TikTok and its Chinese parent ByteDance have hit a setback in their proposed $400 million settlement with the U.S. Justice Department after a federal judge indicated he would reject a key part of the agreement involving a long-running privacy consent decree.
U.S. District Judge George H. Wu in Los Angeles said Friday that he was inclined to reject the companies’ request to terminate a 2019 consent decree imposed on TikTok’s predecessor, Musical.ly. He scheduled a hearing for Monday to consider the issue.
Wu said that, based on the information currently before the court, he could not determine that ending the decree would provide a “durable remedy” or that the proposed termination was appropriately tailored to the changes cited by the government.
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The ruling does not, on its face, reject the entire $400 million settlement. But it puts a significant component of the agreement in doubt and could complicate TikTok’s effort to resolve allegations that it mishandled children’s personal information.
Under the proposed settlement reached in August, TikTok agreed to pay $300 million immediately and another $100 million if the court terminated the 2019 consent decree.
The decree dates back to Musical.ly, the short-video platform that was later folded into TikTok. In 2019, the Federal Trade Commission alleged that Musical.ly knew children under 13 were using the service but failed to obtain parental consent before collecting their names, email addresses, and other personal information.
Musical.ly paid $5.7 million to settle those allegations. The resulting consent decree imposed reporting and record-keeping requirements that remain in effect through 2029.
The latest dispute shows why the decree remains important to the Justice Department’s case. Terminating it would have provided TikTok with a way to close out a regulatory obligation that predates the current ownership and operating structure of its U.S. business.
The $400 million settlement itself stems from a Justice Department lawsuit filed in 2024. The government accused TikTok and ByteDance of violating U.S. children’s online privacy laws by collecting personal information from users under 13 without the required parental consent.
The government has argued that TikTok has undergone substantial changes since the lawsuit was filed, including changes to its ownership structure, management, compliance operations, and privacy practices. Those changes form part of the rationale for seeking an end to the older consent decree.
But Wu’s tentative position suggests that the court wants more evidence that those changes are sufficient to replace the protections and oversight contained in the existing order.
TikTok’s Broader U.S. Restructuring
The privacy case is unfolding alongside a much larger effort by ByteDance to restructure TikTok’s U.S. operations and address Washington’s concerns over the platform’s ownership and handling of American user data.
In January, ByteDance agreed to establish a majority American-owned joint venture intended to safeguard U.S. user data and help avert a potential U.S. ban. TikTok’s U.S. business has more than 200 million American users.
The joint venture has pointed to new safeguards designed to prevent children from accessing the platform. In a court filing, it said all users are required to provide their date of birth and that it has developed age-moderation systems designed to identify users under 13 who misrepresent their age.
Those measures are relevant to the Justice Department’s argument that TikTok’s privacy practices have changed significantly since the original allegations.
The judge’s response, however, indicates that the court may require a clearer connection between those changes and the proposed termination of the 2019 decree. That creates an unusual situation for TikTok. The company is attempting to resolve a new federal privacy case while simultaneously seeking to remove an older regulatory obligation that remains in force for several more years.
The settlement would have, for the Justice Department, provided a financial penalty and a resolution to the litigation while allowing TikTok to operate under its newer compliance framework. For TikTok, ending the consent decree would remove an additional layer of federal oversight inherited from Musical.ly.
The court’s decision could therefore determine whether the proposed settlement can proceed in its current form or whether the parties will need to renegotiate the arrangement.
The Monday hearing is expected to provide more clarity on whether the judge’s concerns can be addressed without reopening the broader settlement. Until then, the $400 million agreement remains subject to a significant legal hurdle, with the fate of the 2019 consent decree at the center of the dispute.