TikTok Survey – HCA Takes on Tech World – Commentary
What to expect?
The Hungarian Competition Authority (HCA) has opened an investigation into TikTok, the popular social media platform. TikTok’s ability to generate vast amounts of consumer data and inundate its users with advertisements has already sounded several alarm bells as regulators attempt to make sense of the phenomenon of digitization. The HCA took the initiative to review the platform with a focus on consumer protection.
The general theme of the Hungarian survey is TikTok’s potential failure to adequately inform consumers about its operation and policies, including the data collected and how TikTok subsequently uses that data. In addition, the HCA expressed concerns about the lack of information in Hungarian and the lack of efforts to control the exposure of young people to certain advertisements.
The investigation is part of the HCA’s digital consumer protection strategy (for more details, please see “HCA publishes digital consumer protection strategy“), which has already given rise to several fascinating attempts to regulate platforms and e-commerce. The authority has a particular focus on how companies communicate and inform consumers about their business models and data policies. In recent years, the HCA has raised concerns that even when information regarding the collection and use of consumer data is technically available, the terms and conditions are often very complex and, therefore, the underlying risks. remain unclear The behavior may be classified as illegal under Hungarian law and result in a fine.
While the HCA’s recent approach serves as a guide, TikTok faces a long and detailed review of its practices where large commitments or severe penalties cannot be ruled out. There were numerous HCA cases to support this statement; this article highlights two of the more interesting cases.
In 2018, the HCA closed an investigation into Google and its messaging service. The authority said Google had failed to ensure that consumers correctly understand how their data is handled by the tech giant and therefore cannot make an informed decision about the nature and costs of the service. Google presented the HCA with a comprehensive set of commitments, taking several steps to educate consumers about the collection and use of their data. After a two-year investigation, Google escaped sanctions with this cooperative approach.
The HCA recently closed an investigation into the dating site Academic Singles. The authority found that the dating site had misled consumers about the need to pay for services, subscription options and cancellation policies. The dating site’s communication was confusing and lacking in transparency, leading to several consumer complaints. As a result, in addition to a fine of 4.5 million euros, the HCA forced the company to fundamentally change its practices. Academic Singles had to send a rectification notice to all of its current and former clients and publish the operative part of the decision on its homepage.
In addition to the above, the HCA has closed several investigations into e-commerce. Notably, it imposed significant fines on online retailers for failing to diligently communicate the terms of their campaigns (eg, Black Friday sales (for details, please see “Digital consumer protection – Black Friday success turns sour for large online marketThe authority also fined Booking.com for using consumer psychology against its consumers and failing to present payment options in a comprehensive manner (for details, please see “HCA imposes record fine on Booking.com for unfair business practicesIn February 2020, the HCA opened an investigation against Viber, the popular messaging service. In that endeavor, the authority aims to determine whether the “free and secure” statement is warranted given Viber’s policies.
The HCA imagines the average consumer as a highly exposed individual with no way to get a complex overview of the implications of certain digital services. It also sees unfair competition and consumer protection as adequate tools to tackle some of the unprecedented challenges posed by digitization. The authority undoubtedly expects a high level of transparency from companies participating in this transformation and urges markets to devote more resources to consumer welfare for a healthier data economy.
Given the rapid dynamics of these markets, the HCA will likely continue to assert its goals of protecting digital consumers for the foreseeable future.
For more information on this topic, please contact Andras Nagy at Schoenherr Avocats by phone (+36 1 8700 700) or by e-mail ([email protected]). The Schoenherr Avocats website can be accessed at www.schoenherr.eu.