TikTok in Europe’s crosshairs as U.S. mulls ban on Chinese-owned app

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ByteDance Board Member: Fighting TikTok Due to 'Misinformation and Misunderstandings'

TikTok is hosting its 2022 year-end event on December 13 in Milan, Italy.

Claudio Lavenia | Getty Images Entertainment | Getty Images

TikTok is beginning to feel the pinch of political and regulatory pressures in Europe, where the Chinese-owned app has largely escaped the scrutiny it faces in the US

EU Internal Markets Commissioner Thierry Breton warned TikTok CEO Shou Zi Chew at a meeting this month that the block could ban the app if it doesn’t comply with the new digital content rules well before the September 1 deadline.

That’s a marked change from the EU’s near-silence on TikTok, while US lawmakers have been aggressive, banning the app from federal devices in December over national security concerns. A proposed bipartisan bill also aims to block the app from operating in the United States

It’s not that the EU is technology-friendly. Europe has fined US tech giants for breaching the EU’s General Data Protection Regulation.

The difference with TikTok is that the app has stayed out of the crosshairs of commercial interests in Europe.

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“There is no political demand for an investigation into Chinese companies,” said Hosuk Lee-Makiyama, director of the think tank European Center for International Political Economy, in an interview in December.

“TikTok’s user base is much larger than many people in Europe think,” he said. But, he added, “They’re not going to look very closely unless they’re stealing too much of your ad revenue.”

According to Sensor Tower’s Abe Yousef, TikTok had about 275 million monthly active users in Europe as of December, noting that this is more than a third of Europe’s population of about 750 million.

The data dragon TikTok must be placed under the supervision of the European authorities. Europe must finally wake up.

Moritz Korner

MEP, European Parliament

According to data.ai, formerly App Annie, TikTok was the most downloaded social media app in Italy and Spain last year. The app took second place in France and Germany, the data showed.

WhatsApp, owned by Facebook parent company Meta, ranked first among social media app downloads in France and Germany, and third in Italy and Spain, according to data.ai.

Meta reported 2021 sales of $29.06 billion in Europe, a region the company defined as including Russia and Turkey. In contrast, according to the latest available UK filing, TikTok recorded sales of just $531 million in the European Union in 2021. But that was well over four times what was announced for 2020.

“It will take a little time for the European Commission to come together on these issues,” said Dexter Thillien, senior technology and telecoms analyst at The Economist Intelligence Unit.

“It’s not because of the European Commission’s unwillingness to do anything,” Thillien told CNBC in a phone interview. “They have their hands full with larger companies.”

TikTok is not yet a giant on the scale of companies like Meta, alphabet and Amazon when it comes to social media, advertising and e-commerce. But TikTok has become so popular that its app has inspired copycat products like Meta’s Reels short video feature.

According to data.ai, more than half of 16 to 24 year olds in France and Germany use TikTok.

Since its launch in 2016, TikTok has grown a global monthly user base of more than 1 billion and cemented the careers of well-known media personalities, from the D’Amelio sisters to Addison Rae.

That gives it an attractive pool of data to train its algorithms to aggressively target users with content best suited to their interests. TikTok’s parent company, Beijing-based ByteDance, has achieved similar success in China with a local version of the app called Douyin.

A major fear among US intelligence officials – and increasingly lawmakers in Europe – is that Beijing could influence how TikTok targets its users to engage in propaganda or censorship.

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“The success of TikTok is the result of a European policy failure,” Moritz Korner, MEP for the FDP, told CNBC via email.

“From a geopolitical perspective, the EU’s inaction on TikTok has been naïve.”

Since 2019, Korner has been calling on the European Commission to put pressure on data protection authorities to take action against TikTok. He is concerned that the platform poses “several unacceptable risks for European users,” including “data access by [and] Persecution of journalists.”

“The data dragon TikTok must be placed under the surveillance of the European authorities,” said Korner. “Europe must finally wake up.”

Why the tone is changing in Europe

Last month, ByteDance admitted to using two journalists’ TikTok data to pinpoint their physical movements, according to an internal memo. TikTok distanced itself from the activity, saying the employees involved were no longer employed by ByteDance.

Surveillance concerns were a big topic of conversation at Chew’s meeting with EU officials earlier this month, alongside the EU’s tough digital services law.

The DSA approved last year has yet to be applied in Europe. EU officials are pressuring tech giants of all stripes to get their homes in order before the September 1 deadline, including TikTok.

“The EU takes privacy and data protection issues very seriously. And it’s building one of the toughest regulatory architectures for digital platforms, including TikTok, in the world,” Manuel Muniz, provost at IE University, told CNBC.

Under China’s counterintelligence and national security regulations, TikTok’s parent company ByteDance and other Chinese tech companies would be forced to share user data with Beijing if asked to do so by the government, experts previously told CNBC.

This was an issue when the US pressured allies to ban Huawei, the Chinese telecoms giant, in 2019. At a press conference in 2019, a Chinese government spokesman addressed the National Intelligence Law, saying intelligence work should be carried out “according to the law” and urging people “not to take anything out of context”.

The Chinese Foreign Ministry did not immediately respond to a request for comment.

TikTok has admitted that China-based employees can access data of its European users, but denies ever sharing such information with the Chinese government. A company spokesman told CNBC the firm has “always been bound by and endeavored to comply with the EU regulations that apply to us”.

“We continue to foster a strong compliance culture by investing heavily in the evolution of our platform and business to align with the changing regulatory environment,” the spokesperson said.

Still, the company says it is committed to creating a robust system for processing Europeans’ data within Europe. This includes setting up a new data center in Ireland to store European users’ data locally.

That reflects a big difference: European regulators have focused on data processing, while US regulators look for national security threats.

Meanwhile, investigations into TikTok’s access to user data in China are “starting to bear fruit,” according to Thillien.

Investigations take time. It took the Data Protection Commission of Ireland nearly five years to complete its investigation into Meta’s targeted advertising practices, resulting in a fine of more than $400 million.

The commission is examining whether the transfer of user data from TikTok to China and the processing of data about minors violate the bloc’s strict data protection rules of the GDPR. A result of the Irish privacy inquiry is not expected until the end of this year or in 2024.