WASHINGTON — A federal judge indicated on Friday that he is likely to reject a key element of the proposed $400 million settlement between TikTok, its parent ByteDance and the U.S. Justice Department, raising fresh uncertainty about how the companies will resolve allegations over children’s privacy.
Under the agreement announced in August, TikTok would pay $300 million up front and an additional $100 million if a court terminates a 2019 consent decree tied to Musical.ly, the app that was later merged into TikTok.
U.S. District Judge George H. Wu in Los Angeles said he was inclined to deny the parties’ request to end the consent decree and scheduled a hearing for Monday to consider the motion. In a tentative ruling, Judge Wu said the court "cannot determine that it constitutes a durable remedy or that termination is suitably tailored to the asserted change in circumstance."
Background
The 2019 consent decree stemmed from an FTC action finding that Musical.ly knew young children were using the app but failed to obtain parental consent before collecting names, email addresses and other personal information. Musical.ly paid a $5.7 million fine to resolve those allegations. The decree requires ongoing reporting and record-keeping obligations that remain in place through 2029.
What the Settlement Would Do
The Justice Department’s 2024 lawsuit accused TikTok and ByteDance of failing to protect children’s privacy and illegally collecting information from underage users without parental consent. The companies argued in court filings that TikTok has changed substantially since the lawsuit was filed—pointing to changes in ownership structure, management, compliance functions and privacy practices.
This year ByteDance agreed to create a majority American-owned U.S. joint venture intended to safeguard U.S. user data and head off a potential ban on an app used by more than 200 million Americans. The TikTok U.S. joint venture has told the court it requires users to enter their date of birth and has developed age-moderation systems to identify minors who misstate their age.
Judge Wu said the record as presented did not yet allow the court to conclude that lifting the decree would be an appropriately tailored or durable remedy.
TikTok and the Justice Department did not immediately respond to requests for comment on Saturday. The outcome of the Monday hearing will determine whether the contingent $100 million payment would be triggered or remain tied to the existing consent decree.
Reporting by David Shepardson; Editing by Mark Potter.
