TikTok Quandary: A global controversy

The DOJ's suit argues that TikTok’s actions have impacted millions of young users under COPPA, which is designed to protect the personal information of children under 13. Despite a court-imposed injunction requiring TikTok to maintain records demonstrating compliance with COPPA, the company is accused of failing to adhere to these regulations, complicating the DOJ’s efforts to gauge the full extent of the violations.

TikTok's explosive growth, with a 67 percent revenue increase in 2023 and projections to reach 1.8 billion users by the end of 2024, has only heightened the urgency of these legal battles. Critics argue that the app’s practices threaten not just individual privacy but also national security, adding layers of complexity to the ongoing dispute.

TikTok’s rewards feature has sparked strong reactions from the European Commission. Although TikTok does not easily concede its faults, it eventually accepted that this particular feature was detrimental to children. The company recently agreed to withdraw a rewards feature that raised concerns about encouraging excessive screen time, particularly among children. The European Union's executive commission  announced  this  decision  on  August 5.  

This development has caused significant embarrassment for TikTok and marked the first resolution of an investigation under the EU's sweeping Digital Services Act, which came into effect in February 2024 and aims to ensure a “safe and accountable online environment” by regulating large digital platforms.

TikTok made this commitment without admitting that the feature violated the Digital Services Act, officials said. The TikTokLite Rewards program had sparked controversy due to its potential to foster addictive behaviours among users. Launched earlier this year, TikTokLite allowed users to earn points through activities like watching videos, liking content, and inviting friends. 

These points were redeemable for Amazon vouchers and PayPal gift cards. While the rewards system had age restrictions, the EU was particularly concerned about the broader psychological impact on children. 

The investigation began in April when officials scrutinized TikTok's age verification measures. The Commission was worried that the company had not adequately assessed the rewards feature’s potential risks associated with its addictive nature. TikTok, responding to these findings, has expressed its intent to engage constructively with regulators. Although the company did not admit to any wrongdoing, it agreed to permanently withdraw the feature and avoid schemes circumventing this action.

The case involves TikTokLite, a low-bandwidth version of the app released in Spain and France. It allowed users to earn points for activities such as following creators, liking content, or inviting friends to join TikTok. These points could be exchanged for Amazon vouchers and PayPal gift cards. TikTok stated that rewards were restricted to users aged 18 and older, who had to verify their age. Users could watch up to one hour a day of videos to earn rewards, capped at the equivalent of one euro ($1.09) per day.

The resolution of the TikTokLite investigation does not affect an earlier probe focusing on concerns about the protection of minors, advertising transparency, data access for researchers, and mitigating risks of “behavioural addiction” and harmful content. In April of this year, TikTok had announced it was halting a feature on its new app that rewarded users in Europe for watching videos, following pressure from regulators concerned about its addictive features. The company backed down shortly after the European Union warned that the TikTokLite app might have breached the 27-nation bloc's digital regulations upon its launch.

In September 2023, European regulators imposed a significant $368 million fine on TikTok for failing to protect children's privacy, marking the first major penalty for the app under Europe’s strict data privacy rules. Ireland’s Data Protection Commission, primarily responsible for overseeing data privacy compliance in the EU, led this action.

The Data Protection Commission's investigation revealed several privacy violations by TikTok. For instance, the sign-up process for teenage users defaulted to public accounts, exposing their videos to potentially millions of viewers. Additionally, the “family pairing” feature, designed to allow parents to manage their children’s settings, was found to be insufficiently robust. It permitted direct messaging features to be activated for older teens without parental consent and nudged users towards more privacy-invasive settings. These findings highlighted TikTok’s lax approach to user privacy.

European regulators are particularly vigilant about compliance with the General Data Protection Regulation (GDPR), which sets high standards for data protection and privacy. TikTok’s failure to meet these standards not only resulted in hefty fines but also amplified calls for stricter oversight and regulation of digital platforms.

Germany, known for its rigorous data protection laws, has also scrutinized TikTok’s practices. German data protection authorities have investigated the app's handling of underage users’ data and its approach to personalized advertising. As in other European countries, the emphasis in Germany has been on ensuring that TikTok complies with stringent privacy standards and limits children’s access to the platform.

Critics have argued that TikTok’s extensive data collection practices could be exploited by external actors, including state-sponsored cyber-spies from countries like China. Allegations suggest that if Chinese agencies cannot access TikTok’s data through legal means, they might find alternative methods to infiltrate the app’s digital infrastructure.