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Facebook, Jio, and Samsung see new opportunity amid India’s ban on Chinese apps

The Indian government issued a ban on TikTok, WeChat, and dozens of other apps from Chinese developers this week, in a move that reflects the increasing fragmentation of national tech markets along geopolitical fault lines.

India Smartphone Shipments MArket Share

India’s Ministry of Information Technology said that the ban was rooted in concerns over national security and sovereignty, as well as a desire to protect consumers’ privacy and data security. The ban comes two weeks after a violent border skirmish broke out between India and China — at least 20 Indian soldiers died in the battle, and dozens are believed to have been captured by China, according to The New York Times. 

The absence of WeChat, TikTok, and other Chinese apps in India will create a vacuum that could help Facebook and Jio realize their super-app ambitions. Last week, Facebook gained regulatory approval to complete its purchase of 10% equity in Jio, India’s largest network operator by subscribers, for $5.7 billion. Together, the companies hope to create a super-app for the Indian market which will reportedly include payments, gaming, e-commerce, and social media services.

With one fell swoop, the Indian government eliminated formidable competitors spanning the digital landscape, many of which previously threatened Facebook and Jio’s super app ambitions. For instance, TikTok — which had amassed an estimated 120-200 million users in India — posed the greatest threat to Facebook’s social media dominance in the country, and Facebook can now attempt to capitalize on its absence by propping up in-house alternatives such as Lasso.

Similarly, WeChat has long attempted to popularize its super-app in India, though it had limited success, partially due to the dominance of Facebook’s WhatsApp messaging service, which was used by 93% of India smartphone users in 2020, according to eMarketer. The absence of such competitors will help Facebook and Jio carry out an unprecedented land grab within the Indian digital services market. 

The ban on apps from Chinese developers represents one of India’s biggest retaliation against Chinese tech companies, and it could precede bans across other tech sectors. The rising tensions between India and China could result in further economic disengagement. In particular, India represents one of the largest markets for China-based smartphone vendors, and the Indian government undoubtedly understands that this creates a powerful bargaining chip in negotiations with China.

China-based smartphone vendors Xiaomi, Vivo, Realme, and Oppo together accounted for 73% of smartphone shipments in India in Q1 2020, according to Counterpoint research. Retaliatory measures such as higher import tariffs on these players would be a major boon to South Korea-based Samsung, which accounted for 16% of India’s Q1 2020 smartphone shipments. These efforts will be curtailed by the fact that Chinese companies have invested a significant amount of money in India’s tech economy, and further provoking Beijing could slow India’s overall economic development.

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