India binned made-in-Singapore app in latest round of China bans
Stock market wipeout followed, so island nation's government has complained
Updated India's latest round of bans on Chinese apps has taken down a Singaporean company's apps – and share price – reportedly leaving government officials asking some pointed questions.
India has banned hundreds of apps the government alleges are controlled by Chinese companies, send data to China, or use infrastructure located in China. A new round of bans, announced on February 14, listed 54 more apps on grounds they endangered users' privacy by sending data to servers in China.
Some of those apps are owned and operated by Singaporean company SEA, which on the day of the new bans warned players of the popular game "Free Fire" that the software had been pulled by Indian app stores.
In a refreshingly brief canned statement, the company offered the following:
We are aware that Free Fire is currently unavailable in the Google Play and iOS app stores in India and that the game is currently not operable for some users in the country. We are working to address this situation, and we apologize to our users for any inconvenience.
SEA also makes a popular shopping app named Shopee, which does a healthy trade in India. Market reports from the likes of Sensor Tower claimed Shopee was the second most downloaded app in India for the month of January – lagging only behind homegrown Indian e-commerce company Meesho. It was also recently named a notorious market rife with counterfeit kit by the Office of the US Trade Representative.
Investors appear to have been alarmed by the ban on Free Fire and the prospect of similar action againt Shopee because SEA shares plunged after the ban was announced, wiping out up to $16 billion of market capitalisation.
SEA responded by denying entanglements wiht China, telling Reuters "We do not transfer to, or store any data of our Indian users in, China," adding that it is a Singapore company and complies with Indian law.
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But SEA does have one big link to the Middle Kingdom: Chinese web giant Tencent has a stake in the company. Tencent did recently sell a chunk of its shares, to reduce its holding from 31.3 per cent to 18.7 per cent of stock, and voting power below ten per cent.
Late last week Reuters returned to the ban of Free Fire, reporting that Singapore's government has been in touch with Indian officials to complain about the ban, seeing as SEA is Singaporean.
SEA's share price bounced on the news.
But government intervention may not be the only reason for the rise. SEA's stock fell steadily from October 19 2021 until last Friday, going from an all-time closing high of almost $370 that day in October to $120 on February 23. Some analysts suggest that fall was a correction, and recent rises represent a rebound.
Whatever the cause of the share price increase, investors who got in early still have a net gain of almost 300 per cent since the start of 2020, when SEA's scrip cost $40.49 apiece.
At the time of writing, Free Fire remains banned in India, but Shopee is still available – and presumably hoping its model of free delivery and free service to sellers, enabled by ad sales, keeps it ahead of the many other domestic and international players targeting India's e-commerce market. ®
Update, 04:30 AM, March 2nd : A spokesperson from Singapore's Ministry of Trade and Industry has responded to our inquiries, as follows:
"Free Fire" is a gaming app owned by Sea Ltd, a leading technology company founded and headquartered in Singapore. We hope that this matter can be resolved expeditiously.