TikTok and ByteDance's proposed $400 million settlement with the U.S. Justice Department hit a hurdle on Friday after a federal judge indicated he would reject part of the agreement.
TikTok and its Chinese parent company agreed in August to settle allegations that the short-video app violated U.S. children's online privacy laws.
Under the deal, TikTok agreed to pay $300 million immediately and a further $100 million if a court terminated a 2019 consent decree imposed by the Federal Trade Commission on TikTok's predecessor, Musical.ly.
But U.S. District Judge George H. Wu in Los Angeles said he was inclined to reject the request to end the consent decree and scheduled a hearing for Monday.
Without further details, the court "cannot determine that it constitutes a durable remedy or that termination is suitably tailored to the asserted change in circumstance," Wu said in tentatively rejecting the bid to end the decree.
The FTC said in 2019 that Musical.ly, later folded into TikTok, 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 settle the allegations.
The consent decree requires TikTok to maintain certain reporting and record-keeping obligations through 2029.
TikTok and the Justice Department did not immediately respond to requests for comment on Saturday.
The $400 million settlement stems from a Justice Department lawsuit filed in 2024 accusing TikTok and ByteDance of failing to protect children's privacy and illegally collecting their personal information.
The companies were accused of violating a law requiring online services aimed at children to obtain parental consent before collecting information from users under 13.
The government said TikTok had undergone significant changes since the lawsuit was filed, including to its ownership structure, management, compliance functions and privacy practices.
In January, ByteDance agreed to establish a majority American-owned joint venture aimed at safeguarding U.S. user data and averting a U.S. ban on an app used by more than 200 million Americans.
The TikTok U.S. joint venture said in a court filing that it requires all users to enter their date of birth to use the site and added that it developed sophisticated age-moderation systems that identify children under 13 who misrepresented their age.
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