Home FEATURED NEWS All eyes on TikTok India sale after Oracle-Walmart deal in the US — Quartz India

All eyes on TikTok India sale after Oracle-Walmart deal in the US — Quartz India

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With Oracle and Walmart set to acquire significant stakes TikTok’s US business, questions about a possible sale in India loom.

The Beijing-based company was banned in India alongside a host of other Chinese apps on June 29 following Sino-Indian border tensions. The Narendra Modi government said it believes these apps share users’ information with the Chinese government, posing a threat to India’s sovereignty and security.

Last month, reports cited ByteDance was holding talks with Reliance group for backing TikTok’s Indian business. Headed by India’s richest man, Mukesh Ambani, the deep-pocketed conglomerate is well-positioned to make a bid. Especially with the corpus of cash its digital arm Jio Platforms has amassed just this year.

There is no official confirmation of this from either side but if the deal is through, “it will help TikTok in managing the regulatory hurdles in India while Reliance can improve consumer engagement in its consumer apps,” said Aurojyoti Bose, lead analyst at GlobalData.

Some experts are skeptical considering Reliance inked a deal with a TikTok rival, US-based Triller, in August. Moreover, its association with Facebook, which launched its own short-video feature called Reels, could complicate the deal.

Regardless, Ambani won’t be the only one in line to buy TikTok in India, said Yugal Joshi, vice-president at consultancy Everest Group. Considering Tiktok has been stealing advertisement dollars from Facebook and Google, Joshi supposes any other rival of these behemoths can be a potential acquirer.

“With the size of the deal expected to be anywhere upwards of $2.5 billion (Rs1.8 lakh crore) and the complexities involved of having a Chinese licensor, it is not everyone’s cup of tea,” said Naushad Panjwani, regional president of Indo American Chamber of Commerce (IACC), and an expert on international M&A.

Still, there are a handful of large conglomerates and media houses who will jump at the opportunity.

Potential TikTok buyers in India

India has been TikTok’s largest market with over 200 million users, and no comparable replacement has come up yet.

Japanese investing giant Softbank, which backs TikTok, is reportedly weighing the possibility of buying the banned India business. Kolkata-based tycoon Sanjiv Goenka has supposedly thrown his hat into the ring as well.

“The Flipkart-Walmart combo is another credible player to make a bid for Tiktok,” said Anindya Ghose, professor of technology, operations, and statistics at New York University’s Stern School of Business. “As this e-commerce platform figures out a way to compete with Amazon, adding Tiktok’s user base and the algorithmic ad-tech prowess of Tiktok can transform Flipkart into a social commerce platform with sophisticated ad targeting capabilities.”

Even traditional IT firms like Tata Consultancy Service (TCS), Infosys, or HCL could be viable contenders, said Chris Carter, CEO of cloud security firm Approyo.

“These companies would love to acquire the knowledge and data to be able to market and sell to those on TikTok,” he said. “They have very deep benches of developers who could come in the next 12 months and work with TikTok on the data and development side.”

However, whether or not the rumours will see the light of day is debatable.

Obstacles to TikTok India’s sale

While US president Donald Trump threatened to ban TikTok in the country unless an American company buys it, India hasn’t explicitly proposed such a thing.

“…they will be buying a car without the key secret component—the engine.”

Also, the American deal ensures US data is held in the US but the proprietary technology is not up for grabs. The Chinese commerce ministry recently amended its export control rules to restrict the sale of several technologies to foreign players.

“The Chinese government has indicated it will block any export of TikTok’s AI systems, the technology that suggests videos to users,” said Irfan Khan, veteran influencer marketing expert and partner at Yaap Digital. “This means that if Reliance or any other consortium buys out Indian operations, they will be buying a car without the key secret component—the engine.”

Moreover, India’s border clash with its neighbour has not simmered down. Triggered by the Galwan Valley skirmish in mid-June, the Line of Actual Control (LAC) has been a site of rife military tensions over the last few months. In the aftermath, India’s apps ban targeted several of China’s revered publishers such as Alibaba, Tencent, and Baidu.

TikTok was especially controversial after a Reddit user reverse engineered it and warned of its much more intrusive user tracking compared to Instagram, Facebook, Twitter, and Reddit apps. “It’s like comparing a cup of water to the ocean—they just don’t compare,” he wrote. He also warned of predators on the platform pursuing young children. India had previously levied a temporary ban on TikTok over child pornography allegations.

Given all of these, a straight comeback of the app in India is unlikely—at least until the next few state elections said Varun Saxena, founder of Gurugram-based short-form video app Bolo Indya. “Post elections and geopolitical tension calming down, Tiktok may return with some stringent changes in their data security and transfer processes,” he said. “If Bytedance could ensure and prove that no data is being shared in any form with the government or the servers back there in China, there is always a possibility.”

Moving away from China

In the meantime, Chinese companies have been trying to revamp their image.

In July, TikTok began distancing itself from its Chinese roots and even mulling changes in its corporate structure. Recent reports suggest it is considering moving its headquarters to the US to allay concerns.

TikTok is not alone. Popular gaming app PUBG cut publishing ties with Tencent after India banned it earlier this month. Additionally, Tencent has been looking to make Singapore its Asia hub to appease India.

“Chinese companies have grown due to their innovation, aggression, and vision, exploiting the soft and liberal economic policies of most countries,” said Panjwani. “If such bans continue and more Chinese companies suffer loss of markets and erosion of value, perhaps the Chinese government will have no option but to progressively open up their markets for foreign companies.”

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