Market Data 
European officials are threatening TikTok with massive fines and a possible forced suspension this week of parts of a new spinoff app, launched this month, that regulators allege contains addictive features.
The warnings target TikTok Lite, a less data-intensive version of TikTok’s main app which contains a feature that rewards users with cash for engaging with TikTok content and app features.
EU officials fear the feature could be used to turn TikTok Lite users into addicts who can’t stop using the app and described it as an “experiment” on unwitting EU citizens in Spain and France where TikTok Lite has been made available.
Monday’s announcement by the European Union marks the trading bloc’s second major inquiry into TikTok and focuses specifically on TikTok Lite and what officials said were risks of serious harms to users’ mental health.
The move comes days after the US House of Representatives passed legislation that could ultimately ban TikTok from the United States over national security concerns. The US Senate is expected to take up that measure as early as this week, as part of a vote on foreign aid to Israel and Ukraine.
The latest EU probe represents the first time Commission officials have flexed their power using certain new tools granted to them under Europe’s far-reaching new law regulating online platforms, the Digital Services Act (DSA).
“This is a demonstration of the fact that when we say minor protection is a priority under the DSA, we really mean it,” a European Commission official told reporters Monday.
“We are disappointed with this decision,” a TikTok spokesperson said in response to the EU warnings. “The TikTok Lite rewards hub is not available to under 18s, and there is a daily limit on video watch tasks. We will continue discussions with the Commission.”
The European Commission said Monday it had given TikTok 48 hours to defend its reward program to officials, after which TikTok could be ordered to suspend the rewards feature in TikTok Lite as an urgent temporary measure. A decision to order the suspension could come as early as Thursday, commission officials told reporters on a conference call. A suspension could last 60 days and be repeatedly renewed.
In addition, TikTok could be fined for failing to provide information it owes to the Commission about TikTok Lite, including a risk assessment report and a separate report outlining steps the company has taken to minimize those risks. EU officials first sent their request for information last week. It is separate from another ongoing DSA investigation into TikTok, launched in February, over the company’s approach to user harms more generally.
Failure to hand over the TikTok Lite risk assessment by Tuesday, and the risk mitigation report by May 3, could result in fines of up to 1% of TikTok’s global annual revenue and “periodic penalties” of up to 5% of TikTok’s average daily revenue, the Commission said.
TikTok could face further, additional fines of up to 6% of its global annual revenue if the TikTok Lite features the Commission is investigating are determined to be violations of the DSA.
Both the possible forced suspension and the potential fines are procedural tools the European Commission has not used before under the DSA, a commission official said.
“So far this has never been necessary, because in all our 40-plus requests for information that have been sent, companies have always supplied the information,” the official told reporters on the call. “Generally speaking, we’ve never not received the reply to our request for information.”
Commission officials repeatedly declined to say whether TikTok had offered an explanation for why it did not submit the requested information.
This story has been updated with additional information.
