This week India’s government decided to ban 59 China-based apps, including popular social media platform TikTok. Based on national security fears, it’s the largest-ever ban of Chinese tech by a global democracy. It is also a clarion call for European and American startups, to enter one of the world’s fastest-growing markets.
The tech ban had its roots in the June killing of 20 Indian soldiers by their Chinese counterparts, in a Himalayan region bordering the two superstates. But in truth, Indian fears over Chinese state influence in tech was fomenting for years. In 2017, India’s Ministry of Defence ordered employees to uninstall 42 Chinese apps it believed to be hazardous.
New Delhi’s move this week is far more impactful. It reflects a growing global discomfort at Chinese startups “tech-washing” their nation’s increasingly woeful human-rights record. This week it has been revealed that China is sterilizing its minority Uyghur population, while sweeping security reforms have all-but destroyed Hong Kong’s independence from the mainland.
Furthermore, Chinese-based companies are mandated by law, to co-operate with state intelligence. The US and several European countries have already rejected 5G infrastructure work by Huawei. More cases will surely soon emerge.
India is a massive tech market. Home to 1.38 billion people – 375m of whom own a smartphone. It has more Internet users than the United States, and a tech-hungry middle class. Thanks in part to gigantic multinationals like InfoSys and Tech Mahindra, India exports $70bn in IT services, and $126bn total technology.
It is a massive opportunity – and China knows it. Thirteen of India’s 26 “unicorn” companies—private firms with a billion-dollar-plus valuation—are owned by Chinese tech brands like Tencent or Alibaba, or backed by Chinese venture capital. China’s tech outfits and VC spent a record $3.3bn in China last year. They provided a huge chunk of the record $14.5bn Indian tech startups raised (America invested $7bn).
So – any Indian strike on Chinese tech is likely to catch domestic companies in the crossfire. But imagine: if TikTok is banned from India, who can fill its shoes? Replicate this across dozens of software markets, and India is offering its user base up to Europe, the US and other Asian nations. This tech Cold War may have started on a mountainside. But it will lead to a battle on the plains of Europe, and the coasts of America. Watch this space.