Banned Chinese apps consider shifting servers to India to allay concerns

Some of the Chinese apps banned by the Indian government citing them to be a security threat are weighing the option of shifting their data servers to India to allay concerns.

The Indian authorities feared that these apps were transferring consumer data to locations outside the country, especially China, in an unauthorised and surreptitious manner. With servers in India, the data of local consumers would be stored in the country. 

The proposal is important because all the 59 app companies have been given an opportunity to present their point of view of the order in the next few days. The government committee that will hear these companies will have members from the ministry of electronics and information technology and the ministry of law and justice, as well as top officials from the Computer Emergency Response Team (CERT). It is believed that a meeting is slated with some of them on Thursday. Sources said that TikTok was expected to meet the panel on Wednesday, but it’s not clear whether the meeting was posptoned. A company spokesperson declined to make any comments.    

A source in a leading Chinese app pointed out: “We do not have our servers in China but in the US and other locations. But we are open to looking into having them in India. The question is whether that will help us operate again. We will abide by any new mandatory rules put by the Government.”

According to sources close to some of these companies, the other alternative is to share the “source codes” of the apps, but that will require more detailed discussions.

Kevin Mayer, CEO of TikTok and COO of ByteDance, which owns the app and is the largest player in this space, in a message to his employees in India, said their “platform in India has encountered an unfortunate challenge” and that “they are working with the stakeholders to address their concerns”.

Pointing out that the app had 200 million users in India since 2018, Mayer said employees were the company’s biggest strength and that it had assured the 2,000-strong workforce that it would do everything in its power to “restore the positive experiences and opportunities that they can be proud of”.  

TikTok has data centres catering to their Indian consumers located in the US and Singapore. Alibaba-backed UC Web had announced in 2018 that it had already set up data centres across various cities in India as well as in the US. Yet there are many others whose servers are located in China.

The Chinese response is not unusual – in the telecom sector, for instance, when Huawei was under scrutiny for being allegedly involved in spyware, it offered to share its source code in an escrow account. The Reserve Bank of India (RBI) earlier pushed new regulations that payment data generated in the country needed to be stored in India.    

The government’s interim ban will have a serious impact on some of the app companies. Based on data from Sensor Tower and Google Analytics, eight to 10 of them were among the top 100 most downloaded apps in India till Monday.

As independent businesses, the banned apps were clearly dependent on India for their business model. E-commerce site Club Factory, for example, has over 100 million Indian subscribers and over 30,000 Indian sellers on its site. UC Browser has 130 million active users in India out of its 430 million across the world.