Chinese social media giant Bytedance, the company behind the popular app TikTok, is bracing itself for more fines from European privacy regulators following a record $370 million penalty imposed by Ireland’s data privacy watchdog last September. Corporate filings show that Bytedance has set aside $1 billion to cover future fines, as the company faces lawsuits and investigations over TikTok’s addictive design, handling of user data, and lack of safeguards for teenage users. Most recently, thirteen states and the District of Columbia filed lawsuits claiming that TikTok’s design had harmed children and teens.
The $1 billion provision for future fines was revealed in corporate accounts for TikTok’s European operations filed with the United Kingdom’s Companies House. The accounts also disclosed that TikTok’s European revenues surged to $4.57 billion in 2023, up from $2.6 billion in 2022. However, the company’s losses have nearly tripled to $1.3 billion in 2023, up from $512 million. Bytedance stated that the interpretation of the General Data Protection Regulation is still evolving, creating uncertainty about potential fines that could be imposed by data protection supervisory authorities.
The European Commission has opened an investigation into TikTok under the Digital Services Act, which allows the European Union to fine companies up to 6% of their global revenue for breaches. The $1 billion provision set aside by Bytedance includes the $370 million fine imposed by Ireland’s Data Protection Commission in September 2023, which is currently under appeal. TikTok has also faced regulatory sanctions in Italy, the UK, the Netherlands, and the United States, totaling over $30 million in fines over the past few years.
TikTok also faces several legal claims from Dutch privacy and consumer rights foundations, totaling $11.4 billion, as well as a $1.1 billion claim over unlawful data collection from a Portuguese consumer rights group. The company noted in its corporate filing that these cases are still at a procedural stage, and it is impractical to estimate the potential financial impact of these claims. In the United States, TikTok is facing a wave of litigation from state attorney generals alleging that the app’s design features encourage compulsive use and harm the mental health of American teenagers.
Bytedance is also fighting against a federal law that would require 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, and the case is likely to be appealed to the Supreme Court. As regulatory scrutiny and legal challenges continue to mount for Bytedance and TikTok, the company is preparing for additional fines and penalties that could have a significant financial impact on its operations.
