impact of Chinese apps ban

CONTEXT

In the wake of the face-off with Chinese forces on the India-China border in Ladakh,

The Indian government on June 29 banned 59 apps of Chinese origin.

These include popular ones such as-

TikTok, SHAREIt, UC Browser,CamScanner, Helo, Weibo, WeChat and Club Factory.

WHY WERE THEY BANNED?

The Ministry of Electronics and Information Technology in a press release asserted that,

It had received many complaints from various sources, including several reports about misuse of some mobile apps for stealing and transmitting users’ data in an unauthorised manner to servers which

have locations outside India

The Ministry said it had decided to block the 59 apps to safeguard the “sovereignty and integrity of India”,

Invoking powers under Section 69A of the Information Technology (IT) Act read with the relevant provisions of the Information Technology (Procedure and Safeguards for Blocking of Access of Information by Public) Rules 2009.

BANNED APPS USER BASE IN INDIA?

Estimates by Sensor Tower show the video-sharing social networking app,

TikTok, for instance, has seen about 611 million downloads in India over the app’s lifetime, while estimates of active users 

vary with the highest pegged at 200 million.

File-sharing tool SHAREIt has about 400 million users.

The Alibaba-owned UC Browser second in India market share at 10.19%, after Google Chrome (78.2%).

HOW USERS WILL BE AFFECTED?

Installed apps may continue to exist on mobile devices.

But now that the latest versions of the apps have been removed from Google’s Play Store and Apple’s App Store, 

users will not be able to access updated versions in future.

If a notice goes out to internet service providers asking that data flow from these apps be halted, that could impact the 

functioning of existing, installed apps.

HOW IT WILL IMPACT CHINESE APP PROVIDERS?

The potential loss of advertising revenue impacts app-makers.

Tik Tok’s parent ByteDance Ltd. recorded a doubling of global revenue to $17 billion in 2019, over the previous year, with $3 Billion in profit.

Its India business may have yielded only $5.8 million in revenue for the year ended March 2019,

But with quicker user adoption more recently, the stakes seem to be getting higher When TikTok was banned briefly in India last year on the grounds that it reportedly promoted pornography,

The company had told a local court that it was losing roughly $15 million a month due to the ban, according to a Reuters report.

CHINA’S RESPONSE TO THE BAN?

China has said that it suspects India’s actions could be in violation of the World Trade Organization (WTO) rules.

“India’s measure selectively and

discriminatorily aims at certain Chinese apps on ambiguous and far-fetched grounds, runs against fair and transparent procedure requirements, abuses national security exceptions.

It also goes against the general trend of international trade and e-commerce, and is not conducive to consumer interests and the market competition in India.”

The Chinese government’s comments 

indicate that it could file a formal 

complaint at the WTO.

WILL THE MOVE HURT INDIA?

It could, in terms of investments and employment.

ByteDance Ltd. had talked of upcoming investments worth $1 billion in India.

That will probably remain suspended till further clarity emerges, potentially impacting job creation.

CAN THE ORDER BE CHALLENGED IN AN INDIAN COURT?

Though it is unlikely that the companies 

concerned may take such a step

immediately,

But either companies or any affected individual in India could challenge the blocking orders in court.

The courts will then decide whether the government has provided sufficient explanation as to the nexus between what 

these apps are alleged to be doing and the reasons adduced by the government such as protection of national security and strategic interest.

Courts will also consider if the ban is a proportionate and necessary step to be taken, given the facts at hand.