” the Justice Department said.

The lawsuit was filed before TikTok’s U.S. business was split from its original China-based ownership structure. CBS News reported that TikTok finalized a new ownership structure in January in response to a Biden-era law requiring the platform to sever ties with ByteDance over national security concerns or face a nationwide ban. TikTok is now managed by a joint venture made up mostly of U.S.-based investors, including Oracle and private equity firm Silver Lake, as well as Abu Dhabi-based MGX, CBS News reported.

CBS News reported that ByteDance holds a 19.9% stake in the company, giving it minority control over TikTok’s U.S. operations. The BBC reported that TikTok’s U.S. operations are 81% owned by a consortium of investors, while ByteDance maintains a 19% stake, and said the settlement only involves TikTok’s operations in China.

The BBC reported that when the lawsuit was filed, U.S. attorneys said more than 170 million teenagers were using TikTok and that the app was “directed to children,” but did not effectively determine users’ ages or obtain parental consent for underage users.

ByteDance and TikTok did not immediately respond to requests for comment, according to CBS News and the BBC.