India Bans More Chinese Apps: What to Know
The Indian government has banned hundreds more mobile apps, many with reported links to China. Here's what businesses and investors need to know.
The Indian government initiated a process to ban 138 betting apps and 94 lending apps, many of which it says have links to China. However, the Indian Ministry of Electronics and Information Technology (MeitY) has already reportedly walked back a few of those bans — telling internet service providers and the Google Play Store to unblock LazyPay (owned by Indian company PayU) and Indian credit app Kissht, among others, after they demonstrated no link to China. But these bans are only the latest. From June 2020 to February 2022, New Delhi banned hundreds of mobile apps in India, many developed in China and others with links to China in some form.
Here’s what to know about the latest bans, the data on India’s past mobile app bans, and India’s evolving policy in this area. Brought to you by Global Cyber Strategies, a Washington, DC-based research and advisory firm.
The One-Liner
The Indian government is working to ban hundreds more apps, many with supposed links to China — and with hundreds of app bans already on the books, businesses need to evaluate their technological supply chains and the evolving risks in India.
India’s App Bans Over Time
The Indian government’s most recent app bans, originally issued on 232 mobile apps, were reportedly implemented because of “improper data storage and transfer” abroad and money laundering, in the government’s words. One source told the Economic Times that “it seems that through discussions and various questions, MeitY is trying to find out whether any of the apps have Chinese partners or investors. The ministry is basically trying to cull out the good ones from the bad actors.”
Before this most recent set of reported app bans, the Indian government had banned a series of mobile apps beginning in June 2020 and continuing until February 2022.
The Indian government banned 59 Chinese apps in June 2020, stating that “in view of information available [the apps] are engaged in activities which is [sic] prejudicial to sovereignty and integrity of India, defence of India, security of state and public order.” Then, it banned 47 apps in August 2020 (some of which were “clones” of or similar to those banned in June), 118 apps in September 2020, and 43 apps in November 2020. New Delhi did not announce any new app bans from November 2020 until February 2022 — over a year — until it banned 54 applications, again focusing on links to China.
For some bans, the driver was a somewhat clearer and distinct event, as with the June 2020 bans that quickly followed India-China border conflict. In other cases, the bans appear to be the product of continuously evolving Indian government policy on non-Indian, and particularly Chinese, tech companies, products, and services, meshed with a variety of other factors. As one senior official said in February 2022:
Many of the apps from the stable of Tencent and Alibaba, have changed hands to hide ownership. They are also being hosted out of countries like Hong Kong or Singapore, but the data was ultimately going to servers in Chinese destinations… even apps such as ByteDance-owned TikTok and Tencent’s WeChat were available for download through alternative means such as APK files, and the government has taken cognizance of it.
The Impact of India’s Past App Bans
The Indian government has issued hundreds of app bans in the last few years, beginning in June 2022. A closer look at the data underscores that utility apps, photo and video apps, social media apps, messaging and social networking apps, and gaming apps are a core focus of these bans — historically more so than finance, news, and other apps. This subsection focuses on the app bans in June 2020 (59 apps), September 2020 (118 apps), and February 2022 (54 apps) as case studies.
The Indian government’s 59 app bans in June 2020 focused most on utility apps (25). This was followed by photo and video apps (12), social media apps (6), and messaging and social networking apps (5). Fewer news, e-commerce, music and entertainment, and gaming apps were affected, and no finance, search, or cloud apps were affected.
By contrast, the Indian government’s 118 app bans in September 2020 focused most on gaming apps (38). This was followed by utility apps (32), messaging and social networking apps (15), photo and video apps (14), and music and entertainment apps (8). A few e-commerce (4), search (2), news (2), and finance (2) apps, along with a single cloud app (1) were affected, and no social media apps were affected.
As in September 2020, the Indian government’s 54 app bans in February 2022 focused most on gaming apps (15). This was followed by utility apps (13), messaging and social networking apps (10), music and entertainment apps (10), and photo and video apps (6). No news, e-commerce, finance, social media apps, search, or cloud apps were affected.
Some of these bans have seriously hurt the companies in question. TikTok is the most significant example: before the Indian government banned TikTok in 2020, there were over 200 million active monthly TikTok users in India — the app’s biggest international market (e.g., outside of China). Fast forwarding to early February of this year, TikTok reportedly laid off its remaining 40 employees in India. Several of them were reportedly working only on TikTok’s markets in Dubai and Brazil. Multiple Indian companies have started TikTok alternatives since, but they are not quite the same offering and do not identically concentrate market share under one company.
