/by Matthias Horn
The European Union has continued to assert its influence over the digital market. In a recent development, TikTok, one of the most popular social media platforms globally, agreed to suspend its “Lite Rewards” program across the EU. This move was not voluntary; it came in response to mounting regulatory pressures from the European Commission. The Commission had been investigating whether the Lite Rewards program violated key provisions of the Digital Services Act (DSA) and raised broader concerns about consumer protection and market fairness. The suspension represents a critical moment in the ongoing efforts to address the power dynamics between large digital platforms and European regulators. TikTok is still under investigation for DSA breaches around child protection in a separate case launched in February.
The European Commission’s Investigative Actions
The European Commission’s interest in TikTok’s operations in Europe is part of its broader strategy to enforce the rules set out in the Digital Services Act (DSA) and the Digital Markets Act (DMA). In March 2024, the Commission sent a formal request for information to TikTok regarding the launch of its “TikTok Lite” version in France and Spain. This inquiry was part of a larger investigation into whether TikTok’s design and content practices, particularly through its Lite Rewards program, were in compliance with EU regulations. The investigation focused on whether the program, which incentivized users with rewards for engaging with content, could be considered manipulative, especially toward younger users who are particularly vulnerable to addictive online behaviors.
Following the inquiry, the European Commission’s ongoing proceedings against TikTok under the DSA sought to determine if the platform’s practices constituted a violation of the regulation’s requirements for risk management and consumer protection. These requirements emphasize the importance of transparency, fairness, and accountability, particularly for large online platforms that wield significant influence over the digital marketplace. The Commission’s goal was to ensure that platforms like TikTok do not exploit their users, especially minors, through manipulative design that prioritizes engagement over user well-being.
TikTok’s Response and the Suspension of Lite Rewards
In response to the Commission’s scrutiny, TikTok announced the permanent suspension of its Lite Rewards program across the EU in August 2024. This decision, though framed as a compliance measure, underscores the growing tension between digital platforms and regulators in Europe. The Lite Rewards program had offered users points for completing tasks such as watching videos, effectively encouraging prolonged screen time. This business model aligns with the broader concept of the attention economy, where platforms compete for user attention as a primary driver of revenue.
TikTok’s decision to suspend the program is significant for several reasons. First, it demonstrates the platform’s recognition of the EU’s growing regulatory power and the need to comply with the DSA’s requirements. The DSA imposes stringent obligations on very large online platforms (VLOPs) like TikTok, particularly in terms of managing risks related to user safety and transparency. Second, the suspension reflects the broader impact of EU regulations on global digital platforms, forcing them to reconsider how they engage with users and monetize their services within the European market.
The Digital Services Act and its Implications
The Digital Services Act, which came into force in 2022, represents a critical component of the EU’s digital strategy. It aims to create a safer and more accountable online environment by imposing specific obligations on platforms that serve a large number of European users. The DSA emphasizes the need for transparency in how platforms operate, particularly concerning the algorithms that determine content distribution and the design features that encourage user engagement.
For TikTok, the DSA’s requirements translated into several key obligations that played a role in the Commission’s investigation. Article 26 of the DSA mandates that very large online platforms (VLOPs) like TikTok conduct regular risk assessments to identify potential harms to users and society. These risks include the dissemination of illegal content, the negative impact on users’ rights, and the societal effects of platform design. In TikTok’s case, the Commission was particularly concerned about the risks associated with the Lite Rewards program’s potential to manipulate user behaviour.
Article 27 of the DSA further requires platforms to implement appropriate mitigation measures to address these risks. For TikTok, this meant reevaluating the design and operation of the Lite Rewards program to ensure that it did not contribute to harmful online behaviours. By suspending the program, TikTok aimed to demonstrate its compliance with this requirement, apparently signalling its willingness to work with regulators to mitigate potential harms.
Additionally, Article 34 of the DSA imposes transparency obligations on platforms, requiring them to report on the steps they take to comply with the regulation, particularly regarding their risk management practices. TikTok’s suspension of the Lite Rewards program will need to be documented in its transparency reports, showcasing the platform’s efforts to align with the DSA’s requirements.
The Broader Implications for the Digital Economy
TikTok’s compliance with the DSA and the suspension of the Lite Rewards program raises important questions about the future of digital platforms in Europe. The attention economy, which prioritizes maximizing user engagement, is increasingly at odds with the EU’s regulatory focus on fairness, transparency, and user protection. Platforms like TikTok, which rely heavily on user engagement for revenue, must now navigate a regulatory landscape that challenges the very business models that have driven their success.
The suspension of the Lite Rewards program is also indicative of a broader trend in the EU’s approach to regulating the digital market. The DSA, along with the Digital Markets Act (DMA) and the General Data Protection Regulation (GDPR), forms part of a comprehensive framework aimed at curbing the excesses of digital platforms and ensuring that they operate in a manner that is both competitive and fair. This regulatory environment forces platforms to reconsider how they engage with users, particularly in terms of how they design features that encourage prolonged engagement.
TikTok’s other incentive programs, such as its Creator Fund and various in-app challenges, also operate within the attention economy, incentivizing content creation and user engagement. However, these programs may face similar scrutiny if they are found to contribute to harmful online behaviors or violate the DSA’s requirements for risk management and transparency. The broader implication is that platforms must strike a delicate balance between driving engagement and ensuring compliance with EU regulations.
Conclusion
TikTok’s decision to suspend its Lite Rewards program in response to the European Commission’s investigation highlights the growing influence of the EU’s regulatory framework on the digital economy. The Digital Services Act, in particular, imposes stringent obligations on platforms like TikTok to ensure that their business practices do not harm users or distort the market. The suspension of the Lite Rewards program reflects a broader shift towards greater accountability for digital platforms in Europe, signalling that the EU is serious about enforcing its regulations and protecting its citizens from manipulative online practices. Of course, it is not entirely clear whether the EU Commission’s investigations alone are responsible for the decision.
As the digital landscape continues to evolve, platforms operating in Europe must adapt to a regulatory environment that prioritises transparency, fairness, and user protection. TikTok’s experience serves as a warning to other platforms that the EU’s regulatory framework is not just a set of guidelines but a robust system of enforcement that has the power to reshape the digital economy. The ongoing proceedings against TikTok under the DSA will likely set important precedents for how platforms engage with users and design their services in a way that aligns with the EU’s vision of a safer, more accountable digital space.
Matthias Horn, Global Data Privacy Lawyer with Ottobock, Berlin, Germany