Chinese social media giant Bytedance is preparing for more regulatory fines as it sets aside $1 billion to cover future penalties from European privacy regulators. This move comes after Ireland’s data privacy watchdog fined Bytedance $370 million for failing to protect the personal data of children using its app TikTok. Bytedance has been facing a slew of lawsuits and investigations around the world over TikTok’s addictive design, data handling practices, and lack of safeguards for teenage users.
Recent corporate filings for TikTok’s European operations show that the company’s revenues surged to $4.57 billion in 2023, up from $2.6 billion in 2022. However, its losses also nearly tripled to $1.3 billion in 2023. Bytedance stated that there is uncertainty regarding potential fines as the interpretation of the General Data Protection Regulation is still evolving, and decisions from data protection authorities are subject to review.
The European Commission has opened an investigation into TikTok under the Digital Services Act, which could lead to fines of up to 6% of global revenue or a ban. The $1 billion provision for future fines includes the $370 million fine imposed by Ireland in September 2023. TikTok is appealing the fine, but it has faced various regulatory penalties in recent years, including fines in Italy, Britain, the Netherlands, and the United States over data privacy issues.
TikTok is also facing legal claims amounting to $11.4 billion from Dutch privacy and consumer rights foundations, as well as a $1.1 billion claim from a Portuguese consumer rights group over unlawful data collection. The company stated that these cases are still at a procedural stage and it is difficult to estimate the potential financial impact. In the United States, a bipartisan group of state attorneys general is suing TikTok over design features that allegedly encourage compulsive use of the app, harming the mental health of American teenagers.
Bytedance is fighting back against a federal law that could force it to sell TikTok to a non-Chinese company by January 2025 or face a ban in the U.S. A ruling on this matter was expected by December 6, with the possibility of an appeal to the Supreme Court. Despite these challenges, TikTok remains popular among users worldwide, but the company faces significant legal and regulatory hurdles as it navigates the complex landscape of data privacy and user protection laws.
