TikTok to Pay $400 Million to Settle US Child Privacy Lawsuit

TikTok and its parent company, ByteDance, have agreed to pay 400 million dollars to resolve a U.S. government lawsuit accusing the short-form video platform of systematically violating the Children's Online Privacy Protection Act (COPPA).

The Anatomy of the COPPA Violations

The legal battle originated from an investigation by the Federal Trade Commission (FTC), which prompted the administration of Joe Biden to file a complaint in a California court. According to court filings, the platform deliberately allowed children under the age of 13 to establish accounts and interact with adult users starting in 2019. The company collected and retained personal data from these minors without providing proper notice to parents or acquiring the verifiable prior consent required by federal law.

The platform, and its predecessor, Musical.ly, also failed to delete user accounts or purge data when parents explicitly requested it. Under the terms of the extrajudicial agreement, the company will disburse 300 million dollars immediately.

“This agreement represents a significant victory for children and American parents,” stated Stanley Woodward in an official announcement. “The priority of the Department is garantizar que los niños quedan protegidos en Internet y que las empresas que obtienen sus datos personales cumplen sus obligaciones según la ley,” Woodward added, emphasizing that the resolution secures substantial compensation while reinforcing mandatory family privacy protections.

Corporate Restructuring and the U.S. Takeover

Since the initial filing of the lawsuit two years ago, TikTok has completed substantial shifts in its ownership, management, compliance obligations, and privacy practices. Last year, the White House forced the parent company of TikTok to sell its U.S. subsidiary to investors in this country, following two years of threats to ban the platform’s operations. A law promoted by the administration of Joe Biden and approved in 2024 obligated ByteDance to divest from the platform or resign itself to being shut down.

Photo: elpais.com

Lawmakers argued that the Chinese ownership of the company could pose a threat because Beijing could have access to U.S. user data and use it to manipulate the population or promote propaganda narratives within the platform’s content. Following legal challenges that reached the Supreme Court, the platform was suspended for a few hours on the eve of the inauguration of Trump on January 20, 2025. Trump, after a telephone conversation with Chinese President Xi Jinping, lifted the veto and extended deadlines for the application to remain operational in U.S. territory, while negotiations for the sale to businessmen took place. The definitive agreement, which included the payment of a commission to the U.S. government worth 10,000 million dollars, was reached in March of this year.

The investor Larry Ellison, owner of Oracle, is one of the investors that acquired the U.S. subsidiary of TikTok. He has direct stakes and stakes through the technology giant that he founded in Santa Clara, California. Also involved are the private equity firm Silver Lake, the businessman Michael Dell and the technology company that bears his name, and the Abu Dhabi investor MGX.

Federal Precedent and Expanding Industry Scrutiny

The resolution sets a key precedent in federal court as social media regulation faces intense scrutiny. This case will serve as a reference for legal actions undertaken jointly by 29 states against the company Meta, which they accuse of violating the same child protection standards in a trial recently initiated in the city of Oakland.

Photo: baenegocios.com

As federal regulators maintain pressure, the intersection of data collection, parental consent, and corporate ownership continues to be a focus for technology enterprises operating within the United States.