The watchdog has issued TikTok Inc and TikTok Information Technologies UK Limited with a "notice of intent" - a legal document that precedes a potential fine.
The commissioner’s office investigation found the company may have processed the data of children aged under 13 without appropriate parental consent, failed to provide proper information to its users in a concise, transparent and easily understood way and processed special category data, without legal grounds to do so.
The office said its findings are provisional, no conclusion should be drawn there had been a breach of data protection law or a fine would be imposed, and that it would consider any representations by TikTok before reaching a final conclusion.
Information commissioner John Edwards said: "We all want children to be able to learn and experience the digital world, but with proper data privacy protections.
"Companies providing digital services have a legal duty to put those protections in place but our provisional view is that TikTok fell short of meeting that requirement.
"I've been clear that our work to better-protect children online involves working with organisations but will also involve enforcement action where necessary.
"In addition to this, we are currently looking into how over 50 different online services are conforming with the children's code and have six ongoing investigations looking into companies providing digital services who haven't, in our initial view, taken their responsibilities around child safety seriously enough."
Additional reporting by PA.