Bytedance faces global learning curve as TikTok runs afoul of local regulators

Bytedance, the world’s most valuable startup, is facing a steep learning curve on its international expansion, as its popular short-video app TikTok gets embroiled in regulatory issues in different overseas markets.

TikTok, known as Douyin in mainland China, has become one of the most downloaded apps worldwide since it was launched in 2016. But that rapid growth has been marred by recent problems with regulators in Indonesia, the US, and India.

“Those problems suggest a lack of investment in local intelligence and local legal advice on the part of Bytedance,” said Paul Haswell, a partner who advises tech companies at international law firm Pinsent Masons.

“With TikTok, Bytedance is learning the hard way about potential penalties if local laws and regulations are not properly researched and followed.”

Making a TikTok video / Photo credit: Riva Quenery

A Bytedance spokeswoman declined further comment on the company’s recent legal issues.

TikTok – where users can watch as well as create short videos with music, stickers, and animation as special effects – faced its most adverse regulatory issue in India, a market where the app was estimated by Bytedance to have more than 120 million registered users.

A court in southern India’s Tamil Nadu ordered the federal government on April 3 to ban downloads of TikTok, which it said encouraged pornography. The prohibition did not affect those who had already downloaded the app in India.

Apple and Google removed TikTok from their online app stores in India, following a directive from the country’s Ministry of Electronics and Information Technology.

That ban resulted in financial losses of up US$500,000 a day and put more than 250 jobs at risk, according to a filing by Beijing-based Bytedance that was reported by Reuters early last week.

Two months before that legal hurdle, the Bytedance app was already the focus of unwanted publicity. A youngster in Tamil Nadu was accused of murdering a friend over a video uploaded to TikTok.

The same Indian state court, however, last week reversed its earlier ruling after a hearing with Bytedance. A senior government official, cited in a Reuters report on April 25, said the electronics and information technology ministry would ask Apple and Google to allow TikTok to return on their app stores once it received the court’s order.

Following the lifting of that ban, TikTok said in a blog post that it will offer “a full suite of 13 advanced safety features, which are designed to protect our Indian users.”

Helena Lersch, public policy director at Bytedance International, had earlier said the company planned to invest US$1 billion in India and increase the number of staff in the country to 1,000 by the end of this year, according to a report by The Indian Express.