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India Bans TikTok, Dozens of Other Chinese Apps Following Border Clash -- 2nd Update

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06/29/2020 | 05:46pm EDT

By Rajesh Roy and Shan Li

NEW DELHI -- India banned dozens of Chinese mobile apps, including widely used TikTok and WeChat, after a border clash between troops from the two countries left 20 Indian soldiers dead this month.

New Delhi cited cybersecurity concerns in blocking the Chinese apps from one of the largest and fastest-growing markets in the world. A senior Indian government official said the ban was imposed because the apps might have been used to harm India's defenses, as well as to send a message to China.

Rising tensions since the clash between the Indian and Chinese armies along their disputed border in the Himalayan mountains have been accompanied in India with calls for the government to retaliate against China.

"This is India's first salvo to China after the border clashes, showing that India has a diverse range of retaliatory options," the official said.

He said India's move might lead more countries to act similarly. Regulators in Washington are already formally weighing whether TikTok poses a national-security risk to the U.S.

The Ministry of Electronics and Information Technology, calling the issue "a matter of very deep and immediate concern which requires emergency measures," said in a written statement that it had received multiple complaints about misuse of some mobile apps for the theft and unauthorized, surreptitious transmission of users' data to servers outside India.

"The compilation of these data, its mining and profiling by elements hostile to national security and defense of India...ultimately impinges upon the sovereignty and integrity of India," the ministry said.

The banned mobile apps include Alibaba Group Holding Ltd.'s UC Browser, a web browser, and Tencent Holdings Ltd.'s WeChat messaging platform, which has more than 1.2 billion monthly active users world-wide. UC Browser and WeChat have found audiences in Asian countries such as India and Indonesia.

Video app TikTok, owned by Beijing-based Bytedance Ltd., is popular with Indian youths and has dominated the social-media landscape in terms of users along with WhatsApp, owned by Facebook Inc.

Last month, India rankeds as the top country for new TikTok users, accounting for 20% of the app's nearly 112 million downloads around the world, according to Sensor Tower. The U.S. placed second, at 9.3%.

Including TikTok, six of the top 10 most downloaded apps in India were from Chinese tech companies, compared with four from U.S. companies, according to a report published in April by Paulson Institute's MacroPolo think tank. Chinese companies had just three of the top 10 apps in India in 2015, according to the report.

Bytedance, Alibaba and Tencent couldn't immediately be reached for comment. The Chinese government didn't immediately comment on the Indian action.

Analysts said the ban on Chinese apps is part of a broader effort by India to push back against Beijing. The two countries' face-off at the Himalayan border has both sides looking for new ways to gain leverage, especially India, which is weaker militarily overall although more closely matched along the disputed border.

For Prime Minister Narendra Modi, whose Bharatiya Janata Party leads the government, banning the apps plays to popular domestic demands to stand up to China, analysts said. It also underscores that India's market, one of the biggest and most promising for Chinese tech companies, can't be taken for granted, they said.

"The digital war between China and India is [heating up] because there is a heavy propaganda element infused with internet-based nationalism on both sides," said Sreeram Chaulia, dean at the Jindal School of International Affairs in Haryana state, near Delhi.

Mr. Chaulia said India would like to wean its citizens from dependence on Chinese goods and services -- particularly online -- to prevent Beijing from dividing Indian society and weakening New Delhi's resolve to counter China on the border dispute and broader bilateral strategic competition.

"If China becomes indispensable on social media and online consumption habits of Indians, it would soften public opinion in India and confuse Indians as to whether or not China is a major threat," he said.

As China's government becomes more combative abroad, other countries' consumers and regulators have responded by putting pressure on Chinese firms or spurning Chinese brands altogether -- particularly its technology competitors, which have been among the most prominent Chinese companies doing business globally.

In India, outrage over the deaths of the 20 Indian soldiers in the border clash added fuel to a boycott movement that has prompted some Indian smartphone users to delete Chinese-made software.

