Why India banned 59 apps including the wildly popular TikTok over a geopolitical dispute with China

India TikTok

India banned 59 Chinese-owned apps on June 29, including TikTok.
The ban follows a border skirmish between India and China in the disputed territory of Ladakh on June 15, and escalates geopolitical tensions between the two countries.
India says the ban is about preserving "data sovereignty", implying that it wants home-grown champions to replace Chinese apps.
But Chinese tech dominates India, not just in software, with cheap Chinese Android phones from brands such as OnePlus, Xiaomi, Vivo, and Oppo all still hugely popular.
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On June 29, the Indian government banned 59 Chinese-owned apps from mobile stores, including the wildly popular short-form video app TikTok.

Still, thousands of Chinese apps continue to run on millions of domestic smartphones. Chinese phone brands Xiaomi, Oppo, and Vivo all dominate the smartphone market in India, with Apple nowhere to be seen.

TikTok isn't the only Chinese-owned app to go viral in India; every aspect of Indians' online life is serviced by Chinese software today whether it's finding a date or a payday loan.

The trigger for the ban was border clashes between Indian and Chinese soldiers in the disputed territory of Ladakh on June 15, the deadliest between the nuclear-armed neighbors in decades.

India lost 20 soldiers while China has yet to reveal casualties.

In the aftermath of the skirmish, India's response has been as aggressively nationalist as its current regime.

Addressing soldiers on a surprise visit to Ladakh on July 3, Indian prime minister Narendra Modi said "a message has gone to the world about India's strength."

He also reminded the nation of the "resolve of a self-reliant India."

But what is the point of Indian oaths of self-reliance posted on Chinese-owned social media apps running on Chinese-made phones? And, by extension, what is the point of the ban?

"India knows how to protect its borders and also knows how to carry out a digital strike," said India's Information Technology minister, Ravi Shankar Prasad.

Chinese phones and apps dominate India

Over the past five years, Chinese-owned products have swept across India's online landscape.

It made business sense. India boasts the fastest-growing consumer market in the world and is the second-largest for app downloads, with 19 billion in 2019.

As per Google Play Store rankings, 18 of the top 100 apps of 2017 happened to be Chinese; in 2018, that number rose to 44.

The majority of the Chinese apps entering India catered to the vast yet overlooked pool of internet users in the hinterlands, turning the mythical "next 100 million users" into loyal subscribers.

They cast a wide net: social networking, gaming, video sharing, live streaming, instant messaging.

The apps had multiple ways to monetize their popularity, with dating apps relying on subscriptions, lending apps relying on financial penalties, and live streaming apps taking commissions.

For the users, too, Chinese apps meant more than trivial ways of passing the time.

They offered monthly income to many and dizzying fame to the chosen few. It wasn't — and isn't — a fairy tale world: some of these apps deceive and exploit their users and get away with it.

But Chinese apps remain popular in India even in the face of increasing local and global competition.

Together, the 59 banned apps had registered 330 million installs in India from Apple's App Store and Google Play Store in April-June quarter, according to figures reported by Livemint.

Akash Senapaty, who builds consumer apps at M56 Studios, believes multiple factors made the Chinese apps stand out.

"In most cases, they had scaled these apps before in China," he told Business Insider. "So to us, it seemed like these apps were hits on 'day zero'. In reality, they had a massive advantage of knowing what works and what doesn't."

Chinese apps had bigger capital canons than Indian rivals, he continued.

A third factor, he said, was successful localization. "There are three parts to this," he added. "One, they didn't hesitate to pay local content creators. Two, they also established local teams with employees. And finally, on the technical side their apps were fully set up to deliver a localized experience."

Finally, the fourth factor was local telecoms giant Jio, credited for bringing millions of Indians online through free or cheap mobile data. "The Chinese apps were best enjoyed on a diet of cheap and plentiful data," Senapaty said.

Design also played a role, argued Senapaty. "The ones I analyzed in depth, TikTok and BIGO, were brilliantly designed apps. As consumers, we focus on what we see on the app. But the engineering and backend systems behind these apps are incredible."

What they probably didn't factor in are the whims of the cyber-age geopolitics.

India's tech ban hammer is a geopolitical weapon — and should be used wisely

"The response is targeted towards what China cares the most about — its business," said Amit Jangir, co-founder of Karbon Card, a Shanghai-based fintech startup.

According to Sensor Tower data, TikTok, which had more than 500 million downloads, generated $924,000 from June 2019 to June 2020 in India revenue through user spending, per Sensor Tower.

Demands within India to ban TikTok, or all Chinese apps, have a history.

Those asking for it include Hindu nationalist groups, hawkish politicians and WhatsApp warriors.

One of their recurring arguments is this: Why should we enrich our enemies with our attention and money?

What this ignores is the fact that most of these Chinese apps are run by Indians living in India who work as coders, customer service agents, supervisors and salespersons. Many of them have lost their jobs in the last week.

"The decision to ban was taken way too quickly without considering the impact that it would have," added Jangir. "I'm afraid that a lot of overseas investors will now be reluctant or hesitant given that policy changes can be so drastic."

Jangir is wary of what lies ahead for India and its relationship with business and technology.

"Giving a month's time to be compliant and inviting these companies for a discussion would have shown that India isn't trigger happy," he said. "I honestly think the government and, as a society, we need to think about the impact such actions will have on our long-term future."

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