Small traders likely to feel the pinch as govt bans 43 mobile apps

Small to medium businesses key user base of logistics and transport apps Lalamove and Drive by Lalamove

On Tuesday, the Ministry of Electronics and Information Technology (Meity) issued a list of 43 apps it was banning “for engaging in activities which are prejudicial to sovereignty and integrity of India, defence of India, security of state and public order”. According to Meity, the decision was taken based on comprehensive reports from Indian Cyber Crime Coordination Centre, Ministry of Home Affairs, and the ban was under Section 69A of the Information Technology Act.

This is the third set of apps banned since June. The total number of banned apps adds up to 220. The bulk are from China, or they have a China connection. China has protested the bans saying this is violative of World Trade Organisation (WTO) regulations.

The catch-all phrases in the ban order tell us nothing about the concrete reasons for the bans. The official position insofar as there’s been any clarification is that these apps are hosted on Chinese servers, and hence, Chinese data miners can harvest data of Indian users. The “unofficial” official narrative is that this is retaliation after the incidents in eastern Ladakh.

Most banned apps, as mentioned above, have origins in Mainland China. Some like Lalamove are based in Hong Kong, and Snack Video is from Singapore.

It is unclear without much detail what data is harvested since every app asks for different permissions. Nor is there any explicit law, which forbids all sorts of private data of Indian users being harvested or hosted abroad. The only mandatory rule for localisation of data of Indian citizens pertains to payment data. Such payment data must be hosted and processed in India, according to the Reserve Bank of India. Also, India has no data protection law and there is zero assurance of privacy, or legal redress in case of a breach for data hosted on an Indian server.

Quite a few of these newly banned apps are dating apps, which help “hook ups”. It is unclear how many Indians date via ChinaLove, Chinese Social, Asian Date and We Date, which all seem geared for the Chinese market. Apart from this, there are games like Heroes Evolved and Happy Fish.

There are also several video streaming and editing apps, including Snack Video, a Tik-Tok clone that offers similar facilities for hosting short videos. (Tik-Tok was banned in June itself). That’s gained some traction in India.  

Most importantly for Indian traders, the ban includes several apps belonging to the Alibaba ecosystem. At least four Alibaba apps — AliExpress, Alipay Cashier, Alibaba Workbench and AliSuppliers — are crucial to traders who have dealings with China. Another Alipay app was banned in the earlier lists and AliExpress has been under investigation allegedly for dodgy invoicing 

to evade Customs duties and Goods and Services Tax (GST) payments.

Trader who wish to buy anything from China, or sell anything in China, will have used Alibaba apps to facilitate transactions. Although the trader community is circumspect in speaking about bans, this raises a barrier against cheap Chinese imports such as mobile phone and computer accessories (headsets, pen-drives, power banks), and white goods (microwaves, electric kettles) et cetera.

The ban also includes two logistics and transport apps, Lalamove and Drive by Lalamove. The HK-based Lalamove was operating in area that include Ahmedabad, Bengaluru, Chennai, Hyderabad, Mumbai, Pune and the National Capital Region. Its key user base is the small to medium business, which needs goods transported cheaply and quickly. The ban will thus affect easy goods movement until similar capacity is built by others. The logistics gap will probably be replaced quickly but transport costs may rise.

The bans will clearly affect some livelihoods. It will also drive up the price of many consumer items. Some traders will pay more to import the same goods from China, without direct access to economies of scale offered by Alibaba. For example, they may use a contact in, say, Hong Kong, or Singapore, to access Alibaba and invoice the same items at a mark-up. Other traders will opt to import more expensive substitutes from elsewhere.

Do these bans serve any economic purpose? Indians have no expectations of data protection, or privacy, anyway. Consumers will pay more as a result of the bans. Traders will be put to inconvenience. Some people will lose livelihoods.

Sought-after Snack over

Since Tik-Tok was banned in June, Snack Video has become popular. Snack Video is owned by Kuaishou Technology, which is funded by Tencent. It is headquartered in Singapore and seemingly hosted on Singapore servers. (Singapore has a strong Data Protection Act).

There have been over 190 million downloads worldwide since late June, when Tik-Tok was banned. In the past 30 days, there have been over 100 million downloads, with about 35 million from India. In September, a Delhi-based sampling of 5.5 million smartphones showed Snack Video was present on 22 per cent of phones. If those numbers are nationally representative, Snack Video would be present on close to 90 million Indian handsets. Anyhow, it far outstrips desi video-streaming apps like Chingari, Mitron, Roposo and Trell.

Like Tik-Tok, Snack Video seems to have built its own ecosystem though Tik-Tok was much larger. A lot of youngsters use it to create and disseminate content. Some have successfully monetised it. Since the ban will mean a block on servers and the removal of the app from Indian Google Play, it would be sensible to use a VPN to download and save any content you may have created.