[ad_1]
With its investment of Rs 43.574 crore, Facebook is now Reliance Jio’s largest minority shareholder. This was accompanied by a pact between WhatsApp and Reliance Retail to promote the latter’s JioMart platform. In July 2019, Facebook invested in Meesho, an Indian social commerce company that connects buyers and sellers on social media. Similarly, the plan with JioMart focuses on connecting Kirana stores to customers.
This investment gives Jio easier access to hundreds of millions of users on WhatsApp, Facebook and Instagram, financial and technological muscle, and a better balance.
For Facebook, it means access to over 370 million subscribers to Jio, a partnership with one of India’s largest technology companies with a game in telecommunications infrastructure and services, cloud storage (JioCloud), digital entertainment (JioTV and Jio Cinema), payments (MyJio), communication (JioChat), cybersecurity (JioSecurity), e-commerce (JioMart), healthcare technology (JioHealth-Hub) and IoT (JioMotive for smart car connectivity), and the opportunity to launch new products (eg Lasso) through Jio’s vast network of customers.
A strategic partnership with India’s largest telecom operator will also be key to Facebook’s future technology moves, particularly in virtual reality (VR) and the Internet of Things (IoT), the success of which will depend on access to 5G. Jio has reportedly developed his own end-to-end 5G technology and has requested approval from the Indian Telecommunications Authority (Trai) for 5G testing.
Facebook has previously partnered with a telecommunications provider in Japan to provide augmented reality (AR) / VR based products using 5G networks. It also executes the “Telecommunications Infrastructure Project”, which aims to create open source telecommunications equipment to promote affordable telecommunications infrastructure in poorly connected areas. Some member companies have expressed concern about the project’s potential to make Facebook a powerful telecommunications player.
Telecom is heavily regulated in India. As such, this investment in Jio Platforms can give Facebook access to the 5G technology and telecommunications infrastructure it needs, while being sufficiently insulated from the scrutiny and regulatory compliance that goes with it.
This investment in Jio is Facebook’s third in India, after Meesho and Little Eye, a new build analytics tool for mobile app developers. The link, as the Facebook press release says about the Jio deal, is presented as the company that invests in India’s future. This is helped by the perception of Reliance Jio as the “poster-child” for the “swadeshi” digital movement in the country. Reliance Industries Ltd (RIL) President Mukesh Ambani spoke about the need for data sovereignty and the strengthening of small Indian companies.
The company has also supported GoI’s data localization policies in the past. In contrast, GoI has been understandably cautious and “less friendly” to large foreign tech companies and their opposing positions on key issues, particularly related to data storage and protection. In the face of such unstable relationships, the idea behind this strategic partnership may also be to allow Facebook to develop a better relationship with “key decision makers.”
The optics of the agreement, which focuses on helping and partnering with, rather than competing with, Kirana small and medium-sized enterprises (SMEs) and stores, is also sought to soften adverse reactions and criticism from the government and national pressure groups . This debate will undoubtedly influence how India thinks about Big Tech regulation.
These conversations are fairly nascent in India, compared to many other jurisdictions around the world, particularly in the United States and the EU. Only on the digital payments front, both MyJio, which already offers UPI payments and recharge services, and WhatsApp Pay, which received NPCI approval in February, could easily dominate the market.
Facebook and Jio together also have access to large amounts of personal information, even when India has yet to finalize a personal data protection law. News reports already point to Jio’s plans to create a super app, which could also lead to the creation of an app ecosystem. Indian startups have often spoken about the difficulty or inability to compete with large tech companies and their impact on the Indian tech ecosystem. This agreement and its implications for the Indian market attract similar concerns.
Only time will tell whether the “digital sarvodaya of India (universal service)” Mukesh Ambani spoke of in a press release after the Jio-Facebook deal was announced on Wednesday will be for everyone. Or if this is just a sequel to what Reliance Jio did to the Indian telecom market.
(Chaudhari and Gupta are director of policy and associate, respectively, Ikigai Law)
[ad_2]
