TikTok, its parent company ByteDance and the state of Alabama have agreed to a $100 million settlement over allegations that the social media platform was designed to addict children, with the company also facing up to $300 million in additional penalties if it fails to comply with the deal.

TikTok and ByteDance agreed to pay Alabama $100 million within 45 days. ByteDance was included in the settlement because it retains a minority stake in TikTok’s US business following a corporate restructuring earlier in the year, says the BBC.

The settlement requires TikTok to impose a two-hour daily usage limit for child users, as well as blocks on use during school hours and overnight. The restrictions take effect immediately.

TikTok will also impose a blanket ban on cosmetic filters for children and provide parents with tools to heavily moderate app usage, restrict certain content and limit adult users from discovering children’s accounts.

The company must also notify parents about suspicious interactions between teens and adults.

TikTok has up to one year to implement longer-term requirements under the settlement, including age verification measures.

The agreement was finalised shortly before a jury trial was scheduled to begin, following mediation in which the settlement represented Alabama’s final offer.

The state’s lawsuit alleged that TikTok was intentionally designed to addict children to features on its platform.

The settlement is TikTok’s first with a US state. The restrictions apply exclusively in Alabama and use a framework similar to an August agreement between Meta and 52 state Attorneys General.

A TikTok USDS spokesperson stated that the settlement builds on their commitment to continually enhance safety tools for teens.