(The author is a Reuters Breakingviews columnist. The opinions expressed are her own)

MUMBAI - TikTok’s salvage value appears to vary from place to place. Microsoft is in talks for the Chinese-owned short-video app’s assets in the United States, Canada, Australia and New Zealand, while social network Twitter is interested only in the U.S. division, Reuters reported on Sunday. India, the TikTok’s biggest market by users, is the neglected elephant in the room.

Microsoft has been showy about its commitment to the emerging market. The $1.6 trillion company’s Hyderabad-born boss, Satya Nadella, beamed in last year to the annual meeting of the $188 billion Mumbai-based Reliance Industries. The two firms announced a 10-year alliance that will see Reliance’s new data centres work with Microsoft’s Azure Cloud, amongst other things. For Twitter, like other foreign technology firms, India is widely estimated to be one of its biggest markets by users. The country accounted for 611 million TikTok downloads, or 30% of the total, according to SensorTower.

Practical issues might be one reason to hold back. Either buyer will have to convince sceptics in Washington that their deal will sever any backdoor links with the People’s Republic, and also make the same case to New Delhi, which slapped a ban on the app in June. In addition, Indian users are less valuable to advertisers than those in wealthier markets, and the need to support a long list of local languages raises operating challenges and costs. There’s the price tag too: the whole of TikTok might be worth over $24 billion, Breakingviews estimates. Any such sum would sorely strain Twitter’s balance sheet.

But there are political reasons to be reticent too. Prime Minister Narendra Modi’s government is championing a hazy concept of a “self-reliant” India, much like his Chinese counterpart Xi Jinping. That could imply future policy support for apps like Chingari, Mitron and Roposo, all of them homegrown TikTok-like alternatives; for ShareChat, which has raised money from Twitter and owns a video-sharing app called Moj; or for Reliance’s JioMeet video conferencing app, which is strikingly similar to Zoom, and free to boot.

India may not fully duplicate China’s template, which helped tech firms like Baidu and Tencent become giants by locking out overseas competition. But foreign buyers have reason to beware.

 

CONTEXT NEWS

- Twitter has approached TikTok's Chinese owner ByteDance to express interest in acquiring the U.S. operations of the video-sharing app, Reuters reported on Aug. 9 citing two people familiar with the matter.

- Microsoft said on Aug. 2 that its talks to purchase TikTok include its operations in the United States, Canada, Australia and New Zealand, adding that it may invite other U.S. investors to take a minority stake.

- Microsoft had not expressed interest in buying all of TikTok in its negotiations, a source familiar with the discussions told Reuters. That contradicted a report in the Financial Times on Aug. 6 stating that the deal might encompass the full global business of TikTok.

 

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own)

(Editing by Pete Sweeney and Sharon Lam) ((una.galani@thomsonreuters.com; Reuters Messaging: una.galani.thomsonreuters.com@reuters.net))