Chinese App Ban Hits TikTok Parent Firm ByteDance’s $1 Billion India Expansion Plan


TikTok Ban: The government order didn’t name China, or cite the border clashes (Representational)

A ban on dozens of Chinese apps following a border clash with China has possibly derailed a $1 billion India expansion plan of China’s ByteDance, while also sparking an uproar from users of its popular TikTok video app. TikTok was removed from Google and Apple app stores in the country after the Centre said on Monday night that it was among the 59 apps which it believed posed a “threat to sovereignty and integrity”. The government order didn’t name China, or cite the border clashes.

App analytics firm Sensor Tower said all the 59 apps named were of Chinese origin, including Tencent’s WeChat and Alibaba’s UC Browser. “If this is not rolled back, these companies would be constrained to cut back their operations in India, potentially resulting in a loss of employment,” said a lawyer who advises a Chinese company whose app has been banned.

China’s foreign ministry said it was “strongly concerned” about India’s decision, adding that India had a “responsibility to uphold the legitimate legal rights of investors including the Chinese companies.”

The biggest casualty of the move appears to be ByteDance, which has since last year hired several senior executives and laid out plans to invest $1 billion in India. India is TikTok’s top growth market and accounts for 30% of its 2 billion downloads worldwide.

TikTok said in a statement the Indian government had invited the company to respond to the ban and submit clarifications, adding that it complies with all data security and privacy requirements. It did not comment on the fate of its expansion plan.

Following the ban order, many TikTok users posted videos expressing their displeasure with the ban.   One user @omkarsharma988 posted a video in which he throws utensils to the ground, hits a chair and weeps, with a Hindi song playing “You’ve left me, how will I live now?” The video had been liked 218,000 times, as the app still functions on phones on which it is already downloaded.

When TikTok was banned briefly last year after a court said the app encouraged pornography, the company told the Supreme Court the ban cost it roughly $15 million a month. Several Indian lawyers said chances of a success through a legal challenge this time were slim given the government had invoked national security concerns, meaning the Chinese companies can only hope to lobby to reverse the decision.

“From a legal perspective it (the ban) is sound because grounds like national security are difficult to challenge,” said Santosh Pai of Link Legal, which advises Chinese companies.

The ban has also left Tencent disappointed, which has apps on the market and is also a major investor in Indian startups, two sources aware of the company’s concerns told Reuters.

The central government in April mandated screening of incoming investments from countries like China, hitting the likes of Tencent.

While its WeChat messaging app is not that popular in India, the company fears the government could impose a ban later on the mobile version of its blockbuster game PlayerUnknown’s Battlegrounds, said one of the sources.

Tencent declined to comment. Two games of China-based firms, “Mobile Legends” and “Clash of Kings”, were among those banned on Monday.

Sensor Tower said the 59 banned apps recorded roughly 4.9 billion downloads in India since January 2014.