TikTok hit with record fine for collecting data on children

China's big global success story on social media has run into trouble in the United States.

Popular video-sharing app TikTok has agreed to pay $5.7 million to settle allegations that it illegally collected personal information from children under the age of 13, such as names, email addresses and their location.

The US Federal Trade Commission said in a statement Wednesday that the TikTok fine is a record for a child privacy case.

TikTok, which belongs to $75 billion startup ByteDance, has more than half a billion users worldwide, giving it an international edge over other Chinese-owned social media platforms, which have struggled to expand outside their home market.

The US fine relates to Musical.ly, a video-sharing app Bytedance bought in 2017 and merged with TikTok last August.

The FTC said its investigation of Musical.ly had "uncovered disturbing practices, including collecting and exposing the location" of young children. Despite receiving thousands of complaints from parents, the company failed to comply with requests to delete information about underage children and held onto it longer than necessary, according to the commission.

TikTok said in a statement that it is committed to "creating measures" to protect users, including tools for parents to protect their kids.

The company on Wednesday introduced a "separate app experience" for younger US users in which they "cannot do things like share their videos on TikTok, comment on others' videos, message with users, or maintain a profile or followers."

Creating accounts without parents' knowledge

Launched in 2014, Musical.ly let users upload short videos of themselves lipsyncing to popular songs. To register for the app, people had to give an email address, phone number, username, first and last name, short bio and profile picture.

The collection of that personal information provided more than enough evidence for Musical.ly to see it was violating the US Children's Online Privacy Protection Act, or COPPA, the FTC said.

The youth of Musical.ly's userbase was "easily apparent in perusing users' profile pictures and ... profiles, many of which explicitly note the child's age, birthdate, or school," according to a complaint filed by the FTC.

Musical.ly, which had more than 65 million registered users in the United States before it merged with TikTok, received thousands of complaints from parents saying their underage children had created an account without their knowledge. COPPA requires internet companies to obtain "verifiable parental consent" before collecting, using or disclosing personal information from children.

When parents asked, Musical.ly would shut down the accounts of preteens. But it didn't delete the users' videos or profile information from its servers, according to the FTC complaint.

"There have been public reports of adults trying to contact children via the Musical.ly app," the commission said. "In addition, until October 2016, the app included a feature that allowed users to view other users within a 50-mile radius of their location."

As part of the settlement with the FTC, TikTok must take down all videos made by children under age 13.

Other big tech companies have run afoul of the United States' child privacy law in the past.

Oath, which is owned by Verizon (VZ), agreed to pay $5 million in December for using data such as cookies and geolocation to place online ads on websites targeted at children under 13.

Disney (DIS) subsidiary Playdom was fined $3 million in 2011 for collecting and displaying children's information in multiplayer online games.