EU finds TikTok fails to protect consumers from scam ads

The European Commission has issued a preliminary finding that TikTok is not meeting EU requirements to protect consumers from scam advertisements.

The platform is accused of failing to provide sufficient information about ad content, targeting, and sponsorship, potentially breaching the EU’s Digital Services Act.

If confirmed, TikTok could face a fine of up to 6% of its global annual revenue.

TikTok expressed its commitment to comply but disagrees with some aspects of the findings, citing a lack of clear public guidelines.

This investigation is part of wider scrutiny into TikTok’s practices, including its algorithm design, age verification systems, and protections for minors.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ TikTok faces escalating multi-front regulatory pressure in the EU

The EU’s scrutiny of TikTok now spans multiple investigations, showing a coordinated regulatory approach targeting different aspects of the platform.

Beyond today’s advertising transparency case, the EU already fined ByteDance €530 million earlier this month for illegally transferring user data to China, the third-largest penalty ever issued under GDPR regulations 1.

These investigations represent a shift in focus for EU regulators, who have previously concentrated on American tech giants but are now increasingly turning attention to Chinese-owned platforms 1.

TikTok’s response to this regulatory pressure includes a €13 billion investment in European data infrastructure through “Project Clover,” establishing local data centers in Ireland, Norway, and other locations to prevent data access by Chinese personnel 2.

The company has also enlisted cybersecurity firm NCC Group to audit its data handling practices, demonstrating efforts to align with European privacy requirements while maintaining its Chinese ownership 2.

2️⃣ Ad transparency emerges as key battleground in platform regulation

The European Commission’s preliminary findings pinpoint specific failures in TikTok’s advertising repository, which should clearly disclose who pays for ads, targeting methods, and the content being promoted 3.

This investigation, which began in February 2023, signals the EU’s determination to enforce advertising transparency as a crucial component of consumer protection and digital market fairness 4.