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Tik Tok on the Global Clock

Over the course of the last two decades, China has limited many foreign companies’ ability to enter the world’s largest internet market through its use of the Great Firewall of China (GFW). The GFW is a government authority monitoring all internet traffic, with an emphasis on highly censored international borders. Companies such as Google and Facebook are restricted from entering the market, allowing Chinese variants to soar domestically. This practice of preserving its cyber sovereignty has aided China’s tech sector greatly, but recent events have highlighted the clash of eastern and western technologies. In addition to controlling its own internet with an iron fist, Chinese internet media companies have taken foreign markets by storm, most notably in India. Its online population has been influenced by Chinese media companies as a result of various agile platform expansion into the foreign market.

 ByteDance Ltd, a Chinese multinational internet technology company headquartered in Beijing, launched TikTok, a video-sharing social networking service, in 2016. It was not until mid-2019 until TikTok’s viral essence was felt across the world, most notably in India. The Indian smartphone market had surpassed the USA for the first time on an annual level, becoming the second-largest smartphone market globally and reaching 158 million shipments in 2019 with 7% Year-over-Year growth. As download rates soared, so did global user spending - increasing 290% from July 2018 to July 2019. As TikTok climbed to over 800 million users, concerns over the app’s data privacy policies began to grow. On July 29, 2020 India became the first country to ban TikTok along with 58 other Chinese-owned services, citing cybersecurity concerns. India’s ban marks the first in a presumptuous next wave of Chinese censorship due to cybersecurity concerns in foreign markets.

The immediate result of India’s ban has been a flooding of domestic and western (United States) firms into the market in hopes of capitalizing on upturned markets. Facebook’s Instagram was the first application to rapidly iterate, adding a short-video feature called “Reels,” effectively cloning TikTok in the Indian market. Google announced a $10 Billion commitment, over the next five to seven years, in hopes of accelerating the adoption of digital services in the youthful market. The nation of 1.3 billion people, with 600 million already online, is now a battleground for western tech companies hoping to tap into the market. India, as a populated entity holds many growth parallels to China, seeing similar growth rates. However, China implementing population mitigation through their one-child policy has potentially created an opportunity for India to eclipse China in the overall population later this decade. 

Figure 1

Tik Tok on the Global Clock: Text
Tik Tok on the Global Clock: Image

While the Indian government attributed their TikTok ban to cybersecurity concerns, many believe it was a retaliatory decision in response to the clash between Indian and Chinese soldiers along a disputed border that led to over 40 deaths. This ban provides a nationalized opportunity for an Indian-developed alternative casual video sharing platform, as it has all of the sudden been flooded with 200 million users looking for an alternative to TikTok. Whether it will be a foreign investor like Google or Facebook or a domestic application, someone will surely capitalize on this new hole in the market.

Jio Platforms has quietly been adapting one of those domestic companies looking to capitalize on this major shift of consumer habits. India has a lesser percentage of their population online, as shown in Figure 1, due to the slow cultural tides of the country. While a more impressionable generation has adopted the digital era, there is still resistance met in certain demographics, such as location or age. Contributing factors are a lack of accessibility and education around the technology. However, internet balloons being deployed in Kenya by Alphabet’s initiative Loon marks a new era of internet accessibility. The technology provides 10,000 mile wide 4G LTE coverage through a solar-powered balloon floating 12 miles in the air.

The ban of TikTok in the wake of the most recent Sino-Indian conflict has prompted both politicians and consumers alike to question the regulation of user data. Is this an issue that will become nationalized? Or should private companies such as ByteDance Ltd. have control of their users’ data? Right now all eyes are on India as governments see how effective and maneuverable cyberbans can be. If India can successfully replace TikTok, a platform that had 200 million users in India alone, we predict that a plethora of other governments will follow suit in an effort to mitigate the outflow of national user data. 

Copyright © 2020 Hyperion Group Inc, All rights reserved.

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Tik Tok on the Global Clock: Text
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