The recently renewed ban on Chinese apps including Beijing Byte Dance Telecommunications Co. Ltd.'s TikTok in India will boost Instagram LLC and YouTube LLC's reach in the country as users prefer the U.S. platforms to homegrown alternatives, analysts said.
India's Ministry of Electronics and Information Technology permanently blocked access to short-video platform TikTok and 58 other Chinese apps over alleged security concerns, local publication Mint reported Jan. 25. The Indian government first restricted access to the apps in June 2020.
With the TikTok ban here to stay, users in so-called tier 1 cities in India — densely populated areas such as Delhi and Mumbai — will likely flock to platforms with an established user base and similar short-video formats like Facebook Inc.'s Instagram and Google LLC-owned YouTube, analysts said.
"People will not miss TikTok in India; they will simply shift to Instagram where the 'Reels' function will allow them to have a similar look and feel," Pranav Bhavsar, CEO and founder of ASA Capital, said.
Instagram tested Reels in India in July 2020, shortly after the TikTok ban was first announced. Similar to the ByteDance-owned app, it allows users to upload 15-second videos with popular songs and offers a set of editing tools to encourage creative content. India was among the first four countries where the feature was launched, according to a TechCrunch report.
In the more rural parts of India, YouTube will be the biggest beneficiary of the TikTok ban, Jayanth Kolla, Convergence Catalyst founder, said.
"YouTube will benefit from this TikTok ban as the other replacement apps in India are not as popular nor do they have the brand reach in tier 2 and tier 3 markets," Kolla said.
As of May 2020, YouTube had an estimated 325 million monthly unique users in India, according to a Comscore report. Its 2,500 creator channels reached over one million subscribers in the country, resulting in a 45% year-over-year growth in overall watch-time in July, according to The Economic Times (India).
The 59 banned apps recorded around 4.9 billion downloads in India since January 2014, Sensor Tower's Craig Chapple, mobile insights strategist for EMEA told S&P Global Market Intelligence. Further, in the second quarter of 2020, the 59 apps had seen about 330 million installs from India's App Store and Google Play.
The analysts said local versions of TikTok may be appealing at first, but do not have the same stickiness as U.S. competitors.
"The problem with local versions is that their software seems very buggy. This is largely because India's research and expenditure is not as sizable as its American peers," Bhavsar said. He cited the homegrown version of WhatsApp Inc., Hike Messenger, as a prime example of a local product that failed to take off.
Kavin Bharti Mittal, CEO of Hike Messenger, said in a Jan. 6 tweet he was "sunsetting" the app, later rebranded as StickerChat. "India won't have its own messenger. Global network effects are too strong (unless India bans Western companies)," he said in a later tweet.
Other apps that were blocked in India on June 29, 2020, include Tencent Holdings Ltd.'s WeChat and QQ Music, Alibaba Group Holding Ltd.'s UC Browser, Xiaomi Corp.'s Mi Community and Video Call, Baidu Inc.'s Baidu Translate and Baidu Maps.
India also banned 47 apps that are operating as clones or variants of the permanently blocked apps. Another further 43 apps were blocked in the country in November 2020.