What SoftBank’s Interest in TikTok India Means For App’s Future

In India, where the app has 200 million users, several questions arise from a move to acquire TikTok’s India assets.

Japanese conglomerate SoftBank Group may emerge as a bidder for TikTok India.

(Image: Altered by The Quint)     

Japanese conglomerate SoftBank Group may emerge as a bidder for TikTok's India operations, as it looks to assemble bidders and is scouting for local partners, according to a Bloomberg report.

According to the report, SoftBank, which holds a stake TikTok’s parent company, ByteDance, has also held talks with Indian companies such as Jio Infocomm and Bharti Airtel. The talks, however, are learnt to have fizzled out, according to the report.

TikTok has been under scrutiny worldwide owing to the suspicion that they could be sharing user data with the Chinese establishment. Soon after the death of 20 soldiers in Galwan Valley, the Indian government banned 59 apps including TikTok and followed it up on September 2 with another 118 apps with Chinese links, including the multiplayer game PUBG.

Following the TikTok’s ban in India, on 29 June, the axe has been dangling over the app’s US operations as well, with United States President Donald Trump reiterating his threat to ban the app several times.

In India, where the video app had over 200 million users, a number of questions arise from this move to acquire TikTok’s assets in India.

DOES THIS MEAN TIKTOK WON’T HAVE ITS BAN OVERTURNED?

Shortly after the ban, a three-member government panel was set up to inquire into the data sharing practices of 59 Chinese apps that were banned. Representatives of the banned apps were called before the committee over the next one week to discuss the issue and explain their stand, the sources said.

Experts point out that it is incredibly rare to see bans under Section 69A of the IT Act being overturned by the committee at the first instance, although there have been some cases where the blocking orders are reconsidered and overturned after some time.

Admittedly, there is little available data on this as the government doesn’t normally release much information about such blocking orders, but the chances would appear to be slim at this point.

In addition to the technical and legal aspects of this ban, there are also political considerations at play, given the current tensions between India and China, and the brutal killing of 20 Indian soldiers at the Galwan Valley – though, of course, these will not be officially part of the review process.

“Additionally, the hearing process is very tedious, during which they are suffering from huge losses. TikTok is still awaiting the orders from the Indian government who are in the process of reviewing the submissions made by the company,” said Kazim Rizvi, founder The Dialogue, a technology policy think tank.

“During this whole process, the company is expected to suffer a loss of more than $6 billion. This might be the main reason why Bytedance could be looking to sell the assets of the company,” Rizvi added.

HOW EASY OR DIFFICULT IS THE SEARCH FOR INDIAN PARTNERS?

Given Softbank’s talks with Jio and Airtel did not make any substantial headway, the company is likely to continue its search for local partners. Industry observers, however, say this could prove to be an uphill task.

SoftBank’s founder Masayoshi Son is well versed with the Indian market and has backed multiple local start-ups including Snapdeal.com, Ola Cabs, Oyo Rooms and Lenskart.

“However, given the fact that there is rising tensions at the Sino-Indian border and these companies have a chinese sentiment attached to it, looking for an Indian partner is going to be difficult for them,” said Rizvi, a technology policy think tank.

WHERE ELSE HAS SOFTBANK PARTICIPATED IN TIKTOK’S NEGOTIATIONS?

Since Trump’s threat of a ban, Microsoft has been in talks to buy the app’s US, Canada and Australia operations.

According to ETtech, SoftBank, in the United States, brought in Walmart Inc as the main investor in a group of bidders. This group also included Google parent company Alphabet Inc.

However, that plan didn’t work out either as Trump administration demanded that a US technology company lead the investment and Google pulled out, ETtech’s sources said. Walmart, thereby, joined a bid led by Microsoft Corp.

Which group SoftBank is currently working with in US is not very clear at the moment, informed ETtech.

LEGAL ROUTE AN OPTION FOR TIKTOK?

In a dramatic escalation in the US-China technology cold war, ByteDance-owned TikTok has said that despite trying to engage in good faith with the Trump administration to find a solution and implementing stringent security measures, now they “simply have no choice” but to take the legal route to protect the rights of the company.

Can something similar be on the cards for TikTok India. The company did not immediately respond to queries from The Quint on this issue. This move, however, seems unlikely and may not go in their favour even if the company were to knock on the court’s door, owing to the national security concerns cited by the Centre.

“The only option that they might have in case the government decision comes against them is either to take the legal route and challenge the order itself in the SC and wait for its decision that may or may not go in their favour, or sell off all their assets in the country,” Rizvi said.

“Section 69A of the IT Act under which these apps have been banned may not be able to hold its ground if the order is challenged, however, it also needs to be kept in mind that national security is such a sensitive matter that the courts will find it difficult to overrule the order,” Rizvi added.