California Court Blocks Part of TikTok’s $400 Million Settlement

(Bloomberg) -- A Los Angeles judge tentatively opposed part of the US government's agreement with TikTok to resolve allegations of children's privacy violations, extending uncertainty around the service's operations in the country.

US District Judge George H. Wu in the Central District of California on Friday tentatively denied a request to vacate an order initially imposed on TikTok's predecessor Musical.ly — which Beijing-based ByteDance Ltd. acquired and built into TikTok — relating to the privacy of users under the age of 13. That order imposed obligations that neither TikTok nor the US government has shown to be obviated, Wu wrote, saying in a tentative ruling that he intends to maintain oversight of the company's privacy practices.

A Department of Justice spokesperson didn't respond to a request for comment after business hours. TikTok also didn't respond to an email query after hours.

The White House, across the administrations of President Donald Trump and his predecessor Joe Biden, has taken measures to alter TikTok's US operations, treating the company as a threat due to its Chinese ownership. A deal finalized by the Trump administration and ByteDance in January, which included transferring parts of the US operations to American investors, seemed to resolve the dispute. That was followed by a $400 million settlement in August to resolve privacy allegations first raised by the Biden administration. Part of that payment, $100 million, was contingent on the prior consent decree being vacated.

"The Government has not shown that the changes in TikTok's ownership, the changes to the platform's compliance measures, or the recent settlement warrant termination" of the order originally imposed upon Musical.ly, Wu wrote in his ruling. "These developments, at least as put forth in the Government's papers, do not establish substantial compliance with the Order or demonstrate that its prospective protections are no longer necessary."

A hearing on the request to dismiss the consent decree is scheduled for Sept. 21.