The European Consumer Organisation (BEUC) has filed a complaint against TikTok with the European Commission and the various consumer protection authorities across the EU, while consumer organisations in 15 countries have urged their national authorities to investigate the video sharing platform.

The BEUC believes that TikTok fails to protect its young users from hidden advertising and potentially harmful content, mainly highlighting the app’s branded hashtag challenges. These ‘challenges’ encourage users to create content related to specific products and are often set in motion via partnerships with influencers. The organisation also points to the ease of which users can stumble across inappropriate content while scrolling the app.

On TikTok’s ‘Terms of Service’, the BEUC says that some of the app’s terms are ‘unclear and ambiguous’, while being unfair to users. This unfairness extends to TikTok’s copyright terms, which allow the platform to use, distribute, and reproduce user content without any form of remuneration.

These ‘unfair’ terms are alleged to extend to TikTok’s ‘Virtual Item Policy’. The ‘Virtual Item’ feature enables users to purchase coins to use for virtual gifts to show their appreciation to people on livestreams. However, the BEUC claims that the feature contains “unfair terms and misleading practices”, especially around the fact that TikTok has given itself the right to modify the exchange rate between the coins and the gifts.

Finally, the BEUC takes issue with TikTok’s practices around the processing of personal data. The organisation believes that TikTok doesn’t make it clear what personal data it is collecting and does not provide any purpose or legal reasoning either. The BEUC has filed this particular part of its complaint as being a possible breach of the General Data Protection Regulation (GDPR).

“In just a few years, TikTok has become one of the most popular social media apps with millions of users across Europe. But TikTok is letting its users down by breaching their rights on a massive scale. We have discovered a whole series of consumer rights infringements and therefore filed a complaint against TikTok,” said Monique Goyens, Director General of the BEUC.

“Children love TikTok but the company fails to keep them protected. We do not want our youngest ones to be exposed to pervasive hidden advertising and unknowingly turned into billboards when they are just trying to have fun.

“Together with our members – consumer groups from across Europe – we urge authorities to take swift action. They must act now to make sure TikTok is a place where consumers, especially children, can enjoy themselves without being deprived of their rights.”

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The European Commission has accused Amazon of breaching the EU’s rules, formally levelling the eCommerce giant with charges over its treatment of third-party sellers.

The Commission has reached the ‘preliminary view’ that Amazon has been relying on the non-public business data of independent sellers on its marketplace to help its own retail business. Alongside this, a second formal antitrust investigation has been launched by the Commission into whether Amazon gave its own retail offers preferential treatment, as well as those third-party sellers that use Amazon’s logistics and delivery services.

“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition.  Data on the activity of third-party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers,” said Margrethe Vestager, European Commissioner for Competition. “The conditions of competition on the Amazon platform must also be fair.  Its rules should not artificially favour Amazons own retail offers or advantage the offers of retailers using Amazons logistics and delivery services. With eCommerce booming, and Amazon being the leading eCommerce platform, a fair and undistorted access to consumers online is important for all sellers.”

According to the Commission’s initial findings, employees of Amazon’s retail business have access to ‘very large quantities’ of third-party seller data, which is used to give Amazon’s own products an advantage over those of other marketplace sellers, thus enabling Amazon to avoid the risks of true competition on its platform.

The Commission’s separate investigation will particularly look at whether the criteria Amazon uses to select the winners of its ‘Buy Box’ and to enable sellers to offer products to Prime users lead to preferential treatment of Amazon’s own business or the sellers that use the company’s logistics and delivery services.

The second element of that investigation will focus on how effectively third-party sellers are able to reach Prime users.

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The concession was made by the deadline given to Google by EU regulators yesterday (13 July). Now, those regulators have until 20 July to decide if Google’s offer is enough to green light the acquisition, if they want more concessions, or if they want to launch a full four-month investigation into the purchase.

“This deal is about devices, not data. We appreciate the opportunity to work with the European Commission on an approach that safeguards consumers’ expectations that Fitbit device data won’t be used for advertising,” Google told Reuters, who first reported the story.

Privacy advocates and regulators in Europe and the US have been concerned about the acquisition since it was announced, even with Google always insisting it wouldn’t use Fitbit’s data for ads.

It’s believed that the European Commission will reach out for feedback from rival wearable-makers – such as Apple, Samsung, Xiaomi, and Huawei – users to help it make a decision.

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The European Commission’s antitrust regulators are “currently investigating potential anti-competitive behaviour”, according to a document seen by Bloomberg.

