In a recent development, TikTok has decided to eliminate a contentious rewards feature that was under scrutiny for encouraging excessive screen time, particularly among young users. This decision was made in response to concerns raised by the European Union's executive commission.
What Happened: This marks the first outcome of an investigation under the EU's Digital Services Act. The Act, effective since February, governs large digital platforms to ensure a "safe and accountable online environment," AP News reported on Tuesday.
Despite agreeing to the withdrawal, TikTok did not concede to violating the Digital Services Act. The European Commission has deemed the withdrawal as legally binding, sending a "clear message to the entire social media industry," as stated by Margrethe Vestager, European Commission for Digital Affairs.
The case revolves around TikTok Lite, a version of the app launched in Spain and France. The app enabled users to accumulate points for various activities, which could be converted into Amazon (NASDAQ: AMZN) vouchers and PayPal (NASDAQ: PYPL) gift cards. The rewards were limited to users aged 18 and above, with a daily limit on video-watching time to earn rewards.
This resolution does not affect an ongoing investigation into TikTok concerning the protection of minors, advertising transparency, data access for researchers, and risks of "behavioral addiction" and harmful content.
TikTok has yet to respond to Benzinga's queries.
Why It Matters: TikTok's decision comes in the wake of its halted expansion into major European markets earlier this year, as it shifted focus to the U.S. amidst regulatory challenges. This move was aimed at strengthening ByteDance's position in the U.S., which boasts 170 million monthly users, to counter a potential ban in the region.
Furthermore, TikTok and its parent company ByteDance Ltd. have been arguing that the U.S. could have considered lighter alternatives to banning the app to address national security concerns. This ongoing battle with U.S. regulations adds another layer of complexity to TikTok's global operations.