Is it the end of the road for TikTok in India?

Last breath.
Last breath.
Image: Reuters/Danish Siddiqui/Illustration/File Photo
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Seven months after it was suddenly banned in the country, TikTok appears to have run out of doors to knock on in India.

The Bytedance-owned company is downsizing its India team, a Jan. 27 Reuters report said, without specifying the number of people who are being laid off.

“We initially hoped that this situation would be short-lived and that we would be able to resolve this quickly. Seven months later, we find that has not been the case,” ByteDance wrote in an internal memo to staff. “However, we simply cannot responsibly stay fully staffed while our apps remain un-operational.”

The Narendra Modi government banned the short-form video app in June 2020 alongside hundreds of other Chinese apps over data security issues following a border clash with the neighbouring country.

Prior to the ban, India was TikTok’s biggest overseas market. It had over 200 million users and more than 200,000 influencers in the world’s second-most populous country. Much of this user base came from an otherwise untapped rural and semi-urban India. Seeing the success, TikTok’s parent Bytedance even had plans to invest $1 billion in the country.

TikTok’s survival hopes

Despite the government’s tough stance, TikTok spent the last seven months rallying hard to make a comeback.

The company campaigned with the Indian government and even considered shifting headquarters out of China. While operations in the country were paused, the company retained its 2,000-plus workforce at its office in Mumbai, reportedly upskilling them and even giving them raises. It signed a new lease for a customised office space with WeWork Nesco in Mumbai in July. The deal apparently has a 24-month lock-in period.

TikTok was perhaps optimistic because it had been in trouble with the authorities in the past, too, but it managed to resolve the situation promptly. In April 2019, TikTok was banned over allegations of child porn and disinformation, but it sorted the issue within two weeks and bounced back. It also scored goodwill points by hoisting campaigns around cleanliness, education, and more on its platform.

Another reason for hope was that Tencent-owned gaming app PUBG, which was banned in September for the same reasons as TikTok, started showing signs of revival in November. It upped hiring and the makers released teasers announcing a comeback.

But things have turned out differently for TikTok. Indian authorities have shown no sign of budging. And it looks like TikTok is ready to hang up its coat.

Time for India’s next TikTok?

With TikTok’s position vacant, several homegrown, nascent me-too startups have lined up to seize the opportunity. “The battle has shifted to the domestic players which launched apps to fill the ban mid-last year and they are already jockeying for pole position in the space and raising serious capital for that,” Deepak Gupta, founding partner of early-stage venture fund WEH Ventures, told Quartz.

A slew of homegrown apps like Chingari, Mitron, Roposo, MX Takatak, ShareChat’s Moj, Zee5’s HiPi, music-streaming giant Gaana’s HotShots, and Bolo Indya, stepped up. While they’re still no match for TikTok’s popularity, these apps aren’t faring too badly. For instance, Moj and Roposo boast of 100 million downloads each. Chingari has over 46 million.

On the funding front, too, things have been looking up. Chingari raised $1.3 million in seed funding in August. The same month, Mitron raised $5 million. In December, another TikTok-rival Josh, which has 50 million daily active users, filled its coffers with a far more impressive $100 million from Google and Microsoft.

Meanwhile, incumbents like YouTube and Facebook-owned Instagram are still vying for India’s eyeballs. The latter’s Reels feature has become a huge hit, emerging as the most popular option among urban Indians and a hot favourite among celebrities and influencers. In comparison, most of the smaller apps seem like cheaper rip-offs who haven’t been able to distinguish themselves. An Entrackr report noted the hype around these local apps started dying down within a few months.

But homegrown players have been able to capture only about 40% of the void left behind by Tiktok, said Irfan Khan is business head of Digital Marketing at digital tech firm TO THE NEW.

“Building a technology that parallels TikTok’s AI systems, the technology that suggests videos to users is the biggest challenge that the homegrown apps face,” said Khan. “This is the secret sauce of Tiktok and the apps will have to hone this along with monetization play of Tiktok if they wish to come anywhere close to Tiktok in a sustainable fashion. The homegrown apps have started to show maturity in other fronts from seamless customer experience to a strong content bank of entertaining short videos to creator base across India to building video editing tools.”

However, their spirits are still high. “The permanent Chinese app ban is a great opportunity for Indian startups to now showcase and build for the billion,” Aditya Kothari, co-founder and chief strategist, told Quartz. And to grow the business, he is even looking to tap into ex-TikTok talent. He plans to “help the folks who got laid off get back on their feet.”