Chinese app ban derails $1 billion expansion plan of ByteDance

An Indian 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% 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.

'HOW WILL I LIVE NOW'

Following the ban order, many TikTok users posted videos expressing their displeasure with the ban.

One user @omkarsharma988 posted a video in which he throws utensils to the ground, hits a chair and weeps, with a Hindi song playing "You've left me, how will I live now?" The video had been liked 218,000 times, as the app still functions on phones on which it is already downloaded.

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.

"From a legal perspective it (the ban) is sound because grounds like national security are difficult to challenge," said Santosh Pai of Link Legal, which advises Chinese companies.

The ban has also left Tencent disappointed, which has apps on the market and is also a major investor in Indian startups, two sources aware of the company's concerns told Reuters. New Delhi in April mandated screening of incoming investments from countries like China, hitting the likes of Tencent.

While its WeChat messaging app is not that popular in India, the company fears the government could impose a ban later on the mobile version of its blockbuster game PlayerUnknown's Battlegrounds, said one of the sources. Tencent declined to comment.

Two games of China-based firms, "Mobile Legends" and "Clash of Kings", were among those banned on Monday.

Sensor Tower said the 59 banned apps recorded roughly 4.9 billion downloads in India since January 2014.