Indian officials have said they would bar their state-run telecommunications companies from purchasing equipment from Chinese companies such as ZTE Corp. and Huawei Technologies Co. for future 4G mobile networks. Indian authorities have also privately warned telecom operators against working with Chinese companies in the rollout of new 5G networks. As recently as December, Huawei and ZTE were welcomed to participate in India's 5G trials.

India has been the biggest untapped market for some of China's quirkiest social-media companies, which had been signing up hundreds of millions of consumers in the world's second-most populous nation, looking to capture users who weren't hooked on to U.S. apps such as Facebook and Twitter.

Research firm Sensor Tower estimates that the 59 banned apps have accumulated 4.9 billion downloads from Apple Inc.'s India App Store and Alphabet Inc.'s Google Play since January 2014, including 750 million so far this year. Of the top 25 most downloaded apps on India's App Store and Google Play since April, eight were from Chinese publishers.

Chinese content-sharing apps such as Bytedance's Helo -- also now banned -- and TikTok have penetrated deep into the Indian market, where most of the country's 1.3 billion people are getting online for the first time using low-cost smartphones and dirt-cheap data plans.

TikTok is bigger in India than anywhere else outside of China, owing to the South Asian nation's massive population and legions of young and largely unemployed fans. The app was downloaded close to 650 million times since January 2018 on the App Store and Google Play, according to Sensor Tower. Young people are often found in parks and parking lots shooting 15-second videos that mimic the song-and-dance-infused movies of Bollywood, the country's film industry.

India has been the focus for years of both U.S. and Chinese tech companies, who viewed the country as a huge potential market. The chief executives of Facebook, Google and Twitter have all visited India and met Mr. Modi in person, with their platforms building out "India first" features tailored to the country's local languages.

Google, for example, has introduced a feature in its popular Maps app for travelers riding rickshaws or taxis in India, which prompts the phone to buzz if users deviate too much from the original route. Last month, Facebook rolled out a new safety function aimed at helping women protect their photos and personal information online.

Tencent and Alibaba have also been prolific investors in Indian tech startups, especially as Chinese startups hesitate about going public amid a trade war with the U.S. and slowing economic growth within China.

To sustain momentum in India, Bytedance had invested heavily and backed government initiatives to raise TikTok's profile. It had pledged to invest $1 billion in India over the next few years through expansion and construction of a data center. It sponsored "Bala," a Bollywood romantic comedy featuring protagonists who make TikTok videos.

The investment came after an Indian court blocked TikTok from app stores in April 2019 after ruling that the app could expose children to pornography, sexual predators and cyberbullying. The court later reversed its decision after TikTok appealed.

The ban, which lasted less than two weeks, cost the app more than 15 million downloads in India, according to Sensor Tower. Those losses, combined with a similar ban in Indonesia in 2018 over inappropriate content, spurred Bytedance last year to start tailoring in earnest its content policies to individual markets, according to a person familiar with the matter.

The company was wary of further bans in India, which it views as a significant growth market, the person said. Bytedance also owns other popular apps in India, including the social-media app Helo and a music-streaming app called Resso.

TikTok India's public-policy director, Nitin Saluja, said in an interview last year that "there is an enabling environment for any company to have an India-first approach" and that Bytedance wanted to further invest in the country.

India has been a battleground for the Trump administration's effort to get allies to shun Chinese technology, especially cellular equipment from Huawei, over what the White House says are national-security concerns.

Officials in the U.S. and allied countries have said China's authoritarian government could order Huawei to potentially spy on or disrupt communications, The Wall Street Journal reported last year.

U.S. regulators are weighing whether TikTok poses a national-security risk because it is owned by China-based Bytedance. Bytedance's 2017 acquisition of the startup Musical.ly, a lip-synching app that had won a large following among U.S. teenagers, is under review by the Committee on Foreign Investment in the United States for potential national-security risks. Bytedance shut Musical.ly after merging it with TikTok in 2018 -- a move crucial to its success in the U.S. because of Musical.ly's use there. Several U.S. lawmakers have accused the company of censoring content at Beijing's behest -- which Bytedance has denied.

(MORE TO FOLLOW) Dow Jones Newswires

06-29-20 1946ET

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ZTE CORPORATION 1.54% 46.05 End-of-day quote.30.12%
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