Back to square one

Banning Chinese apps has proved to be ineffective

Over a year after the government started to crack down on Chinese apps for engaging in activities “prejudicial to the sovereignty, integrity, and security of India”, apps of Chinese origin continue to hold significant mind space and market share across India’s mobile internet. Indeed, many of these have gained market share since the ban. These apps have used a mix of holding companies outside Mainland China, and of rebranding, to maintain and/or re-establish a presence. Between April and November 2020, the Indian government banned as many as 267 apps of Chinese origin, including apps of giants such as Alibaba, Bytedance, and Xiaomi. This was under Section 69A of the Information Technology Act as the government was worried about data protection. This itself is ironic, given the failure of the government to bring in a data protection law.

The bans removed popular apps such as TikTok, UC Browser, PUBG, Helo, AliExpress, Likee, Shareit, Mi Community, WeChat, CamScanner, Baidu Search, Weibo, and Bigo Live from Indian smartphones and the India Google Play Store. India continues to investigate and ban Chinese apps, including, most recently, fintech plays like Cashbean, which offers instant personal loans. But recent reports indicate a group of at least eight popular apps of Chinese origin have increased their combined Indian user-base to 211 million monthly users in July 2021, compared to the base of 96 million when they were banned in July 2020. Many more popular apps of Chinese origin are in common usage.
 

These apps re-entered by setting up subsidiaries in Korea, Singapore, Indonesia, etc, and sometimes rebranded using new names. The companies providing these apps in India are generally subsidiaries located outside China. It is believed some India-based employees of these companies have also been transferred to the subsidiaries and local developers are interacting via the subsidiaries. Most apps are in the entertainment space, offering media content and games. PUBG re-entered as a Korean app marketed by Krafton, for example. Krafton is controlled by Tencent. The fastest-growing app in India is PLAYit which offers downloads of popular movies and shows via Telegram. PLAYit is developed by Vidmate, which is owned and developed by UCWeb, which, in turn, is owned by Alibaba.

Assuming the government is serious about data protection, or about excluding Chinese apps, these apps which have successfully slipped under the regulatory radar, should raise concern. Apart from being of Chinese origin, they are intrusive in that they seek extensive permissions on installation. They can access cameras, microphones, media content, and track locations. They store data on servers located outside India, though not necessarily in China itself. It is not difficult to work out the Chinese connections and their continued presence on Indian smartphones thus raises questions. Was the entire exercise of successive lists of bans carried out to merely administer a public slap on the wrist? If data protection and privacy are truly concerns, the government needs to pass appropriate legislation. If Chinese investments in India are a concern, a deep review of the entire start-up ecosystem is required, since many start-ups have Chinese investors. Of course, there is also the broader question: Should these apps have been banned at all?