TikTok Risks Fines as EU Issues Ultimatum Over App Launch

(Bloomberg) -- The European Union opened a new probe Monday into whether ByteDance Ltd. violated the bloc’s new content law when it launched its TikTok Lite app in France and Spain without providing a full risk assessment.

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The new app promises to pay users through a points system, which the European Commission said risks creating an addictive effect on users.

The company was given 24 hours to deliver a risk assessment to the commission or risk fines of up to 1% of its total annual income or worldwide turnover, or periodic penalties of up to 5% of its average daily income.

The EU also said it plans to order TikTok to suspend the app’s rewards system until its safety could be assessed fully, although it gave the company a 48-hour window during which it can present a defense.

“We suspect #TikTokLite feature to be toxic & addictive, in particular for children,” the bloc’s internal market commissioner, Thierry Breton, wrote in a post on X. “Unless TikTok provides compelling proof of safety — which it failed to do until now — we stand ready to trigger #DSA interim measures including the #suspension of the TikTokLite ‘reward programme.’”

The new demand under the Digital Services Act is a follow-up to a request sent last week by the bloc’s executive arm for information regarding the launch of TikTok Lite.

TikTok now has until May 3 to respond to other questions about the measures put in place for the protection of minors and the mental health of users, in particular around the potential stimulation of addictive behavior.

A spokesperson for TikTok said in an emailed statement: “We are disappointed with this decision — the TikTok Lite rewards hub is not available to under 18s, and there is a daily limit on video watch tasks. We will continue discussions with the commission.”

The commission has described TikTok Lite as “a new app with a new functionality aimed at users aged 18+” and with a “Reward Program” that allows users to earn points by carrying out tasks including watching videos, which can then be exchanged for rewards such as Amazon vouchers, gift cards or TikTok’s coins currency.

Read more: TikTok Braces for US Divest-or-Ban Law — And a Legal Fight

This is the second such inquiry under the bloc’s new DSA. EU regulators in February announced a formal investigation into TikTok over the app’s addictive design and screen-time limits, its privacy settings, and the social media platform’s age verification procedures.

TikTok is also facing increased pressure on the other side of the Atlantic. The US House of Representatives on Saturday put legislation requiring the app’s Chinese parent company to divest its ownership stake on a fast track to become law, with the Senate expected to vote on the bill in the coming days.

Online platforms and search engines with over 45 million users in the EU must comply with the most stringent rules of the DSA, with 22 currently falling under the designation including Alphabet Inc. products like Google Search and YouTube, Meta Platforms Inc.’s Facebook and Instagram, and Microsoft Corp.’s LinkedIn.

(Updates with TikTok response in eighth paragraph)

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