The European Commission has closed its Digital Services Act (DSA) investigation into TikTok Lite's rewards feature, after accepting the social media giant's undertaking to permanently withdraw the feature from the EU.
Launched in France and Spain earlier this year, TikTok Lite's “tasks and rewards” mechanism allows users to earn points for in-app activities such as watching videos and liking comments, which can then be redeemed for Amazon gift cards. TikTok Lite is a low-bandwidth alternative to the TikTok app that the company offers in some markets.
According to the European Commission, TikTok also agreed not to try to circumvent its commitments, such as by launching the same feature under a different name or by rolling out a version that serves as an equivalent substitute. The settlement applies to the TikTok Lite rewards mechanism that the EU was investigating, but does not outright ban TikTok from launching rewards features in the future.
When the EU launched an investigation into the rewards feature in April, the European Commission said it was concerned the design of the scheme could “stimulate addictive behaviour” and have a negative impact on the mental health of young users.
TikTok temporarily suspended its rewards scheme in the EU shortly after the European Commission launched its investigation, after the EU threatened to use provisional powers to suspend the feature while it investigated concerns that the app encouraged users to spend excessive amounts of time on it.
A senior European Commission official briefed reporters on background and said the executive body was pleased with the outcome because it delivered swiftly and allowed for the protection of EU citizens, including minors.
The settlement means that the EC has not formally found TikTok in violation of the DSA, and therefore no penalties will be imposed. However, the Commission stressed that if TikTok fails to live up to its promises, the company could be immediately sanctioned under the DSA, which allows for fines of up to 6% of annual global turnover without the need for a new investigation. So TikTok has a pretty big compliance incentive here.
The European Commission said it would use existing processes and the powers of the DSA to monitor TikTok's compliance with its obligations, also with the cooperation of Member State-level authorities that monitor compliance with the regulation's general rules.
Thierry Breton, the EU's internal market commissioner, said in a statement: “Brain time for young Europeans is not, and never will be, the currency of social media. We have won the permanent withdrawal of the TikTok Lite Rewards program, which could have had highly addictive consequences. The DSA is in full swing.”
TikTok spokesperson Elliot Barton sent TechCrunch a statement about the settlement: “We always seek to negotiate constructively with the European Commission and other regulators. TikTok is pleased to have reached an amicable resolution and has rescinded our TikTok Lite rewards program, which launched in France and Spain in April and had already voluntarily suspended it.”
While the TikTok DSA case is now closed, a separate, more extensive investigation announced in February is still ongoing.
The case concerns the app's main algorithm and other aspects. The European Commission said it was concerned that the design of its tracking-based recommendation engine could lead to a “rabbit hole effect,” whereby a user who watches one video on a topic may be recommended more extreme videos that could amplify harmful content, such as videos promoting eating disorders.
The EU is also concerned that TikTok does not have sufficiently strong age protection measures in place to protect children from inappropriate content, and is also investigating TikTok's compliance with DSA transparency requirements.
For more information on how the DSA and its sister regulation, the Digital Markets Act (DMA), are impacting Big Tech platforms, please see our previous reporting.