TikTok has incurred a significant regulatory cost in the United States.
On August 21 local time, the United States Department of Justice announced that TikTok, ByteDance, and related entities agreed to pay $400 million to resolve a two-year child privacy lawsuit. $300 million will be paid immediately, and an additional $100 million will be paid after the court revoked an old consent order related to TikTok’s predecessor, Musical.ly. The Department of Justice stated that this is one of the largest settlements in the history of the Children’s Online Privacy Act (COPPA) cases in the United States.
But what is even more noteworthy than the $400 million itself is the statement made by the US Department of Justice regarding TikTok.
In the 2024 lawsuit, the wording used by the U.S. Federal Trade Commission and the Department of Justice was quite harsh: TikTok was accused of “knowingly violating” the Child Privacy Act. It was alleged that TikTok retained accounts and collected personal information from users who were under 13 years old, without obtaining parental consent. The regulators also accused TikTok of having loopholes in its age filtering system, and of setting additional barriers when parents requested the deletion of their children’s data.
Two years later, the U.S. government still took out $400 million, but the tone of their statement clearly changed.
The Department of Justice, when announcing the settlement, specifically emphasized that since the case was initiated in 2024, there have been “significant changes” in TikTok’s ownership, management, compliance systems, and privacy practices. These changes include strengthening protections for minors, improving age identification, and enhancing parental oversight. The Department of Justice even stated that these changes have “substantially advanced” the public interests that the lawsuit aimed to achieve.
The background behind this statement is that TikTok's identity in the United States has changed.
In January of this year, ByteDance completed the restructuring of its TikTok operations in the US and established TikTok USDS Joint Venture LLC. Investors in the US and globally hold 80.1% of the shares, with ByteDance retaining 19.9%. Oracle, Silver Lake, and Abu Dhabi’s MGX each hold 15% of the shares. This new company is responsible for managing user data, algorithm security, content moderation, and software security in the US. The data is still hosted on Oracle’s US cloud infrastructure.
This arrangement, similar to "Guizhou on the Clouds," allows TikTok to continue operating legally in the United States.
This means that TikTok no longer faces ‘national security’ challenges in the United States, and its relationship with US regulatory authorities will focus more on specific issues such as child privacy protection.
400 million dollars in settlements is a further mitigation of this latter risk.
This does not mean that the United States has relaxed its regulations on TikTok. However, TikTok can address its issues within a systematic framework. In the past, the biggest risk was being suddenly expelled from the American market. Now, the situation is more like this: you can stay, but ownership, data, algorithms, child protection measures, and compliance systems must all be integrated into the regulatory framework designed in the United States.
For TikTok, this is certainly much better than being banned. The US market has over 200 million users, and keeping this market is enough to explain why companies are willing to accept such a costly restructuring.
But from another angle, the United States' initial goal for TikTok is also changing.
From Trump's attempt to directly block TikTok during his first term, to the passage of the "no-fly" bill by Congress, to the U.S. chemical 합자회사 in 2026, and now the $400 million privacy settlement, the regulatory approach has gradually shifted from "how to get rid of TikTok" to "how to manage TikTok".
Therefore, what these $400 million actually purchase may not be just a simple 'waiver certificate'.
This also means that TikTok’s survival crisis in the United States has been further alleviated.
It should be emphasized that this settlement resolves the accusations made by the U.S. government previously. The Department of Justice has clearly stated that the related accusations have not been finally determined by a court.
