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SAN FRANCISCO – Facebook on Tuesday made its largest single investment by putting $ 5.7 billion on Jio Platforms in India, a huge gamble in the developing market and a sign of how big tech companies are making progress in the pandemic.
Jio Platforms is a subsidiary of Reliance Industries, one of the largest multinational companies in India and a major provider of cellular and internet services in the country. The investment, which requires approval from competition regulators, would give Facebook a 9.99 percent stake in Jio Platforms, Jio said.
Facebook said the move indicated its commitment to India. More than 388 million people in India have connected to the Internet in the past four years through Jio, Facebook said.
“The country is in the midst of a huge digital transformation, and organizations like Jio have played a major role in connecting hundreds of millions of Indians and small businesses online,” said Mark Zuckerberg, Facebook’s chief executive officer, in a post. on his Facebook. page announcing the deal. “With communities across the globe locked in, many of these entrepreneurs need digital tools they can trust to find and communicate with customers and grow their businesses.”
Facebook is moving forward with strategic investments at a fragile time in the global economy. Although many companies have been affected by the consequences of In the coronavirus pandemic, large technology companies are in a position to benefit in the long term as more people turn to their services while taking refuge indoors. Companies like Apple, Alphabet and Facebook have the financial strength to overcome a difficult period.
Facebook sees many opportunities with Jio. India is a great market for Facebook; more than 400 million people in the country use WhatsApp, its global messaging service, while more than 300 million people use the company’s central social network.
Historically, Facebook has not made as much money from every user in Asia as it does elsewhere. But the company hinted that the new partnership could change that. WhatsApp has worked for years to create tools for small businesses and has dabbled in payment systems, while Facebook has also invested in creating digital storefronts for entrepreneurs to sell goods and services online.
“By bringing JioMart, Jio’s small business initiative, together with WhatsApp, we can enable people to connect with businesses, buy and ultimately buy products in a seamless mobile experience,” he said. a statement from David Fischer, director of revenue for Facebook, and Ajit Mohan, managing director of Facebook in India.
In a joint interview with a senior Reliance executive, Mr. Mohan said that tens of millions of small businesses in India are already using WhatsApp to communicate. “How do we help them access customers and help people discover products?” he said, adding that Jio offered a way to communicate with them.
Jio has partnered with other American technology companies like Microsoft to offer an enhanced suite of services to small businesses. Its current offerings include high-speed Internet, cloud storage, payments, and even products from its extensive retail supply chain.
This is not Facebook’s first foray into the Indian market. Several years ago, he tried to offer free Internet connectivity to Indian users in a program called Free Basics. But that initiative hit inconvenience after inconvenience until It was banned in the country in 2016. Regulators decided that companies could not offer free internet services that favored some companies over others.
More recently, Facebook has disagreed with the Indian government over WhatsApp. The government has demanded that WhatsApp change its encryption to track messages to their source, which WhatsApp has refused to do. At the same time, regulators have repeatedly paralyzed WhatsApp’s request to offer a payment service to their Indian users.
Jio was founded by Mukesh Ambani, an industrialist who is the richest man in India. It transformed the Indian tech scene when it hit the market in 2016 by offering free calls and ultra-cheap 4G data to Indians who were previously stuck with high prices and slower 3G connections from existing operators.
Since then, Jio has become the largest operator in India by number of subscribers, with almost 400 million lines. It has helped drive India’s mobile Internet costs to the lowest in the world, with virtually unlimited data and calls costing just a few dollars a month. The price war that started has also hurt Indian telecommunications companies, leading many to bankruptcy.
Jio has the ambition to take on Amazon in e-commerce, manage data centers, provide fiber Internet to homes and businesses, and establish new services like tele-health and distance education.
But Mr. Ambani took on a huge debt to build the telecommunications business. Those costs have been subsidized by other parts of Reliance Industries, which is also India’s largest retailer, its largest polyester producer and one of its largest energy companies.
Facebook’s money will help Reliance reduce some of that debt and invest more in its network, which it must do after regulators delayed the approval of a high profile. $ 15 billion agreement to sell 25 percent of its energy business to the Saudis.
Mr. Ambani has also been the most powerful corporate voice urging regulators to take India’s first approach that favors local companies and hinders foreign companies like Facebook and Amazon. He has argued that the large amount of data collected by such companies should remain in India and be controlled by Indians.
In the joint interview, Anshuman Thakur, Jio’s chief strategy officer, and Mr. Mohan said that companies have different perspectives on some issues, but that won’t stop them from working together in other areas.
“We will collaborate on some,” said Mr. Mohan. “We will compete in many.”
Facebook’s investment can help turn India’s battered telecommunications sector into a duopoly. A recent Supreme Court decision ordering older operators to pay billions of dollars in back taxes has left the industry in dire financial straits, and one of the top three operators, Vodafone Idea, is on the verge of insolvency.