The concern is that the Libra Association and its payments ecosystem would unfairly shut out competitors in the space. Regulators are looking at how the exchange of information and use of consumer data may create “possible competition restrictions”.

The Libra Association, which was formed to oversee the cryptocurrency, is made up of names including Spotify, eBay, Vodafone, Uber, Lyft, Visa, Mastercard, and PayPal, to name a few. It is described as being an “independent, not-for-profit membership organisation, headquartered in Geneva, Switzerland”.

The investigation follows another currently being conducted by EU into how Facebook could use its power to unfairly block out rival apps.

The European Commission’s competition officials, under the stewardship of Margrethe Vestager, haven’t shied away from investigating and fining the tech world’s biggest names – with investigations also ongoing into the likes of Amazon, Apple, and Google, which has already been slapped with a few hefty fines over the past few years.

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Margrethe Vestager, the European Commissioner for competition, is preparing to open the formal inquiry within days, according to Bloomberg, citing two people familiar with the case.

Primary investigations into Amazon began back in September last year. This initial probe looked at concerns that the company uses data from third-party sellers on its platform in order to boost its own sales. The upcoming larger investigation will take a deeper dive into that possibility and will likely conclude in a hefty fine, if the European Commission finds Amazon to be at fault.

“The question here is about data. Because if you, as Amazon, get the data from smaller merchants that you host – which, of course, can be completely legitimate because you can improve your service to these smaller merchants – do you then use this data to do your own calculations,” said Vestager in September.

The inquiry comes at a time when the EU is already preparing to hit chipmaker Qualcomm with a second penalty for underpricing chips in order to squeeze out the competition. There’s also Spotify’s complaint against Apple to manage and the fact European Commission is just one of many bodies looking at Facebook uses people’s data.

Over the past three years, Vestager has hit Google with three separate hefty fines for abusing its power to promote its own shopping comparison service at the top of search results, for forcing Android device makers to use its search and web-browsing tools, and for blocking ads on publisher sites from rival search providers respectively.

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Google’s parent company, Alphabet, experienced a five per cent drop in its stock after the trading floor closed, following the release of its Q1 2019 earnings report. The report outlined a fiscal quarter that was much less impressive than expected, according to analysts. Alphabet’s shares had previously been flying off the shelves, with a 24 per cent stock increase this year alone.

Alphabet’s report also highlighted the $1.7bn (€1.5bn) fine the company had to pay to the European Commission (EC) for infringing on European competition law, which took a toll on most numbers. Including the fine (GAAP), Alphabets quarterly revenue increased by only 17 per cent year-over-year, totaling $36.34bn (£28.07 billion), versus the estimated $37.33bn. Meanwhile, EPS was reported at $9.50, compared to the $10.10 predicted by analysts.

Traffic acquisition costs (TAC) totaled $6.86bn, compared to the expected $7.26bn, according to FactSet. Q1 2019’s TAC accounted for 22 per cent of Alphabet’s advertising revenue, a drop from last year’s 24 per cent.

Paid clicks on Google properties only increased by 39 per cent since Q1 2018, showing that Google is having a hard time bringing traffic to its properties, regardless of lowered advertising costs. This is the lowest growth Alphabet has experienced, considering Q4 2018 saw a 66 per cent growth and Q3 2018 saw a 62 per cent growth.

“We delivered robust growth led by mobile search, YouTube, and Cloud with Alphabet revenues of $36.3bn, up 17 per cent versus last year, or 19 per cent on a constant currency basis,” said Ruth Porat, chief financial officer of Alphabet and Google. “We remain focused on, and excited by, the significant growth opportunities across our businesses.”

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Following discussions between Facebook, the European Commission, and consumer authorities, the new terms make it clearer that keeping Facebook free requires the social network selling user data to third parties for advertising purposes. It terms will also provide information on how users can close their accounts and under what reasons accounts can be disabled.

“Today Facebook finally shows commitment to more transparency and straight forward language in its terms of use. A company that wants to restore consumers trust after the Facebook/ Cambridge Analytica scandal should not hide behind complicated, legalistic jargon on how it is making billions on peoples data,” said Vera Jourová, commissioner for justice, consumers and gender equality. “Now, users will clearly understand that their data is used by the social network to sell targeted ads. By joining forces, the consumer authorities and the European Commission, stand up for the rights of EU consumers.”

Facebook has also made amendments to its policy on the limitation of liability, now acknowledging its responsibility in the case of negligence; has limited the cases where it can unilaterally makes changes to terms; set the limit to 90 days for holding on to deleted content; and clarified the language around a user’s right to appeal the removal of content.

