Should a Banned TikTok Benefit from Selling Indian User Data?

While hugely successful video-sharing app TikTok remains banned in India, tech giant Microsoft has shown intentions of purchasing the app from ByteDance. If the deal goes through, what happens to the Indian user data that the government has been trying to protect by banning TikTok?

Microsoft’s interest in pursuing a deal to buy TikTok’s presence in the US, Australia, Canada, and New Zealand has been reported by the Financial Times. The extent of this expanded interest remains unclear.

If the deal includes the portion that has been operating in India, what will it mean for India?

Speaking to The Tech Panda, Robinder Sachdev, President of Imagindia, says that India should ask questions about the valuation placed on the Indian user data that Microsoft will gain from TikTok.

India must inform Microsoft, and the US regulators who will approve the deal, that sale conditions must include and satisfy India’s concerns that TikTok is not selling or transferring any India-related data that it may have stored in servers in any of the deal-related countries

“This deal involves data of let’s say a hundred million Indians. That is value. Why should TikTok benefit from that value? The government of India has banned TikTok. The core question is, is TikTok benefiting in this valuation by the virtue of having users of India?” he asks.

Currently, Microsoft is showing interest in buying only the four country operations of TikTok, but what happens after six months or one year if the company decides to lap up the Indian operations too? What happens then if TikTok stays banned from India, but Microsoft wants to bring it back in the country, using the data that TikTok already had.

Read more: ‘Why are we walking blind into the next trap?’ Interview with Robinder Sachdev

Sachdev says Indian policymakers should look into and answer such questions.

“We have to be more aware about our data and who is using our data for what purposes,” he says.

Microsoft Gets Indian User Data

Much of the TikTok affair has been in the realm of public policy and been subject to public debate. Sachdev says that thus, India has the right to interfere in a deal between Microsoft and ByteDance.

“I think India is absolutely within its right to ask for it, that TikTok should declare in this deal it’s evaluation,” he says.

Is TikTok benefiting in this valuation by the virtue of having users of India?

“India must inform Microsoft, and the US regulators who will approve the deal, that sale conditions must include and satisfy India’s concerns that TikTok is not selling or transferring any India-related data that it may have stored in servers in any of the deal-related countries” he adds.

He goes on to say that Microsoft should take a no objection from India. If sufficient hurdles are in TikTok’s way, Microsoft will think once or twice before taking the deal.

“Because Microsoft should not want to land up in a position where the Indian government is probing it,” he says.

Who Owns the Data?

If Microsoft does decide to buyout TikTok from ByteDance, the valuation of these entities will be based upon the data that they will gain. This raises the question of ownership of that data as well as the valuation of that data, based of which TikTok becomes worth buying in the first place.

“The issue with Microsoft on this deal or with anyone with respect to TikTok, I would say fundamentally is the question about data and data rights. On the one hand, the government may say that we should not allow it, because of a possibility of data leakage or data spying. On the other hand, from an individual point of view, it’s a question of data rights,” Sachdev says.

The primary question is with respect to the valuation of TikTok for this deal with Microsoft, because end of the day, it’s all about data

TikTok’s response to the India ban has been a reiteration that it doesn’t share data of Indian users with China. However, in July, according to Bloomberg, TikTok has said that Indian users’ data is located in servers in Singapore.

“If yes, why should that data be allowed to be part of the valuation of the deal apart from the very basic fact that the collection of this data itself is wrong. It then leads to other questions, I would say. But the primary question is with respect to the valuation of TikTok for this deal with Microsoft, because end of the day, it’s all about data,” he says.

Read more: Triller Looks to Fill TikTok Gap in India

In buying TikTok, Microsoft is eyeing the data that will give them the ability to increase business, to continue creating new products, suggestions, and recommendations for other users or the same users, so that they can improve user stickiness. This is what makes up the value of the company.

Sachdev asks why should that value be based upon the data, which belongs to the citizens of India.

What Will the Valuation of TikTok be Based Upon?

According to CNBC, Microsoft is planning to finalize the acquisition talks with TikTok ahead of the 15^th September deadline. CNBC’s David Faber also reported that the deal could be worth between US$10 and US$30 billion. If the deal does come through, Microsoft has agreed to bring TikTok’s code from China to the US within a year.

If Microsoft is doing that, what is the value being assigned to the TikTok business? The value of a business like TikTok is based on the number of users they have

Sachdev asks what is constituting the value of TikTok.

“So Microsoft is buying for future cashflow, apart from other reasons. If Microsoft is doing that, what is the value being assigned to the TikTok business? The value of a business like TikTok is based on the number of users they have,” he says.

He adds that this user base will be at Microsoft’s disposal to use for future innovations like facial recognition and AI.

User Data is Power

As nations compete with one another in trade and business, governments have often raised questions or asked for information which is necessarily of interest. The European Union’s GDPR data compliance is an example, which addresses the transfer of personal data outside the EU and EEA areas.

The issue with Microsoft on this deal or with anyone with respect to TikTok, I would say fundamentally is the question about data and data rights

If India is serious about it, India can go and warn Microsoft or create some discomfort for the tech giant.

“I think it is up to India to articulate in this matter. And, then it is for ByteDance and Microsoft to listen” says Sachdev.

While the deal is stirring worldwide interest, questions arise as to how the Indian ban will figure in the future. Moreover, don’t the same apply to any of the apps and platforms we use? After all, the end usage is always data, which is putting absolute power into the hands of the app owner.