Youths shoot a TikTok video in Hyderabad earlier this year. India banned 59 of China’s biggest mobile apps in June on security concerns © AFP via Getty Images

The possibility that there will be a local white knight in India who can save TikTok, following the Modi government’s recent ban on scores of China’s biggest mobile apps, grows more unlikely by the day against a backdrop of rising tensions between Beijing and its counterparts in Washington and New Delhi.

As is the case in the US, the fate of TikTok’s operations in India is a function of politics more than economics — however benign a video app designed to entertain teenagers may appear at first glance.

Governments across the world are, in the wake of the Covid-19 induced economic slowdown, becoming increasingly involved in business decisions that in past times were left to the private sector. That can sometimes lead to tensions as companies get caught up in geopolitical agendas — as groups from Apple to HSBC have learnt.

Nowhere though does it seem that government support is as critical as in India. That is why, in the current environment — with Delhi taking a harder stance against both the Chinese government and Chinese companies — many analysts say it is inconceivable that any local firm or group of investors would defend TikTok, despite its huge popularity in the country.

“The prime minister is directly involved,” says one investor. “It is too politically charged.”

In some ways, that is counterintuitive. TikTok is far less well established in the US than it is in India. The possible $30bn valuation of its North American, Australian and New Zealand operations reflects future prospects more than current reality.

Yet people close to investors at General Atlantic, KKR and Sequoia Capital — among the backers of TikTok’s parent group, ByteDance, with some of them actively involved in efforts to come up with a solution to the Trump administration’s objections to the app — say they are not involved in comparable efforts in India. 

The most obvious candidate to make a play for TikTok’s vast audience in the subcontinent would be the Jio arm of Mukesh Ambani’s Reliance Industries. In transforming Reliance from a conglomerate built on yesterday’s “black gold” of petrochemicals to one geared towards future riches derived from data and connectivity, Mr Ambani has made the group the only national champion India has.

The Jio unit has made the internet affordable even in remote corners of the countryside. That has allowed students whose teachers never bother to show up to classrooms to study online and made it possible for villagers to determine whether their coughing is due to a common cold, Covid-19 or something more serious such as cancer, thanks to telemedicine.

Jio, of course, has a voracious appetite for content. Mr Ambani has been approached by some of the local arms of international investment firms involved in keeping TikTok from being banned in the US but he has rejected their lukewarm overtures, according to people with knowledge of the matter.

“Jio has built a patriotic narrative,” says one of the most powerful media and entertainment executives in the country. “To buy TikTok would be contrary to [Mr Ambani’s] agenda.”

There are other complications for Jio as well. Facebook, which has tried without success to launch TikTok clones in both the US and India, has invested $5.7bn in Jio, a significant portion of the $20bn Mr Ambani has raised from a variety of sources. Would the group really wish to see Jio write a check to the Chinese to keep its rival alive? Yet the Indian press continues to report that Jio is interested, which has the effect of discouraging other potential bidders.

Jio, General Atlantic, KKR and Sequoia Capital declined to comment.

To be sure, a lack of confirmed bidders doesn’t all stem from fear of alienating the government. There is also a nationalist backlash in India against Chinese-backed businesses as well as separate social concerns stemming from the widely held belief that such platforms — be they foreign or homegrown — are harmful for young people.

“All social media is drunk on the Kool-Aid of their own power,” the executive says. “There is no sense of social responsibility or redeeming value.”

There are other considerations as well. Despite the fact that TikTok counted 270m users in India before its ban, monetisation of the app is challenging.

Meanwhile the question mark over TikTok’s future development in India remains. Indeed, sometimes it appears as if India and the US are in competition to see who can adopt the harshest policies against Chinese interests. Talks with US regulators over TikTok turned much more toxic after the Modi government banned the app lest Washington appear more lenient than Delhi, says one direct participant in the discussions.

While the politicians and executives talk, TikTok’s Indian rivals have wasted no time in trying to fill the vacuum to supply bored viewers looking for entertainment by poaching its biggest stars. Unlike one of its short videos, there will be no quick fixes for TikTok.

henny.sender@ft.com

Get alerts on TikTok Inc when a new story is published

Copyright The Financial Times Limited 2020. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article