The U.S. Department of Justice has secured a $400 million settlement with TikTok and its parent company ByteDance to resolve a case tied to children's privacy legislation, the department announced Friday.

Associate Attorney General Stanley E. Woodward Jr. called the outcome "a major victory for American children and parents."

"The department's priority is ensuring that children are protected online and that companies entrusted with their personal information meet their legal obligations," Woodward said in a statement. "This resolution secures a substantial recovery while reinforcing the protections that families expect and deserve."

The lawsuit, which centered on compliance with the Children's Online Privacy Protection Act — a 1998 federal law that bars online services from collecting personal information from children under 13 without parental consent — was filed in 2024 by the Justice Department under the Biden administration. The complaint alleged that children under 13 could create TikTok accounts and communicate with other users, including adults, and that their personal information was collected without the consent the law requires. The DOJ said the settlement ranks among the largest ever reached in a case involving the privacy act; for comparison, the previous record COPPA penalty was the $275 million Epic Games agreed to pay in 2022 over its Fortnite game.

Under the terms of the agreement, TikTok and ByteDance will pay $300 million immediately, with a further $100 million due "upon entry of an order vacating a prior consent decree entered against TikTok's predecessor, Musical.ly." Musical.ly, a lip-syncing app that ByteDance acquired in 2017 and folded into TikTok a year later, was at the center of a 2019 settlement in which TikTok paid a then-record $5.7 million over COPPA violations. That earlier consent decree is what a federal court must now formally vacate before the final $100 million of the new agreement comes due, leaving a judge's order as the remaining step in the payout timeline.

The Justice Department noted that since the lawsuit was first filed, "TikTok has undergone significant changes to its ownership, management, compliance functions and privacy practices." Those ownership changes include a 2025 restructuring that placed TikTok's U.S. operations in a joint venture whose American investors include Oracle and Silver Lake, following a law that required ByteDance to divest the platform. The company "has implemented extensive measures designed to strengthen safeguards for younger users, improve age-related controls and enhance parental oversight," the DOJ added, saying those developments have "strengthened protections for millions of American families."

The department said the settlement demonstrates its commitment to protecting the public while also acknowledging the progress TikTok has made.

"The most important result is that children and parents are better protected today than they were when this case began," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "This settlement reflects substantial progress, secures a significant monetary recovery and brings this matter to a successful conclusion."

TikTok did not immediately respond to a request for comment from FOX Business.

Source: Fox Business