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

Short video app TikTok extends reach in global markets

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

Video-sharing platform TikTok – on which 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.

Indian court lifts ban on TikTok video app in victory for China’s Bytedance

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”.

How China’s TikTok app became known all over the world

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.

“(About) 25 per cent of that will be just content moderation, which means there is full-time moderation staff based in India,” Lersch said.

In February, ByteDance agreed to pay a US$5.7 million fine to the Federal Trade Commission in the US over TikTok’s illegal collection of personal information from children.

That fine represented the largest penalty handed down in a children’s privacy investigation, according to the commission. It said TikTok, which had merged with Musical.ly in August last year after the karaoke app was acquired by ByteDance, failed to obtain parental consent from users under the age of 13 based on the country’s Children’s Online Privacy Protection Act.

TikTok to pay US$5.7 million fine over US child privacy violation claims

A statement from TikTok at that time expressed commitment to “creating measures” that will protect users, including tools for parents to safeguard their kids’ information.

In July last year, authorities in Indonesia banned TikTok for containing “pornography, inappropriate content and blasphemy”.

That ban, however, was lifted a week later after TikTok agreed to remove “all negative content” from the app and open an office in Indonesia, home to the world’s largest Muslim population, according to the country’s Ministry of Communication and Information Technology.

“It would have been easy for ByteDance to resolve these international teething problems by obtaining good local legal advice in advance,” Pinsent Masons’ Haswell said. “Any company, no matter where it is based, has to properly research any new market it wants to develop.”

The legal minefields TikTok must steer clear of outside China have put more pressure on ByteDance, as growth slows in its home market. The company relies mostly on advertising generated from its core content business.

ByteDance barely met its 2018 revenue target of 50 billion yuan (US$7.4 billion) to 55 billion yuan after a sharper-than-projected slowdown in advertising growth dampened by the country’s deteriorating economy, according to a Bloomberg report in January.

TikTok, however, has greatly extended ByteDance’s reach and helped it raise more financing. The six-year-old company secured a US$75 billion valuation in its most recent fundraising round, vaulting it past Uber Technologies in the global unicorn rankings, after attracting backing from well-heeled investors led by SoftBank Group Corp, KKR & Co and General Atlantic.

Chinese authorities have also introduced tighter regulations covering the country’s thriving short video industry, singling out 100 categories of banned content, from smearing the image of Communist Party leaders to sexual moaning.

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The crackdown is expected to increase the workload of short-video sharing services providers, such as ByteDance, as they are now required to shoulder more responsibility for content censorship on their platforms.

Founded by Chinese entrepreneur Zhang Yiming, ByteDance has evolved into a multifaceted content empire spanning Tik Tok and other platforms for news, humour to celebrity gossip.

Despite its international missteps, ByteDance is not the only Chinese technology company encountering tough challenges outside the world’s second largest economy, according to Haswell.

On the flip side, many Western companies have had challenges breaking into China, he said. “It’s all down to making sure that you do the research before acting in a foreign market.”