🇮🇳🇨🇳The splinternet: Indian TikTok edition.

What should we make of this?

Jul 1

I prepared this analysis for members today, but I’m sharing it with all my readers because I know that many are scratching their heads trying to understand what’s going on. If you’d like to receive insight on the near future every week, join the community.

Two weeks ago, Indian and Chinese soldiers faced off like stone-age warriors. Clubs, spikes, fists, 13,500ft up in Ladakh, brutalising each other in this firearm free zone.

This week, the battle between the two nuclear-armed powers moved to another arena: the digital market. India banned 59 Chinese apps, including TikTok and WeChat.

TikTok has more than 200 million users in India, and it may be TikTok’s biggest market.Some Indian TikTokers have millions of followers, charging thousands of dollars to post clips. Startups like EduTok have been built on the platform.

In a statement, India’s Ministry of Electronics and Information Technology said:

The compilation of […] data, its mining and profiling by elements hostile to national security and defense of India, which ultimately impinges upon the sovereignty and integrity of India, is a matter of very deep and immediate concern which requires emergency measures.

The ban will be enforced by India’s internet service providers, who will be instructed by the government to block these apps. The Indian government may also be assessing Huawei and ZTE’s participation in the nation’s 5G networks.

The ban on these 59 apps isn’t the first time the India government has weighed in on these questions.

Data localization has been going on in India for a few years, requiring companies to store critical user data in India. (See my essay on our spiky fragmented world.)

In 2018, India took action against large foreign e-commerce platforms, preventing marketplaces from offering exclusive products, and influencing the sale price of goods and services. See EV#198 for more.

The nationalist sentiment is an important part of Indian technology identity. As I wrote in EV#182 in 2018, India pushes back against the large tech platforms:

For some Indian political leaders, it is as if their nation […] is being conquered by colonial powers all over again.

This feeling, together with a nationalist government, may be behind the heavy hand of some of India’s interventions. Says EV reader, Dev Lewis:

The Indian government thinks about governing the internet in a very similar way to China, which is blanket bans, asserting national boundaries on the internet and essentially carving out what would eventually become a version of the Indian Great Firewall.

For companies, navigating this terrain is complicated.

India is a massively attractive market. Only a quarter of India’s 1.4 billion people has a smartphone. It is already a huge market and only going to get bigger. The Indian startup scene is booming. More than $14 billion went into India’s startups in 2019. Local venture capital is booming. ISP, Reliance Jio, raised more than £15 billion from Facebook, Silverlake, KKR and others.

Phone manufacturer, Foxconn, now has 30,000 employees in India churning out lower-end iPhones. An ecosystem of subcontractors and suppliers has moved with them.

Bytedance, TikTok’s parent, hasn’t received the same warm welcome. The company has made some efforts to localise its operations. As the WSJ points out here:

Bytedance said its roughly 2,000 employees in India are “committed to working with the government to demonstrate our dedication to user security and our commitment to the country overall.”
Empowering local management teams in countries including India has been crucial to the company’s success world-wide [according to the company.]

But this wasn’t enough.

What should we make of this?

National sovereignty matters. It is through national laws that this ban will be enforced. The Internet as an independently regulated cyberspace is rapidly becoming a thing of the past.
India has demonstrated that it will seek to intervene to further its national interests. Yes, the ban on 59 Chinese apps can be seen through the lens of Sino-Indian competition. But the Indian government had previously made life harder for American retailers, Amazon and Walmart.
Global decoupling is not just a gruelling sparring session between China and America. Rather it reflects a series of different pressures, some security-driven, some economic, but all about sovereignty in the face of technology change, that we are seeing expressed by the UK, EU and, of course, India.

Technological decoupling is less bloody and brutal than fighting with spikes and metal clubs high up in the Himalayas, but it will have very deep ramifications.

To dig deeper, listen to my discussion with Parag Khanna on the geopolitics of technology from an Asian lens and revisit my essay on our spiky, fragmented world.

Azeem