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ByteDance, the Chinese hectacorn, has been looking to re-enter the Indian market and the move has caused the government to scrutinise the same. New Delhi remains concerned over the Chinese internet giant’s ability to harvest user data using artificial intelligence (AI), posing a security risk.

A government official was cited in an ET report as stating, “The problem with ByteDance is not just data and who stores it. It is their AI algorithm. There has to be some sort of algorithmic accountability. Because this is not just about data privacy. It is about what they are doing with the data even if they are not exporting it.”

Earlier in June, reports had emerged that the Chinese internet major is looking to enter the Indian market again. Hiranandani Group, which runs the data centres company Yotta, is in talks with ByteDance to licence its technology to launch a TikTok-like short video app in India.

Importantly, a partnership with Hiranandani Group allows ByteDance to store Indian users’ data in India, which allows the Chinese company to become compliant with India’s latest IT regulations.

TikTok, once the most popular short video app in India, was banned in 2020 following a deadly clash with Chinese forces in Galwan Valley. The altercation resulted in multiple casualties on both sides and prompted the government to ban 59 Chinese apps, including ByteDance’s TikTok.

New Delhi has since then banned a total of 277 Chinese apps citing national security as a primary reason. However, ByteDance’s move is set to meet intense scrutiny from the government.

Yesterday (July 28), Battlegrounds Mobile India, a rehashed version of the banned mobile game PUBG Mobile, was taken down from the Google Play Store and Apple App Store in India following an order from the government.

To add some more context, Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said in the Rajya Sabha that the government is monitoring banned Chinese apps making a comeback in the country.

Amid all this, ByteDance has been selling the stake it holds in Indian companies. In early June, the Chinese internet major sold its stake in VerSe Innovations, the parent company of DailyHunt and Josh, at a discount of 56%.

Details On The ByteDance-Hiranandani Partnership

A second government official was cited as saying, “From what we know, ByteDance will license its technology to Hiranandani in return for a fee, which will launch the app in India. They will also ensure that all the data is stored in India. The government may also be given access to a mechanism to routinely do audits of the safety of data.”

The newly-formed entity will likely be headquartered in Mumbai and is already looking for senior leadership. ByteDance has also rehired some of its previous leadership in India. Both parties involved are now working to ensure total compliance with the government’s latest norms.

However, even though ByteDance successfully makes a second debut in India, Indian startups will prove to be tough competition. The likes of Moj and MX TakaTak (the two merged earlier this year) have filled the gap left by TikTok, having taken over 97% of TikTok’s user base by early 2021.

Any TikTok-like entity will further face competition from Meta’s Instagram Reels and YouTube’s YouTube shorts.