TikTok will have to face a consumer protection lawsuit filed by Attorney General Brenna Bird after the Iowa Supreme Court ruled the state’s courts have jurisdiction over the social media giant, rejecting the company’s appeal of a failed motion to dismiss the action.
Bird sued TikTok and its parent company, Chinese conglomerate ByteDance, in 2024, claiming the company’s flagship app violated the Iowa Consumer Fraud Act. The Friday, Jan. 23, ruling from the Iowa Supreme Court affirms a trial court’s ruling rejecting TikTok’s motion to dismiss, clearing the way toward a trial.
In her lawsuit, Bird focused on online app stores operated by Google, Apple and others, each of which offer ratings of the appropriate age for users based on the content of applications. In the case of TikTok, Bird accused the company of falsely certifying to store providers that sexual, profane, or drug-related content was “infrequent/mild” on TikTok, thus securing, in the case of Apple, a “12+” age rating.
In reality, Bird argued, TikTok is awash with such mature content, even when using restricted modes that are supposed to filter age-inappropriate material. The company’s app store ratings are materially misleading and contribute to Iowa parents permitting children to use TikTok and encounter adult content, violating the Iowa consumer fraud statute, she alleged.
Iowa Supreme Court finds TikTok ‘actively cultivates and monetizes a relationship’ with state’s residents
TikTok sought to dismiss the case, claiming among other arguments it had immunity under federal law. A district court denied its motion, although it also declined the state’s request for an injunction ordering TikTok to change how it represents its content and age ratings. On appeal, TikTok focused on a narrower argument: that Iowa courts lack jurisdiction over claims against the out-of-state entities behind the app.
Writing for the unanimous court, Justice Matthew McDermott wrote that TikTok has more than “random, isolated or fortuitous” contacts within the state. In fact, the company “actively cultivates and monetizes a relationship with (Iowa’s) residents,” he wrote, including ongoing data collection authorized by TikTok’s terms of service, which is then used to serve targeted advertising to Iowans.
“The defendants have entered ongoing contractual relationships with hundreds of thousands of Iowa residents,” he wrote. “They involve not isolated contacts but continuous transactions in which the defendants actively curate content for Iowa users and, in exchange, extract valuable data. That TikTok is available nationwide, and not just in Iowa, does not defeat jurisdiction in Iowa under the analysis.”
TikTok argued that its terms of service are beside the point, because Iowa’s lawsuit does not allege violations of those contracts. But the court rejected that position, finding the alleged false statements about the app’s content and age-appropriateness are what induced many Iowans to accept those contractual terms in the first place.
“The alleged deceptive age ratings were the very tool used to induce Iowa parents and children to enter into the terms of service and download the app,” McDermott wrote. “… Without the alleged misrepresentations, the State asserts that many Iowa parents would not have permitted their children to download the app, enter into the terms of service agreement, or provide the data that the defendants monetize.”
McDermott also noted TikTok has lost similar battles over jurisdiction in other states, including Nevada, Arkansas, Indiana and Vermont.
Ruling comes as TikTok owner dodges federal ban
Trial has yet to be scheduled in the district court to which Friday’s ruling returned the case.
The Des Moines Register has reached out to TikTok for comment. Bird, in a statement, called the ruling “a crucial victory in our ongoing battle to defend Iowa’s children and parents against TikTok.”
“This win puts all big tech companies that lie to parents and kids about the safety of their platforms on notice — Iowa will hold you accountable,” she said.
The ruling comes after ByteDance on Thursday finalized a deal to set up a majority American-owned joint venture company to avoid a federal ban on TikTok.
The Trump administration has threatened the action since 2020 over concerns about a threat to U.S. security because of TikTok’s Chinese ownership. Some 200 million Americans use the platform.
TikTok USDS Joint Venture LLC will secure U.S. user data, apps and the algorithm through data privacy and cybersecurity measures, the company said.
The agreement provides for American and global investors, including cloud computing giant Oracle, private equity group Silver Lake and Abu Dhabi-based MGX, to hold a stake of 80.1% in the new joint venture, while ByteDance will retain 19.9%.
Reuters contributed to this article.
William Morris covers courts for the Des Moines Register. He can be contacted at wrmorris2@registermedia.com or 715-573-8166.
This article originally appeared on Des Moines Register: Iowa Supreme Court lets consumer fraud lawsuit against TikTok proceed
Reporting by William Morris, Des Moines Register / Des Moines Register
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