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Sea's Free Fire among apps India bans on China security fear

·3-min read

India accounted for 2.6% of Sea’s 2021 mobile-game net sales

India has banned 54 apps it says are of Chinese origin, including Sea’s marquee game Free Fire, citing security concerns, people with knowledge of the matter said, the latest instance of tensions between the two neighbours locked in a protracted border dispute.

Sea’s stock sank more than 9% in pre-market trading in New York. The apps banned by the South Asian nation’s Ministry of Electronics and Information Technology include those belonging to large China tech firms such as Tencent, Alibaba and NetEase, and are re-branded versions of apps already banned by India in 2020, the people said asking not to be identified citing rules on speaking to the media.

Sea -- founded in Singapore by Chinese-born founders who became Singaporean citizens -- has been focusing on building a gaming and e-commerce business globally with early backing from Tencent, the largest shareholder of the company. Sea did not immediately respond to requests for comment on the ban on the game Free Fire - Illuminate.

Free Fire, the battle royale shooter often compared with PUBG, is among the world’s most popular mobile games with more than a billion downloads on Google Play. The title has underpinned the phenomenal growth of Singapore-based Sea, Southeast Asia’s most valuable company, and its expansion into markets from Brazil to India.

The game was the highest grossing mobile game in India in the third quarter of 2021, according to industry tracker App Annie. While a surprise, the ban shouldn’t impact the company heavily given the Asian country accounted for just under 3% of Sea’s overall mobile-gaming net sales in 2021, Bloomberg Intelligence wrote, citing Sensor Tower estimates.

India’s banning of 54 apps it says are of Chinese origin, including Garena’s marquee game Free Fire, looks like doing little damage to parent Sea given its small India revenue exposure. The country accounted for 2.6% of Sea’s 2021 mobile-game net sales, according to Sensor Tower data. Krafton managed to grow its worldwide mobile gaming sales in 2021 even though India banned its flagship PUBG game in 2020; the company launched a new game to get around the prohibition on Chinese-made apps.

While Tencent is Sea’s largest shareholder, it’s adopted much the same hands-off approach it takes with other investees in China. In January, the WeChat operator revealed it was cutting its stake in Sea to 18.7% from 21.3%, while taking its voting rights eventually to under 10%.

A spokesman for India’s Home Affairs ministry did not immediately comment on the matter. A Ministry of Electronics and Information Technology spokesperson declined to comment on the issue.

The latest move comes as a long-running dispute between the two nuclear-armed nations remains unresolved, after boiling over in a bloody 2020 skirmish that left soldiers from both sides dead, and drew tougher laws in India for investments from China, including the original app ban.

India and China share an unmarked 3,488 km (2,170 miles) long border along the Himalayas, where thousands of troops, tanks and artillery guns from both countries have been massed since then. Tensions remain between the two countries remain, with India’s army chief citing the risk of Chinese aggression as recently as last month.

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