TikTok Hit With $5.7 Million Fine Over Child Privacy

(Bloomberg) -- Musical.ly, the popular teen video app now known as TikTok, will pay a record $5.7 million to settle claims by the U.S. government that it illegally collected personal information from children.

Musical.ly reached an agreement with the Federal Trade Commission, the agency said Wednesday in a statement, resolving allegations that the social-media company failed to obtain parental consent before collecting names, email addresses and other information from children younger than age 13.

“This record penalty should be a reminder to all online services and websites that target children,” FTC Chairman Joe Simons said. “We will not tolerate companies that flagrantly ignore the law.”

The Children's Online Privacy Protection Act, signed into law more than two decades ago, limits how websites and online services -- including apps -- can collect, use and disclose information from kids. Additionally, the FTC said Musical.ly accounts were public by default, meaning that a child's profile biography, username, picture and videos could be seen by other users.

TikTok is now making changes to better accommodate younger users in the U.S. based on guidance from the FTC, the company said in a statement. Beginning Wednesday, users will be directed to age-appropriate environments. The app for younger users won't permit the sharing of personal information, and will also have “extensive” limitations on content and user interaction.

“We care deeply about the safety and privacy of our users,” TikTok said. “This is an ongoing commitment, and we are continuing to expand and evolve our protective measures in support of this.”

Musical.ly was acquired by the world's most valuable startup, Beijing ByteDance Technology Co., for $800 million and soon after was merged with its TikTok app. A hit in the U.S., Musical.ly was seen as a way for the Chinese company to expand abroad, and also to capitalize on an increasing appetite for short video.

“This FTC ruling underscores what we have long known: companies do not consider children's personal information out of bounds,” U.S. Senator Ed Markey, who helped author COPPA, said in a statement. “While this fine may be an historic high for a COPPA violation, it is not high enough for the harm that is done to children and to deter violations of the law in the future by other companies.”

The settlement also requires the app's operators to take offline all videos made by children younger than 13, the FTC said.

Facebook Inc. is also facing a COPPA-related complaint from several consumer groups. The groups claim the social media giant knew that many of the games it offered were popular with children under 13 and were being played by some potentially as young as 5 years old. Facebook said Feb. 20 that it wasn't in contact with the FTC over the issue.

--With assistance from Ben Brody and Selina Wang.

To contact the reporter on this story: Krista Gmelich in New York at kgmelich1@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack, Alistair Barr

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