Although the exact wording of the updated terms has not yet been disclosed, the social network has until the end of June to implement the changes. Failure of Facebook to implement the changes in time could result in sanctions.

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The regulatory tide is turning on the tech giants and that can only be good news for the smaller ad tech companies that want to compete fairly on a more even playing field.

Many predictions are made about the digital marketing and the tech giants every year but one thing we can almost say for certain is that before the first quarter has passed, 2019 is shaping up to be the year the tech giants are changed forever.

That could be good news for the smaller desktop and mobile advertising business that try to compete with the might of the so-called duopoly of Facebook and Google which they believe has such a wide reach and so much data that they cannot be matched for targeted advertising.

It could also be good news for businesses that use the tech giants’ platforms to promote themselves only for some to find, in their opinion, they are not competing on a level playing field.

It is no longer just the EU tackling the might of the so-called FAANGs (Facebook, Apple, Amazon, Netflix and Google), the United States is fast catching up. There are two main points of action. One is privacy, the other market dominance abuse. The first deals with whether the tech giants used data to target advertising legally and the second whether they operate fairly. 

The pincer movement has led to multiple lawsuits and investigations being brought against Facebook in the US, eye-watering fines levelled against Google in the EU and a potential anti-trust case being brought against Apple, following a complaint from Spotify. Most recently the UK Chancellor called for the country’s Competition and Markets Authority (CMA) to tackle the power of the duopoly.

Anti-trust fines so far
We have already seen the European Commission hit Google with two massive fines. In 2017, it was on the sharp end of a 2.4bn Euros charge for manipulating search results in favour of its own businesses. The idea that Google can run the world’s most dominant search engine and then compete with other business for top listings was always going to lead to trouble, particularly when rivals complained the search giant appeared to be prioritising its own businesses against rivals.

A year later, the EC’s attention was on what it believed to be Google’s abuse of its dominance in mobile through insisting Android phone makers pre-install its search app and Chrome mobile web browser app as default options. The result was a record, staggering fine of 4.2 billion Euros.

Google has denied any wrongdoing and is appealing against both verdicts.

Privacy fines, so far
More recently focus has shifted to privacy with the French data protection agency, CNIL, fining Google 50m Euros for failures over enacting the EU’s new GDPR privacy rules. It was accused of confusing privacy notices and not gaining specific consent for users for targeted adverts. The UK’s Information Commissioner’s Office (ICO) has also confirmed it is investigating possible GDPR breaches. Again, Google denies wrongdoing.

The ICO also fined Facebook £500,000 at the end of last year for failing to safeguard the personal data of people caught up in the Cambridge Analytica scandal.

The fine was the maximum allowed under the Data Protection Act that applied at the time, which has since been replaced by the tougher GDPR. 

Since the new rules came into effect, Facebook’s privacy woes have been restricted to a telling off by the German competition watchdog, the Bundeskartellamt, which gave the social giant a year to restrict how it gathers data.

At the moment, Facebook collates users’ information across its three platforms, Facebook, WhatsApp and Instagram. It has the ability to do so despite being fined 110m Euros in May 2017 for not keeping Facebook and WhatsApp accounts completely separate, as it had promised to do when buying the messaging platform in 2014.

There could be more trouble ahead for Facebook, though. Not only does it face large class action privacy suits in America, the Washington DC Attorney General has launched a case against the social giant for its part in the Cambridge Analytica scandal. If found guilty, the eventual fine is estimated to possibly rise to as much as $1.7bn.

Amazon and Apple next?
So far, only half of the FAANGs acronym have been impacted but the European Commission is conducting an investigation into whether there is an antitrust case that could be brought against Amazon.

The Commission has also been invited to investigated Apple by its arch-rival in music streaming, Spotify. Those involved in mobile marketing may think there is a big name missing in all this. Google has come in for some eye-watering fines but what about the other big mobile player, Apple?

It has managed to dodge controversy and the ire of regulators because, unlike Google, it does not allow other phone makers to use its iOS platform. This means there is no fear of strongarm tactics to have its apps pre-installed because there is no other company involved. 

However, that could potentially be challenged. In the middle of March, Apple was the target of a request by Spotify for the European Commission to investigate anti-competitive behaviour.

Mobile app marketers will be all too aware of the App Store’s 30 per cent cut of download fees and subscriptions. However, Spotify claims this is not only a sizeable chunk of any potential revenue, it’s also unfair that it has to compete on the same platform as Apple Music. It also further claims that Apple makes it difficult for it to upgrade customers or reach out to customers it has acquired through the App Store with new deals and offers. It has a list of five complaints, summed up in a video, which also includes not being able to operate on Apple’s voice-activated speakers.

