As TikTok faces US scrutiny, Chinese apps continue to grow in America

As TikTok faces US scrutiny, Chinese apps continue to grow in America

The PlayerUnknown’s Battlegrounds (PUBG) game is displayed on a Samsung Electronics Co. Galaxy S9 Plus smartphone in an arranged photograph in Hong Kong, China, on Sunday, March 24, 2019. PUBG is a Hunger Games-style competition where 100 players face off with machine guns and assault rifles until only one is left standing.

Justin Chin | Bloomberg | Getty Images

Chinese-developed apps are making hundreds of millions of dollars from American consumers. It highlights how some of China’s biggest firms are expanding internationally, even as its technology faces increased scrutiny in the U.S.

In the third quarter of 2019, apps developed by Chinese firms or by companies with large Chinese investors, accounted for around $745 million in users spending in the U.S., according to data compiled by Sensor Tower for CNBC. The revenue brought in by Chinese apps accounted for 22% of the $3.43 billion spent in the top 100 apps overall.

The mobile app research firm only looked at the top 100 grossing apps in Apple’s App Store and Google Play Store. There were 25 Chinese apps in the top 100 grossing list — up from 21 in the third quarter of 2018.

The user spending figure was up over 65% year-on-year in the third quarter. And the overall percentage of user spending captured by Chinese apps rose too.

Chinese apps have continued to rake in revenue from American users despite the ongoing trade war between the U.S. and China.

Scrutiny on Chinese technology has increased.

Earlier this year, telecommunications equipment maker Huawei was put on a U.S. blacklist which restricts the Chinese company’s access to U.S. technology. Washington holds the view that Huawei presents a national security risk because its networking gear could be used by Beijing for espionage. Huawei denies those allegations.

I think most U.S. users have no clue that these games are made or owned by Chinese companies.

Serkan Toto

CEO of Kantan Games

Meanwhile, a U.S. regulatory committee contacted Bytedance over concerns that its 2017 acquisition of another app, Musical.ly, could be a national security risk, a person familiar with the situation told CNBC. Bytedance is the parent company of popular social media app TikTok.

The 25 apps in the top 100 grossing list are mainly games developed by technology firms like Tencent and Giant. The number one Chinese app in the list is “PlayerUnknown’s Battlegrounds,” or “PUBG Mobile.” Tencent makes the iOS and Android version of the game. South Korean firm Bluehole made the original and other versions of the game for consoles and PC.

Serkan Toto, CEO of games industry consultancy, Kantan Games said American users are likely unaware that the apps they are using are from Chinese developers.

“I think most U.S. users have no clue that these games are made or owned by Chinese companies,” Toto told CNBC.

Despite concerns from Washington over Chinese access to U.S. data, Toto said American consumers are unlikely to worry.

“I think the average user in the U.S. doesn’t care about that,” he said.

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