FB Pixel no scriptReliance may become TikTok's savior in India | KrASIA

Reliance may become TikTok’s savior in India

Written by Moulishree Srivastava Published on   3 mins read

Although Reliance has about 400 million telecom subscribers, its wide range of digital offerings do not have mass user appeal.

As ByteDance looks to save its popular short-video service TikTok that was banned in its biggest overseas market, India, late June, it is reportedly seeking investment from Reliance, the country’s largest company by market capitalization.

The USD 80-billion internet firm has been engaged with the Mumbai-headquartered company for “a financial backing” since late last month, said a report by TechCrunch, citing sources familiar with the matter. The two companies haven’t reached any deal on TikTok, whose India business is being valued at more than USD 3 billion, it added.

Owned by the world’s fourth-richest person Mukesh Ambani, Reliance is known to be on the right side of the Indian government and association with Ambani may get TikTok in the good books of the government.

Backing by the oil-to-retail conglomerate that is now eyeing to transform India’s digital landscape with Jio Platforms, can give TikTok a lease of life in the South Asian nation that ByteDance so desperately needs.

For TikTok, which claimed to have 200 million monthly active Indian users, India is a market it cannot afford to lose. The world’s second-most-populous country has been the biggest driver of TikTok installs, generating 611 million downloads till April.

This comes at a time when ByteDance has been in talks with Microsoft to sell TikTok’s operations in the US, Australia, Canada, and New Zealand. Micro-blogging giant Twitter has also expressed an interest in buying TikTok’s US operations.

If the deal with Reliance goes through, where Jio acquires a significant stake in TikTok India, analysts believe it would be a win-win for both the companies.


Read this: What does the potential USD 50 billion TikTok buyout deal mean?

“The potential deal would give ByteDance some kind of guarantee of access to the Indian market through its investment partner Reliance Jio,” Jayanth Kolla, founder and partner of Bengaluru based business consultancy firm Convergence Catalyst told KrASIA. “Thus it would become one of the few Chinese companies with some kind of active play in the Indian market.”

According to him, TikTok’s ban has created a big vacuum in the short-video market, “which various Indian companies are trying to fill and Reliance is the same.”

“It makes sense for Reliance to acquire a stake in the popular, original product as opposed to reinventing the wheel,” he added.

While Indian firms including Mitron, Chingari, Roposo, ShareChat, and MX Player, among others, are trying to capture the market after the ban on TikTok, global tech giant Facebook is also making a go at it with Instagram’s Reels.

Analysts feel TikTok can pave a way for Reliance Jio to capture users’ attention. Although Reliance has about 400 million telecom subscribers, its wide range of digital offerings do not have mass user appeal. Apart from its music streaming service JioSaavn, none of its digital services has been a huge success.

“It would also strengthen the positioning of Reliance Jio’s digital products in the Indian market,” Kolla added.

Kolla said the move would align with the global trend of ‘splinternet’–where the internet is being broken into various geographical regions. Of late, there have been talks about four versions of the internet–the US version, the European Union version, the China version, and the India version, which is likely to be led by Reliance Jio, Kolla explained.

“TikTok’s global operations are being broken geographically such as in the US, Australia and the rest of the world, which two of the world’s biggest tech companies, Microsoft and Twitter, are looking to acquire,” he said. “TikTok’s India operations can be taken up by Reliance Jio. And this would be in alignment with the bigger trend of breaking the internet.”

Sanchit Vir Gogia, founder and chief executive of technology research and advisory firm Greyhound Research, said in a tweet thread that ByteDance may be forced to sell TikTok’s India operations to a player like Reliance Jio that has both the money and the subscriber base.

“What is interesting to note that TikTok has investments from General Atlantic and KKR, both of which have invested in JioPlatforms,” he said, adding, this would mean Reliance Jio would invest in its strategic investor, Facebook-owned Instagram Reels’ rival.


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