Buy One Free One Deal: TikTok New Owner Gets to ‘Inherit’ 1,500 Lawsuits

TikTok is currently facing a significant legal challenge, with around 1,500 lawsuits pending over concerns related to child safety and privacy.

These lawsuits, collectively estimated to involve billions of dollars, accuse the platform of contributing to a youth mental health crisis and exploiting users' sensitive data for profit.

For potential buyers looking to acquire TikTok’s US operations, these unresolved legal battles pose a substantial risk.

According to Curtis Milhaupt, a Stanford law professor, in the event of a sale, these lawsuits would likely be transferred to the acquiring company.

This means that any US buyer of TikTok’s operations would inherit these legal issues.

ByteDance Ltd, TikTok’s China-based parent company, is named in the majority of these lawsuits, alongside TikTok itself.

Potential buyers might seek assurances from ByteDance, either negotiating for the company to cover the litigation costs or adjusting the sale price to account for the legal uncertainty, Milhaupt suggests.

He said:

"I’m sure potential buyers are aware of this issue and are trying to figure out how to deal with these potential liabilities.”

Can Trump Change TikTok’s Fate?

Ahead of the 5 April deadline for a deal, former President Trump held discussions with key officials, including Vice President JD Vance, who is leading efforts to facilitate the sale of TikTok’s US operations.

Last month, Trump mentioned negotiating with four potential bidders, though their identities were not disclosed.

One proposal under consideration involves a joint venture between Oracle Corp., Blackstone Inc., and possibly other investors.

Public offers include bids from a group led by billionaire Frank McCourt and Reddit co-founder Alexis Ohanian, a collaboration involving tech entrepreneur Jesse Tinsley and YouTube star MrBeast, and a merger offer from Perplexity AI, based in San Francisco.

Additionally, Amazon has submitted an offer.

For prospective buyers, one of the most significant legal challenges TikTok faces is a lawsuit filed by the US Department of Justice under President Biden’s administration.

The suit alleges that TikTok allowed millions of children under 13 to create accounts without parental consent, even after reaching a 2019 settlement with the Federal Trade Commission (FTC) over similar privacy issues.

Under that agreement, TikTok paid $5.7 million to resolve the FTC claims.

This new lawsuit, however, seeks penalties of up to $51,744 per violation per day, potentially amounting to hundreds of millions of dollars in fines.

TikTok has contested the privacy allegations, asserting that many claims are inaccurate or have already been addressed.

It remains uncertain whether the Trump administration will continue the case, especially as it has reversed some of Biden’s enforcement actions.

Should the case proceed and TikTok lose, the financial ramifications could extend to its new owners.

Privacy and Safety Lawsuits Pile Up for TikTok

Even if the administration decides to drop its case, TikTok remains entangled in a series of class-action lawsuits, primarily from parents who accuse the platform of violating the Children’s Online Privacy Protection Act.

Last year, the company allocated $1 billion to cover potential privacy penalties in Europe, following a €345 million fine (approximately US$381.2 million) from Irish regulators for mishandling children's data.

The same regulator is poised to levy an additional fine exceeding €500 million later this month for improperly transferring European user data to China.

In terms of child safety, TikTok, alongside other social media giants like Meta, Alphabet (Google), and Snap, is facing a wave of lawsuits alleging that its platform is dangerously addictive for minors.

Over 1,000 personal injury complaints have been filed by children and parents in California, accusing the companies of intentionally hooking users before they reach their teens.

Several hundred public school districts have also filed claims, asserting that the platforms contribute to a public nuisance undermining the education system.

TikTok has disputed these claims and is appealing some of the rulings that have allowed the addiction lawsuits to progress.

Bloomberg Intelligence estimates that the social media giants could face billions in potential exposure from this litigation.

Additionally, more than a dozen state attorneys general have sued TikTok, accusing the company of misleading users about its child safety measures while deliberately designing features to prolong children’s engagement and maximise profits.

TikTok has dismissed these allegations as "inaccurate and misleading."

Furthermore, a lawsuit from Utah claims that TikTok’s live video feature is facilitating child sex trafficking, a charge TikTok counters by highlighting its proactive measures to ensure community safety.

The company is also dealing with lawsuits from former content moderators who allege psychological harm due to exposure to disturbing content.

Although TikTok successfully avoided a class-action lawsuit by moving these claims to arbitration, the platform remains under significant legal scrutiny.