European Commission forces consumer and advertising changes on TikTok

The question

How does the European Commission enforce consumer and advertising rules against technology companies who are rapidly adapting their use of content and data?

The key takeaway

TikTok is required to make significant changes to its platform in a relatively short period of time to bring it in line with EU consumer and advertising rules. The changes required reflect an appreciation of the fact that TikTok’s primary users are children and teenagers, including greater clarity over advertising, branded content and in-app currency.

The background

In February 2021, the European consumer organisation, BEUC (Bureau Européen des Unions de Consommateurs) filed a complaint against TikTok for consumer law breaches. BEUC alleged the following:

• TikTok’s terms of service are unfair because they are too ambiguous and favour TikTok to the detriment of users
• TikTok’s copyright terms are unfair as they give TikTok the irrevocable right to use and reproduce videos published by users for no remuneration
• TikTok’s virtual gifts policy is unfair because they have the absolute right to modify exchange rates and skew related financial transactions in their favour
• TikTok fails to protect children and teenagers from hidden advertising and potentially harmful content on its platform
• TikTok’s personal data processing practices are misleading - in particular, they fail to explain what data they collect and how they use it in a way which is comprehensible to children and teenagers.

On 28 May 2021, the European Commission responded to this complaint by launching a formal dialogue with TikTok. The European Commission raised questions around TikTok’s hidden marketing techniques, aggressive targeting of children and certain contractual terms in TikTok’s policies that could be considered misleading and confusing for consumers.

The development

On 21 June 2022, the European Commission announced that TikTok had committed to align its practices with the EU consumer and advertising rules by the end of Q3 2022. TikTok committed to the following changes:

• users can report ads and offers that could push or trick children into purchases
• branded content (for example, influencer content posted in return for payment) must not promote inappropriate products and services, such as alcohol or “get rich quick” schemes
• prompts to use a branded content toggle which adds a disclosure (such as #ad) to branded content posts
• content from users with over 10,000 followers will be reviewed by TikTok against its branded content policy and community guidelines
• greater clarity on how to purchase and use coins (TikTok’s in-app currency), pop-ups to provide the estimated price in local currency, and consumer rights to withdraw within 14 days from purchases and access purchase history
• greater clarity over how to access TikTok rewards and send gifts, including price calculation transparency
• paid ads to be identified with clearer labelling to be tested for effectiveness by a third party, and
• users able to report undisclosed branded content.

The Consumer Protection Co-operation network will monitor TikTok’s implementation of these commitments.

Why is this important?

This move against TikTok by the European Commission is a further example of the regulators, in the EU and the UK, getting hands on with the most popular social media platforms, particularly their treatment of children and teenagers. With the landing of the EU’s Digital Markets Act and the Digital Services Act just round the corner (including fining powers ranging from 6%-10% of global turnover), it’s time for the platforms to start reviewing their online services to ensure they will be in a position to comply.

Any practical tips?

The changes imposed on TikTok are a useful guide for the types of practical changes the European regulators are expecting from digital platforms. Running them against your own processes is a useful exercise, particularly in light of the new regulations which are fast approaching down the EU legislative track.

Autumn 2022