FTC refers TikTok child privacy case to US Justice Department

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The US Federal Trade Commission (FTC) has officially referred a complaint against TikTok to the US Department of Justice. The complaint could eventually pan out to become a full-fledged governmental probe. The FTC had been investigating the way TikTok handles user data, particularly concerning children.

Why is the FTC seeking the US Justice Department’s intervention?

The FTC has been investigating TikTok, and its parent company ByteDance Inc., for well over a year. The federal agency was looking at several potential violations of US laws by the Chinese company.

Besides the myriad allegations, the FTC suspects ByteDance violates federal laws that protect children on the internet. Additionally, investigations intend to uncover if ByteDance violated laws that bar companies from using “unfair or deceptive” business practices.

It appears the FTC believes its investigation of TikTok’s business practices merits the involvement of the Department of Justice. By referring the case to the DoJ, the FTC has reportedly implied that it could be ready for a full-blown governmental inquiry.

Needless to say, this would be a long-drawn legal battle for ByteDance. Moreover, it could mean American lawmakers may force ByteDance to significantly dilute its ownership stakes in TikTok, effectively breaking up a very profitable company.

TikTok “disappointed” about the development

In a detailed statement, the FTC has stated that its investigation has, “found reason to believe that TikTok is violating or about to violate the FTC Act and the Children’s Online Privacy Protection Act.”

FTC’s announcing its intention to refer a complaint to the DoJ is surprising because the agency usually refrains from confirming its next move. However, the agency made an exception because the investigation and its outcome are, “in the public interest.” As expected, TikTok has issued a public statement on X (formerly Twitter) expressing its disappointment. The announcement could be one of the biggest blows to ByteDance after the company forked out $5.7 million to settle FTC allegations back in 2019. Incidentally, this was the largest civil penalty the FTC ever obtained in a children’s privacy case.