India's Chinese app ban seen jolting $1 billion expansion of ByteDance

The ban on dozens of Chinese apps following a border clash between the two nations 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 India after New Delhi said on Monday night 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 in India.

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 per cent 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.

When TikTok was banned briefly last year after a state 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 India to reverse the decision.

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