In practice, the TikTok ban was implemented by TikTok and by the Google and Apple app stores. Just as in May 2019 — when TikTok was briefly banned by an Indian court, citing the risk that children were exposed to sexual predators and pornography on the app — Google and Apple immediately removed TikTok from their app stores in June 2022. The block was also implemented on the TikTok side: the platform quickly became inaccessible from within India, after which it became clear that TikTok had itself shut down access to its services from India. Subsequently, India’s Department of Telecommunications ordered internet service providers to block access to TikTok.
As one would expect, TikTok does not publish any information about individuals accessing TikTok from within India (that would make no sense from the company’s perspective, as the app is banned), but a quick web search yields numerous articles and blogs about using virtual private networks (VPNs) to access TikTok from within India. There are also online discussion threads inquiring about “sideloading” TikTok onto Android devices, or installing the app via direct file transfer instead of downloading it from the app store; the official quoted above pointed to this issue. In any case, TikTok’s previously large market share has essentially vanished in India.
Other companies have felt the impacts of these bans, too, and not just in China. For instance, after news broke that gaming app “Free Fire” was on the Indian government’s February 2022 ban list, the app’s owner, Singaporean gaming company Sea, lost $16 billion in value (about 18% of its market value). At the time, Chinese tech giant Tencent had approximately a 21% stake in Sea, plus a publishing partnership with the gaming company. Tencent later reduced its stake in Sea in January 2022.
What Companies Should Know
While there are real security and privacy questions to be asked about mobile apps — some that could apply to every single one and some that are heightened because of certain apps’ ownership by Chinese companies — it would be a mistake to assume the Indian government’s bans are all about privacy and security. Numerous motivations contribute to these kinds of decisions and broader, evolving Indian technology policy on non-Indian tech companies, platforms, and services, including those from China.
The June 2020 bans were implemented following a border conflict between Indian and Chinese military forces, during which 20 Indian and four Chinese soldiers died. Just months prior, in April 2020, Matt Sheehan at the MacroPolo think tank published an excellent, data-driven analysis showing that Chinese apps were neck-and-neck with US companies in the Indian market. Indian firms were clearly not as competitive, even in their own country. As I wrote at the time, numerous other political forces were at play in India, too — including the Trump administration pressuring India to ban 5G equipment from Chinese telecom Huawei; anti-China sentiment, broadly defined; genuine cybersecurity concerns about Chinese apps and technology services; and calls from state officials, celebrities, and other individuals in India for citizens to boycott Chinese products and services, as economic retaliation for the border violence.
While the most recently reported app bans are still unfolding, these numerous factors remain in play and could shape the ultimate outcome of the February 2023 orders. Just look at the All Indian Gaming Federation’s comments on the recently announced bans, effectively praising the bans for supposed social, economic, and security reasons:
“We believe that the blocking of 138 gambling apps undertaken by MeitY on the directions of MHA [Ministry of Home Affairs], is a good step in stopping the menace of gambling and is important not only because it affects the skill gaming industry but because it threatens the economic, social and national security of our country and harms our citizens.” — Roland Landers, CEO, All India Gaming Federation
A few takeaways include:
Cybersecurity concerns, privacy concerns, economic nationalism, anti-China sentiment, a desire to promote Indian tech companies by weakening foreign ones, and many other factors have contributed to Indian government policy in this area. The Indian government’s app bans going forward may depend less on the technology per se and more on how technological issues intersect with the domestic political environment — and India’s relations with the US and China.
India’s app bans mostly focus on companies in China. Companies outside of China but with links to the Indian market should identify points of exposure by better understanding their own technological supply chains. The Singaporean gaming company Sea is a perfect case study: the company is not based in China but had an app banned, which dropped the company’s valuation by about 18%, because it had investments from and partnerships with Chinese firm Tencent.
These risks vis-a-vis Indian government app bans have notably affected the system utility, photo and video, social media, and gaming app areas.
Even companies who do not believe they could be banned — because, for instance, they are based in North America and have no investments from Chinese firms — cannot overlook this techno-political landscape in India. These app bans are still majorly shifting the competitive landscape in India, such as by ejecting major players from the market and potentially creating windows of opportunity for new companies to fill the void with innovations or quasi-replacements.
Subscribe for more public insights, and reach out on Global Cyber Strategies’ website for a range of custom-tailored research and advisory services.
—
© 2023 Global Cyber Strategies LLC.