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Business model more difficult, not making TikTok-like apps, says Nandan Nilekani

Nandan Nilekani said that India is not a big advertising market like China and the US. He said that most apps do not make much money in India but are here for strategic reasons

twitter-logoBusinessToday.In | July 5, 2020 | Updated 10:05 IST
Business model more difficult, not making TikTok-like apps, says Nandan Nilekani
Nandan Nilekani talks about India's app ecosystem

Infosys co-founder Nandan Nilekani said that creating an app like TikTok is not a challenge but implementing a robust business model is. Nilekani said that India is still not a very big digital advertising market and apps such as TikTok are mostly dependent on advertising. His comments come days after the government announced a ban on 59 Chinese apps including popular options such as TikTok, UC Browser, Helo, Shein and more.

"We certainly can build our own TikTok and other apps in India. But the challenge here is slightly more difficult. You have to understand the business models of these applications. Like Facebook and Google, TikTok's main revenue comes from advertisements. And last year globally, ByteDance which owns TikTok, had $17 billion revenue with $3 billion in profit, essentially in China and the US," said Nilekani to India Today TV.

He said that India is not a big advertising market like China and the US. Nilekani stated that the total ad spending in India across mediums such as TV, print and digital is around $10-12 billion, out of which digital space accounts for $2-3 billion. "So, most of these products essentially in India don't make money. But they are here for strategic reasons because they want to build a large user base," he said. When apps garner a large user base, they can monetise it in the future. Apps continue their operations in countries like India by subsidising their revenue from other markets such as the US and China.

Nilekani pointed out that an app like WhatsApp might have 400 million users in India but they don't necessarily make a lot of money out of it. He said Indian products would not have the revenue from other countries to cross-subsidise. "I think it is little more than a technology issue. How do we create an advertisement-led product in India which is sustainable," he added.

Separately, on Saturday, the government launched the Atma Nirbhar Innovation App Challenge. PM Modi tasked tech entrepreneurs and startups to build a robust Indian apps ecosystem. The challenge has been divided into two tracks. Track 1 seeks to identify apps that are already being used and have the potential to scale up. Track 2 is meant to identify Indian start-ups, entrepreneurs, companies and encourage them with ideation,  incubation, prototyping and roll out of applications.

Also read: Atma Nirbhar Bharat App Innovation Challenge: PM Modi asks startups to build apps ecosystem

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