TikTok’s Chinese owner is proposing to settle consumer privacy litigation that has exposed it to hundreds of millions of dollars in damages as the video-streaming app prepares for a possible acquisition under threat of being shut down in the U.S. over national security concerns.
Lawyers for ByteDance Ltd. and consumers have “reached a settlement in principle, subject to certain conditions,” to resolve claims that the app unlawfully records facial-scan images of children and sends confidential information about adult users to China, according to a filing in Chicago federal court. The attorneys said they plan to file a final settlement proposal within 90 days.
But there’s a wrinkle: The deal could be scuttled because attorneys representing consumers in California are complaining that they were left out of the settlement talks.
As it tries to resolve the 19 class-action lawsuits, TikTok’s owner has been under a cloud of suspicion across the Western Hemisphere that the app is dangerous for consumers. While ByteDance has rejected claims that it’s controlled by the Chinese government or that user data is at risk, it has faced heavy scrutiny by regulators in the U.S. and Europe.
Microsoft Corp., meanwhile, has been under pressure to resolve privacy and security concerns tied to a possible TikTok acquisition in time to meet President Donald Trump’s Sept. 15 deadline for reaching a deal. Another possible suitor is Oracle Corp., whose bid for the U.S. operations of TikTok has received Trump’s backing. Either company would benefit immensely by not inheriting a raft of lawsuits filed on behalf of millions of consumers.