India may be part of Microsoft-TikTok deal

 

India may be part of Microsoft-TikTok deal: Report

India is the biggest market for TikTok with more than 200 million users, however, it was banned along with 58 other Chinese apps by the government in June this year

Microsoft is chasing a deal to buy all of TikTok’s global business, including the viral video app’s operations in India and Europe, the Financial Times reported on Thursday, citing people with knowledge of the matter. One investor pegged the value of TikTok’s India business at as much as $10 billion.

Microsoft had said on Sunday that it was in negotiations with ByteDance, the Chinese owner of TikTok and the world’s largest startup, to explore a purchase of the TikTok service in the US, Canada, Australia and New Zealand.

Since then, Microsoft has also pursued a plan that will include all countries where TikTok operates, the FT said. It does not operate in China, and such a deal would not extend to its China-facing sister app Douyin, the newspaper reported.

India was TikTok’s biggest market, with more than 650 million downloads, according to Sensor Tower data. But it’s been banned in the country since the end of June when the government put it on a blacklist of 59 Chinese apps, citing a threat to national security in the wake of border hostilities.

There are Other Options for ByteDance

The newspaper reported that a purchase by Microsoft may help restore its fortunes by removing the stigma of Chinese ownership at a time when sentiment against the country has been inflamed by the clash at the Line of Actual Control.

The FT reported that there was a “deal in the works” with Microsoft for TikTok India but that if it fell through, ByteDance could sell the business to foreign or local buyers. ByteDance would then licence its technology to the company and share revenue, it added. TikTok and Microsoft didn’t respond to queries.

Anand Lunia, founding partner at India Quotient, said TikTok had been one of the most popular apps in the country.

“TikTok was huge in India and it worked really well,” he said. “It had grown crazily and people looked forward to using it. They were unhappy when it was taken away. After WhatsApp, which would be the most desired or valued app in India? I would say TikTok. TikTok India would be valued at least $5-10 billon in India.”

India Quotient has invested in Sharechat, Roposo and Lokal in India.

President Donald Trump has threatened to shut down TikTok in the US unless it was sold to an American company by September 15, warning that it poses a national security threat because of its links to China.

TikTok’s viral popularity in India was accompanied by political scrutiny, court cases, public distrust and investigations into the company.

Despite multiple assurances, it could not assuage concerns over allegations that it was sharing the data of Indian users with the Chinese government. TikTok has invested millions of dollars in the Indian market, building a loyal user base and a creator economy. After its halt, local rivals have been vying for the same advertisers, users and creators.

Since the government banned TikTok along with 58 other Chinese apps in June, local alternative video-sharing apps, including Roposo, Moj, Josh and MX Takatak* have seen massive downloads in India.

Even before the ban was implemented, downloads of Chinese apps including TikTok had seen a slide amid the border tensions. Boycott calls had been growing since March, when the Covid-19 virus outbreak, which originated in China, started spreading in India.

The perception of Chinese apps as propagating explicit, hateful and anti-India content has grown over the past year despite attempts by ByteDance to change the narrative.

Last week, TikTok said it had submitted its response to the Indian government’s queries and was working with it to provide clarifications and allay concerns, presumably over privacy and datasharing issues.

The world’s fifth-largest economy is the battleground for companies vying to dominate one of the biggest and most open internet markets, with an estimated base of 450 million smartphone users.

Meanwhile on Thursday, the US intensified its campaign against Chinese apps. “Untrusted Chinese apps” like TikTok and WeChat pose “significant threats to the personal data of American citizens” and are potential tools for Chinese content and censorship, secretary of state Michael Pompeo said, issuing a “Clean Network” guidance.

“The Clean Network program is the Trump Administration’s comprehensive approach to guarding our citizens’ privacy and our companies’ most sensitive information from aggressive intrusions by malign actors, such as the Chinese Communist Party (CCP),” Pompeo said in a press release.

He announced five new lines of effort to protect America’s telecommunications and technology infrastructure — clean carrier, clean store, clean apps, clean cloud and clean cable.

*Disclosure: TakaTak is owned by MX Player, a portfolio company of Times Internet that also owns ETtech.