TikTok, the Chinese social network very popular with (very) young users, is facing a wave of investigations and lawsuits across Europe and the United States over its mishandling of children’s data. To prepare for the heavy financial sanctions that are coming, its parent company ByteDance has set aside the colossal sum of a billion dollars.
A precedent of 370 million euros in Ireland
Last September, the Irish data protection regulator fined TikTok a record €370 million for failing to sufficiently protect the personal data of children using the app. A first hard blow for ByteDance which seems to be only the beginning of a long series.
New accounting documents suggest that the company expects more fines of this type from European privacy regulators. The billion dollars set aside is explicitly intended to cover these future sanctions.
Revenues on the rise but losses piling up
TikTok’s European accounts filed with the British Companies Registry also show that revenues jumped to $4.57 billion in 2023, compared to $2.6 billion in 2022. But at the same time, losses almost tripled for reaching $1.3 billion last year.
ByteDance explains that the interpretation of the European GDPR is still evolving, which creates uncertainty over the fines that could be imposed. The total amount of sanctions could even exceed the billion provisioned. The European Commission opened an investigation into TikTok in February 2024 and can impose fines of up to 6% of global turnover, or even impose a ban.
Apple spared thanks to its virtuous model
If TikTok finds itself in the crosshairs of regulators, it is largely because of its economic model based on the massive collection of personal data, including that of the youngest. A model that is the opposite of that advocated by Apple, which focuses on respecting the privacy of its users. To counterbalance, Apple is much more hectic in its commercial practices with the DMA and DSA, but its processing of personal data is never called into question.
With features like App Tracking Transparency and applications like Messages and FaceTime end-to-end encrypted, the Apple firm strives to protect the data of its customers, young and old. A virtuous approach which allows it to avoid the regulatory and legal pitfalls in which its Chinese rival gets entangled.
It remains to be seen whether the heavy fines and threats of banning TikTok will ultimately benefit more privacy-friendly social networks on iOS. One thing is certain, ByteDance has not finished hearing from European regulators.
