How Chinese apps ended Facebook’s monopoly in India

Chinese apps took the lead in India—the largest emerging market—in under five years

facebook-tiktok In 2015, WhatsApp, (Facebook) Messenger and Facebook were the top three non-gaming apps the Indians downloaded

Spend $2,000, earn $50,000! This is not the tagline of a ponzi scam. Not even close. Those four words summarise the testimony of a Twitter user who appears to be running a business on Shopify. He began sending free products to anyone who had more than 5,000 followers on TikTok about three months ago, with no compulsion for product reviews. 

On Thursday, one of those TikTok users made a review video that got over two million views. A day later, the business clocked in sales worth $50,000. The whole exercise cost the business owner only about $2,000.    

While the Twitter user shared the incident as a marketing pro-tip, the amazing influential power that TikTok and similar social media apps wield is quite thought-provoking. 

A decade ago, it was close to unthinkable for Indians to find an alternative to Facebook. A ‘Made in India’ or ‘Made in China’ social media app was not even considered a viable business idea to begin with, given the monopoly of Western giants such as Facebook, Google and Twitter. 

Fast forward to 2020: A multitude of social media apps from China such as TikTok, Helo, Vigo and Kwai have conquered the vernacular space, becoming giant-killers in the process. 

According to a detailed analysis by MacroPolo, the in-house think tank of the Paulson Institute, Chinese apps have taken the lead in India—the largest emerging market—in under five years. In 2015, Chinese apps accounted for only 23.9 per cent of the total apps downloaded in India, while the US share, led by Facebook, WhatsApp and Facebook Messenger, accounted for 61.6 per cent in the top 10 non-gaming downloads category. 

However, by 2019, there was a complete role reversal with the Chinese apps dominating 60.5 per cent of the downloads while the US share plummeted to 31 per cent. Meanwhile, the Indian app share fell from 14.3 per cent in 2015 to 8.4 per cent in 2019, despite millions of users making their debut on the internet. 

In 2015, WhatsApp, (Facebook) Messenger and Facebook—all three from the US—were the top three non-gaming apps the Indians downloaded. However, by 2019, the TikTok (including and Likee (formerly LIKE Video)—both Chinese apps—replaced Facebook and its messenger app among the top three. WhatsApp, which was the table topper in 2015, was pushed to the second position by TikTok. 

A key takeaway from the Macropolo analysis was that while the US domination is heavily reliant on one company—Facebook, the Chinese, on the other hand, is less dependent on a single company. While TikTok's owner Bytedance was responsible for around 40 per cent of the Chinese market share, Alibaba’s two apps—UC Browser and Vmate—also command significant market share. 

How did the popular Chinese apps outrun Facebook in India? By capturing the vernacular language market. 

To understand the growth of these Chinese apps in India, one must look across the border to China. The Chinese Communist Party ensured that there was no space for the likes of Google and other Western technology companies on their land. Yet, the Chinese proved more technologically advanced than even the US—their social media game began back in the 1990s. According to a McKinsey report, Chinese users were able to embed multimedia content in social media more than 18 months before Twitter users could do so in the United States. 

Invasion from the north 

In the early 2010s, the Chinese social media landscape was more or less saturated with the likes of Sina Weibo, Renren and Kaixin001. Having conquered the largest population of internet users, the Chinese then turned to the second-largest market—India. 

Facebook, Reddit, WhatsApp, Twitter—the social media needs of Indian users were mostly confined to these around 2014. Users were predominantly from metros. English content attracted the first 200 million people online in India. However, internet users in the country-side were growing at a much faster pace, beyond the borders of the cities to towns and villages. 

The next million dollar opportunity, however, came with a linguistic challenge. From English speaking users the target now shifted base to non-English speaking, first-time internet users. As a result, by 2015 there were a host of startups in the country who were focused on developing technologies to create content in India's vernacular languages.

Among the tech giants who identified the vernacular, voice and video trends, it was the Chinese who grabbed the opportunity and surprised the world with their short-format video mobile apps. Having closely witnessed the growth of a similar content market in Mandarin, the Chinese players gatecrashed India with apps that offered entertainment, user-generated videos and news for a heterogeneous audience that preferred to consume quality content in their native language. 

Soon, TikTok, a video-sharing social networking service owned by ByteDance, emerged as a trendsetter. “TikTok used a challenger strategy and it focused where the leaders didn’t. TikTok reached out to the masses and strategically focused on tier 2 -3 towns. And in fact, the users of TikTok are more skewed towards low-earning individuals.  Compared to Vine (another video hosting platform), TikTok gave people a platform where there was less effort required to express and share the content. It cracked the perfect formula of video and vernacular content,” says Anjali Malthankar, National Strategy Director, Tonic Worldwide, an independent digital marketing agency. 

The Chinese players’  biggest success is that they have given equal weight to their content strategy as to their product and tech strategy. “They created internal teams for content curation for each vernacular language and built a mature ecosystem of micro content-creators across villages and small towns, who churned out short-format videos that appealed to the sensibilities of Bharat,” notes Vikrant Khanna, co-founder of Mogi App, a video delivery SaaS platform.

The Chinese apps also tasted success in India as they figured out the significance of cross-platform content proliferation. This has reflected in their content strategy on Helo. For instance, "Good Morning" and "Chai Pi Lo" posts became huge hits on WhatsApp.

Local players

According to a report by KPMG, Indian language internet users are expected to grow to 536 million by 2021 from 234 million in 2016. Nine of 10 internet users in India are likely to be Indian language users. Such is the potential of the market in the country. 

Despite Chinese dominance, Indian players have neither quit nor surrendered. Desi apps like ShareChat and DailyHunt have recorded steady growth. According to a Business Standard report, the two apps were “toggling between 25-30 million active monthly users” as of 2019-end. 

Content regulation and moderation

Like most matters in the digital space, the proliferation of vernacular social media comes with its own challenges and dangers. While banning the 59 apps with Chinese links, the Ministry of Electronics & Information Technology stated that the apps were allegedly engaged in "activities which are prejudicial to sovereignty and integrity of India, defence of India, security of state and public order.” 

It is no secret that these companies capture huge troves of data to produce content that generates traction and popularity. However, there is little regulation or safeguard for such data. 

The foremost of all issues is how these apps handle personal data, especially when it comes to children. Last year, TikTok faced investigation in the UK for allegedly violating the general data protection regulation (GDPR) which “requires the company to provide different services and different protections for children,” reported The Guardian.  

On a number of occasions, at least a few of the vernacular content apps in India were also accused of promoting ultra content, especially child pornography in India.  

The lack of data protection has wider security implications, too. According to a report by The New York Times, the US government has initiated a national security review of TikTok because it suspects that the app was sending user information and other data to China. 

Such matters are a nightmare in India because the country is yet to have a data protection law. 

At the same time, laws are effective only in a society where there are informed users. So, the primary need is for proactive education and timely reminders to users about the responsibility they hold in making their social network safe for all. 

As blogger Bharath Shanker notes in a Medium post, prevention is better than cure. “Every new user who signs up must be made aware of what is acceptable and not acceptable on the platform and educated about the availability of options to report and block. This education is extremely crucial to new vernacular language users who might be more vulnerable to platform abuse than the first set of users on Facebook/Twitter/Instagram.” 

Organisations should do well to take cognisance of this and work on strengthening data privacy by putting on an end-user lens rather than a regulatory lens. 

Now, with the apps facing ban in India, many content creators are migrating to YouTube and Instagram. But will Alphabet and Facebook gain from China’s loss? It is still too early to say.