MUMBAI -- Having made little headway against the Indian government's ban on the TikTok short-video app, Chinese owner ByteDance appears to have decided to leave a market once among its largest.
ByteDance executives emailed more than 2,000 local employees in late January that most would be laid off. "While we don't know when we will make a comeback in India, we are confident in our resilience, and desire to do so in times to come," the executives wrote, according to the Press Trust of India.
The app is essentially withdrawing from India, a source familiar with the company told Nikkei. Employees were offered three months' salary and additional severance pay corresponding to years worked.
"We continually strive to make our apps comply with local laws and regulations and do our best to address any concerns they have," a TikTok spokesman in India said. "Despite our efforts, we have not been given a clear direction on how and when our apps could be reinstated ... We have no choice but to scale back the size of our workforce."
TikTok's short-form content meshed well with Indians, with the app's popularity soaring after its launch here in 2018. TikTok had about 167 million users in India as of June 2020 before the ban, according to RedSeer Management Consulting.
ByteDance set up offices in Bangalore, Mumbai and New Delhi and hired an army of locals to make the most of the boom. It aggressively sold advertising space to Indian companies and in 2019 announced plans to invest $1 billion in the market.
But the tide turned in June 2020, when the Ministry of Information Technology announced a ban on TikTok and 58 other mobile apps it deemed harmful to the "sovereignty and integrity of India." Citing the Information Technology Act, the ministry said it had received "many complaints from various sources" that the apps were "stealing and surreptitiously transmitting users' data in an unauthorized manner to servers which have locations outside India."
As a result, TikTok was removed from the Apple and Google app stores here. When those who already have the app try to play videos, a message says that TikTok is complying with the ban and that its top priority is protecting the privacy and safety of Indian users.
ByteDance has since made little progress in talks with the government to resume service. Local media in January reported that those 59 apps are now permanently banned in India, likely leading to the company's decision to pull the plug here.
India's stance on TikTok is fueled partly by the protracted standoff with China at their disputed Himalayan border, which resulted in their first deadly clash in nearly 45 years in June. The Indian government expanded its app blacklist in September and November, bringing the tally to 220.
Even if TikTok is eventually allowed back, more time offline will mean more lost ground to regain. TikTok used to account for 85% to 90% of total viewing time on video-sharing apps, according to RedSeer. But many similar apps have launched since the ban, drawing celebrities and other high-profile users.
ByteDance's Chinese version of TikTok, Douyin, has more than 600 million users. TikTok is one of the first Chinese-owned apps to have found widespread success overseas. India, along with the U.S., was one of its biggest markets out of the 100-plus countries where it is available. It is thought to have tens of millions of users in Japan and Europe as well. ByteDance is reportedly valued at up to $140 billion, according to CB Insights. SoftBank Group is among its investors.
But TikTok's political challenges are not limited to India. Recently departed U.S. President Donald Trump had threatened to shut the app down, and its future in the American market remains unclear. TikTok also halted service in Hong Kong after China imposed a sweeping national security law there last summer.