Chinese social media giant Bytedance, the owner of popular app TikTok, was hit with a record $370 million fine by Ireland’s data privacy watchdog last September for failing to protect the personal data of children using its platform. They now expect more fines to come, setting aside $1 billion to cover future penalties from European privacy regulators as they face lawsuits and investigations globally. The attorneys general of thirteen states and the District of Columbia recently filed lawsuits claiming TikTok’s design was addictive and harmful to children.
New corporate filings this week revealed that TikTok’s European revenues surged to $4.57 billion in 2023, up from $2.6 billion in 2022, while losses nearly tripled to $1.3 billion. Bytedance stated that the interpretation of the General Data Protection Regulation is evolving, creating uncertainty about potential fines. The European Commission launched an investigation into TikTok under the Digital Services Act in February 2024, with the ability to fine companies up to 6% of global revenue for violations. The $1 billion provision in TikTok’s 2023 accounts includes the $370 million fine from Ireland.
In addition to the Irish fine, TikTok faced other regulatory sanctions, including an $11 million penalty in Italy, a $16 million fine in the UK, a $1 million fine in the Netherlands, and a $5.7 million fine in the US, all related to mishandling children’s data. The accounts also showed $11.4 billion in claims from Dutch privacy and consumer rights groups, with a $1.1 billion legal claim from a Portuguese group over data collection. TikTok noted that these cases are still in the procedural stage, making it difficult to estimate potential financial impacts.
In the US, Bytedance is battling against a group of state attorneys general who claim TikTok encouraged compulsive app usage, impacting the mental health of American teenagers. There is also a federal law requiring Bytedance to sell TikTok to a non-Chinese company by January 2025, or face a ban in the US. Bytedance plans to appeal any ruling, with a decision expected by December 6. These legal battles highlight the challenges faced by Bytedance as they navigate regulatory scrutiny and lawsuits across multiple countries.
TikTok’s troubles highlight the growing concerns around data privacy and the impact of social media platforms on users, particularly children and teenagers. Bytedance’s provision of $1 billion for future fines indicates the seriousness of the situation and the potential financial ramifications of regulatory actions. As they continue to face legal challenges and investigations, the outcome of these cases could have significant implications for the company’s operations and reputation. It remains to be seen how Bytedance will address these issues and navigate the complex regulatory landscape in the coming months.
