ByteDance-owned TikTok is facing legal action from 13 U.S. states and the District of Columbia. The states accuse TikTok of causing harm to its younger users.
What Happened: On Tuesday, separate lawsuits were filed in New York, California, the District of Columbia, and 11 other states, accusing TikTok of using software designed to keep children engaged for extended periods, reported Reuters.
The short-form video platform is also accused of misrepresenting the effectiveness of its content moderation.
California Attorney General Rob Bonta said, "TikTok cultivates social media addiction to boost corporate profits." The states argue that TikTok seeks to maximize user engagement to target them with ads.
New York Attorney General Letitia James stated, "Young people are struggling with their mental health because of addictive social media platforms like TikTok."
TikTok responded to these allegations, saying that many are "inaccurate and misleading." The company expressed disappointment that the states chose to sue rather than collaborate on solutions to industrywide challenges.
Washington D.C. Attorney General Brian Schwalb accused TikTok of operating an unlicensed money transmission business through its live streaming and virtual currency features, the report noted.
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Why It Matters: This legal action against TikTok comes on the heels of a bill signed by President Joe Biden, which could force TikTok's parent company, ByteDance, to sell the company or face a ban in the U.S.
This also follows a nationwide probe of TikTok's impact on young people launched by eight states in March 2022.
Meta Platforms, Inc. (NASDAQ:META), which owns Instagram and Facebook, Snap Inc. (NYSE:SNAP), and Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube could gain from rising concerns about TikTok.
According to Apptopia, TikTok has consistently outpaced other major social media apps, including Instagram, Facebook, Snapchat, YouTube, and X (formerly Twitter), in U.S. downloads every quarter since 2020.
However, when the ByteDance-owned platform was banned in India, platforms like YouTube, Instagram, and local short-video apps Moj and Josh experienced major user growth in the country, according to Sensor Tower.
With TikTok facing legal scrutiny, users may migrate to other platforms. Moreover, as advertisers reassess their strategies, they may shift their budgets toward platforms perceived as more stable or compliant with regulations.
Photo by XanderSt on Shutterstock
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