TikTok Cancels Rewards Program (Lite App)
While the US government grapples with the idea of a forced TikTok sale, the popular social media app faces another hurdle across the Atlantic. European Union (EU) officials have launched an investigation into TikTok's "Lite" rewards programme, which offered users in some regions in-app rewards based on usage.
Rewards Programme Shutdown in Response to EU Concerns
In response to the EU probe, TikTok announced the voluntary suspension of the program. This move aims to address concerns raised by EU regulators regarding potential violations of the Digital Services Act (DSA).
EU DSA and Concerns Around App Addiction
The EU's DSA enforces regulations on online platforms. A key concern surrounding the rewards programme was its potential to contribute to app addiction, particularly among younger users. The programme's incentive structure, which rewarded users for increased app usage, raised red flags for EU officials.
Transparency and Pre-Implementation Assessment are required.
The DSA mandates that programmes with the potential to increase "systemic risks" must undergo prior assessment by EU officials before implementation. This transparency measure ensures potential issues can be identified and addressed before programmes launch.
Potential Fines for Non-Compliance
By failing to submit the rewards programme for pre-implementation assessment, TikTok potentially faces hefty fines. The DSA empowers EU regulators to levy penalties of up to 6% of a company's global revenue for violations.
Swift Action by TikTok and Avoiding Exemplary Fines
TikTok's swift shutdown of the programme demonstrates its intention to cooperate with EU regulators. While significant fines are unlikely, the EU may use this case as an example to highlight the importance of adhering to the DSA's regulations.
Headwinds for TikTok: Sell-Off, Slowdown, and Shopping Push Struggles
This EU investigation adds to TikTok's growing list of challenges. Aside from the potential US sell-off, the company is also facing a slowdown in user growth and lukewarm user reception towards its efforts in the e-commerce space.
Penalties and the Future of the Programme
It remains to be seen whether the EU will levy a penalty on TikTok and, if so, the nature and severity of it. The fate of the rewards programme itself also hangs in the balance, as both parties work towards a resolution.
