Europe is Set to Crack Down on Big Tech, And This Time TikTok Won't be Left Out.

TikTok is starting to feel the effects of political and regulatory pressure in Europe, where the Chinese-owned app has largely avoided scrutiny.
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In a meeting this month, EU Commissioner of the Internal Market Thierry Breton warned TikTok CEO Shou Zi Chew that the bloc could ban the app if it didn’t comply with new rules on digital content well ahead of a Sep. 1 deadline.
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This is a significant change from the EU's almost complete silence on TikTok, while US lawmakers have been much more aggressive - banning the app from federal devices in December over national security concerns. There is also a proposed bipartisan bill that would block the app from operating in the US.
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The EU is not soft on tech. In fact, it has fined U.S. tech giants for violating the EU’s General Data Protection Regulation.
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TikTok has managed to stay out of the crosshairs of commercial interests in Europe, which sets it apart from other apps.
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Microsoft's recent focus on artificial intelligence has some analysts bullish on the stock, even after lackluster earnings.
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Mizuho predicts that Coinbase shares will be cut nearly in half as retail traders shun crypto.
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Hosuk Lee-Makiyama, the director of think tank the European Centre for International Political Economy, said in an interview in December that there is no political demand for investigation into Chinese entities.
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"TikTok has a much bigger user base than a lot of people in Europe think," he said. But, he added, "you're not going to look very closely if they don't steal too much from your ad revenue."
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According to Sensor Tower's Abe Yousef, TikTok had about 275 million monthly active users in Europe as of December, which is more than one third of Europe's population of about 750 million.
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According to data.ai, TikTok was the most-downloaded social media app last year in Italy and Spain. The app held second place in France and Germany, the data showed.
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According to data.ai, WhatsApp, owned by Facebook parent Meta, ranked first among social media app downloads in France and Germany, and third in Italy and Spain.
Meta reported $29.06 billion in European revenue in 2021, a region the company defined as including Russia and Turkey. In contrast, TikTok recorded turnover of just $531 million in the European Union in 2021, according to the latest available filing in the U.K. However, this was well over four times what was disclosed for 2020, indicating significant growth for the company in this region.
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"It can take a little while for the European Commission to coordinate on these issues," said Dexter Thillien, lead analyst for tech and telecoms at The Economist Intelligence Unit.
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Thillien told CNBC in a phone interview that the European Commission is not unwilling to do something about the problem, but that it is stretched thin dealing with bigger companies.
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TikTok may not yet be as big as 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, such as Meta’s Reels short video feature.
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According to data.ai, more than half of people aged 16 to 24 in France and Germany use TikTok. This popular app allows users to create and share short videos with others.
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Since its launch in 2016, TikTok has become one of the most popular social media platforms in the world, with over 1 billion monthly users. TikTok has also helped launch the careers of many well-known social media personalities, such as the D'Amelio sisters and Addison Rae.
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TikTok's large pool of data makes it an attractive platform for training algorithms to target users with content that is most aligned with their interests. ByteDance, TikTok's parent company based in Beijing, has found similar success in China with a local version of the app called Douyin.
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U.S. intelligence officials and European lawmakers are increasingly concerned that Beijing could use TikTok to engage in propaganda or censorship. TikTok's targeting of its users could make it a powerful tool for Beijing to influence public opinion.
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According to one analyst, lithium is set for a strong year ahead, with China's reopening providing a boost to the stock. This is good news for investors in the metal, which has seen prices rise in recent years.
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According to Morgan Stanley, Apple and other companies will benefit from China’s reopening. This is good news for the global economy, as China is a major player in the world market. The country’s reopening will help to boost trade and investment, which is good news for businesses around the world.
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Wall Street is excited about Chinese tech, and one mega-cap stock in particular is getting a lot of love.
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"The success of TikTok is the result of a failure of European policy," Moritz Korner, a member of the European Parliament for Germany's Free Democratic Party, told CNBC via email.
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The EU's lack of action on TikTok has been unwise from a geopolitical perspective.
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Korner has been urging the European Commission to take action against TikTok over data protection concerns since 2019. He is worried that the platform poses "several unacceptable risks for European users," including "data access by Chinese authorities, censorship, and tracking of journalists."
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Korner called for increased surveillance of the popular social media platform TikTok, saying that Europe needs to "wake up" to the potential dangers it poses. He highlighted the platform's vast trove of user data as a major concern, and said that European authorities need to take action to protect users' privacy.
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Last month, ByteDance admitted to using two journalists' TikTok data to locate their physical movements, according to an internal memo. TikTok distanced itself from the activity, saying that the employees involved were no longer employed at ByteDance.
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Chew's recent meetings with EU officials were dominated by concerns about surveillance and the EU's tough new Digital Services Act.
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The DSA, which was approved last year, has not yet been applied in Europe. EU officials are pressuring tech giants to get their houses in order before a Sep. 1 deadline, including TikTok.
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"The EU is very serious about privacy and data protection issues. In fact, it is developing some of the most stringent regulations for digital platforms like TikTok in the world," Manuel Muniz, provost at IE University, told CNBC.
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Under Chinese counter-espionage and national security rules, tech firms like TikTok's parent company ByteDance would be required to share user data with Beijing if requested by the government, experts have previously told CNBC.
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This was a concern back in 2019 when the U.S. was pressuring allies to ban Huawei, the Chinese telecommunications giant.
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The Chinese government has never required companies or individuals to collect or share data located in foreign countries in violation of local laws, according to a statement from China’s Foreign Ministry to CNBC.
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The ministry said that all parties should respect the principles of market economy and fair competition, stop abusing the concept of national security, and provide Chinese companies with a fair, transparent, and non-discriminatory business environment.
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TikTok has acknowledged that data on its European users can be accessed by employees based in China, but has denied that it would ever share such information with the Chinese government. A company spokesperson told CNBC that the firm has "always been bound by and strived to comply with EU regulations that apply to us."
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"We're committed to maintaining a strong culture of compliance by investing in evolving our platform and business to align with changing regulatory requirements," the spokesperson said.
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The firm is committed to creating a robust system for processing the data of Europeans within Europe. This will include establishing a new data center in Ireland to house European users’ data locally.
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The difference is clear: European regulators focus on data processing, while US regulators look for national security threats.
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Meanwhile, investigations into TikTok's accessing of users' data in China are "starting to show results," according to Thillien.
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Investigations can be lengthy processes. In the case of the Irish Data Protection Commission's probe into Meta's targeted advertising practices, it took nearly five years to reach a conclusion. This resulted in a fine of more than $400 million for the company.
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The commission is investigating whether the transfer of user data from TikTok to China and the processing of data on minors violates the EU's strict GDPR privacy rules.

A decision in the Irish privacy probe is not expected until late this year or 2024.