As far as the App Store complain is concerned, the complaint is that this a similar case of Google being accused of competing with rivals on its own platform but without first ensuring there is a level playing field. The decision whether to open an investigation is far from certain and will rely on the European Commission deciding whether Apple is using its ownership of the App Store unfairly.

Apple has already responded that it denies any wrongdoing and that free apps are not charged a fee, only those which use the company’s secure app payment system are faced with a 30 per cent fee, which halves a year later for renewals.

Regulators are changing, everything
It ought to be remembered the European Commission has already forced Apple to pay back $16bn in back taxes it believes the tech giant owes the Irish government. So, it will be keen to take a look at Apple, although expert opinion is split on whether there are grounds for opening an investigation.

Whatever is decided, one thing is clear. Massive privacy fines, ongoing investigations and anti-trust punishments are showing the tech giants they cannot carry on as normal. For smaller companies looking for a level playing field when using tech giant platforms and for those who cannot match the duopoly’s ad targeting capabilities, this can only be good news.

Regulators in the EU and US are effectively telling the tech giants they have to ‘play nice’ with rivals and customers alike, the days of using their power to get their way and to use huge databases however they like are coming to an end.

The post Why tech giants like Facebook and Google are being torn down a strip by regulators appeared first on Mobile Marketing Magazine.

In a lengthy statement, Apple accuses Spotify of looking to “keep all the benefits of the App Store ecosystem… without making any contributions to the marketplace” and of wrapping its “financial motivations in misleading rhetoric about who we are what we’ve built and what we do to support independent developers, musicians, songwriters and creators of all stripes”.

Spotify’s main complaints centred around Apple’s music streaming service, Apple Music, not being subject to the same rules as other services on App Store, as well as not being happy about the 30 per cent tax that exists on purchases made through Apple’s payment system and the restrictions enforced if Spotify bypasses the payment system.

Apple’s rebuttal argues its case point-by-point, addressing every aspect of Spotify’s complaint, even going as far as criticising Spotify for its treatment of artists – stating the music streaming service distributes “the music you love while making ever-smaller contributions to the artists, musicians and songwriters who create it — even going so far as to take these creators to court”.

Apple states that it has approved and distributed almost 200 app updates for Spotify, helping toward the app being downloaded more than 300m times through the App Store, and says that “the only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows”.

It then goes on to highlight some of the occasions where the pair have worked together to bring Spotify to Apple devices and platforms.

Apple notes that 84 per cent of apps in the App Store pay it nothing, because free apps and those that earn revenue exclusively through advertising aren’t charged. When it comes to the 30 per cent tax, Apple highlights that this is only the case for the first year of an annual subscription, dropping to 15 per cent in the years after. And it points to how many of Spotify’s users are using its ad-supported product anyway, noting that “only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero”.

Apple’s final point highlights that Spotify has recently sued music creators after the US Copyright Royalty Board ruled that it needs to increase royalty payments, accusing the music streaming service of only looking for ways to make more money off of others.

“We share Spotify’s love of music and their vision of sharing it with the world. Where we differ is how you achieve that goal,” writes Apple. “Underneath the rhetoric, Spotify’s aim is to make more money off others’ work. And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters.”

Despite all of the above, Apple still signed off in a somewhat pleasant manner, concluding that “we’re proud of the work we’ve done to help Spotify build a successful business reaching hundreds of millions of music lovers, and we wish them continued success — after all, that was the whole point of creating the App Store in the first place”.

Who comes out on top in the case remains to be seen but the European Commission in the past has tended rule against the tech giants in similar cases – most recently, Google.

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The browser developer is in the process of developing a ‘Firefox Election package’ for the EU’s upcoming parliamentary elections, but Facebook’s browser add-on policies mean that Mozilla cannot deliver the transparency it wishes with the package. In particular, Mozilla takes issue with the fact that Facebook’s Ad Archive API isn’t publicly available.

Mozilla hopes to include ‘two key features’ in its Ad Analysis for Facebook ad-on. The first would analyse a user’s Facebook feed and identify what ads the user is seeing and identify how the user is being targeted. The second would compare this information to publicly available data sources to see how the ads seen by users may differ to the ads seen by others.

“Transparency cannot just be on the terms with which the world’s largest, most powerful tech companies are most comfortable,” said Denlle Dixon, Mozilla COO, in a letter to Mariya Gabriel, commissioner for digital economy and society. “To have true transparency in this space, the Ad Archive API needs to be publicly available to everyone.”

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