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Friday, March 29, 2024
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HomeOpinionNewsmaker of the WeekWith Ambani by his side, Zuckerberg has finally made his Mark in...

With Ambani by his side, Zuckerberg has finally made his Mark in India’s telecom space

Apart from paring its debt, the Facebook deal will help RIL enter India’s e-commerce space by tapping into WhatsApps’ 400 million strong userbase.

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When Covid-19 has brought to a halt almost all deal activity across the world, the $5.7 billion equity deal between Reliance’s Jio Platforms and tech giant Facebook has sent shockwaves through India’s e-commerce and telecom industry. The deal, which gives Mark Zuckerberg’s Facebook a 9.99 per cent stake in Mukesh Ambani-led Jio Platforms, was announced Wednesday and is likely to face the scrutiny of fair trade regulator Competition Commission of India and telecom watchdog Trai.

The largest FDI in India’s tech space by the Menlo Park, California-based social media behemoth makes Reliance chairman Mukesh Ambani the richest man in Asia, surpassing Alibaba co-founder Jack Ma.

The teaming up of Reliance Retail, Reliance Jio and WhatsApp has left competitors like the Alibaba-backed Big Basket, Amazon’s Pantry and Walmart-owned Flipkart shaking in their boots. Just a day after the deal was announced, Amazon ramped up its pilot programme Local Shops on Amazon, anticipating that it won’t be the only one trying to woo small businesses across India into its digital systems.

It’s clear that this deal isn’t just big, it’s serious and has the potential to have industry-wide implications, both in e-commerce and telecom. At the national level, it seems to peddle Prime Minister Narendra Modi’s Digital India Mission.

The agreement has also raised eyebrows on privacy concerns as a consequence of two “data elephants” coming together.

And this is why Reliance Jio and its deal with the world’s largest social media platform is ThePrint’s Newsmaker of the Week.


Also read: RSS affiliate slams Facebook-Jio deal, says it’s a bigger threat than Amazon, Flipkart


What’s in it for Ambani?

Well, the tie-up seems to be a clear win-win for both sides. Jio’s parent company Reliance Industries gets some breathing space amid its ballooning debt and a flailing petroleum business (courtesy declining crude oil prices).

The deal gives Jio a whopping pre-enterprise value of ₹4.62 trillion, also making it the fifth-largest firm in India. Daddy Reliance is on that list too, mind you.

But making big splashes has always been Jio’s way. After entering the telecom sector in 2016, it went from being a new kid on the block to bulldozer in just three years. Offering cheap data plans to its 370 million subscribers, the company has been accused of predatory pricing and “monopolistic tendencies” by rival Bharti Airtel and upturning the entire telecom industry. It’s also courted controversy for using PM Modi’s face in an ad in 2016.


Also read: How Mark Zuckerberg just gave Mukesh Ambani a badly needed win


What’s in it for Zuckerberg

Mark Zuckerberg finally gets a slice of India’s internet pie that he’s been eyeing for more than five years now, and that too, without wasting much time on obtaining regulatory approvals.

Also, the timing couldn’t be more impeccable. As Facebook India CEO Ajit Mohan put it, announcing the deal amid the coronavirus crisis “is a reflection of our commitment to invest in the country.”

The deal will give Facebook a board seat in Jio Platforms and “an observer seat without voting powers” in addition to using WhatsApp for e-commerce opportunities with small businesses in India.

Let’s not forget that Zuckerberg has been pining to provide internet access to India’s one billion strong consumer market for some time now.

In 2014, the American entrepreneur visited a Rajasthan village to launch the ‘Free Basics’ plan to “provide free internet access to a digitally starved nation”, but its business proposal was shot down by Trai in 2016. Trai had said that the model proposed by Facebook violated principles of net neutrality. Zuckerberg gave it another shot in 2017, with the launch of Express WiFi in non-urban areas but that now seems to have gone cold turkey.

This time around, he has partnered with one of the most influential and successful businessmen in the country who may have just given him the golden ticket he’s been waiting for.

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7 COMMENTS

  1. This need minority share holder approval as small investor have invested since many year and the deal has to be transperent with share holder and need aporoval ..Reliance owner can not only decide to sell 10%Stake but its a concern for petty small investor who have been investing their hard earned money simce so many year and moreever its a deal witj jeo and whats up not for reliance and facebook so this need to ne clear and jeo was orignated only with reliance investor and if they decide for split in future or IPO ..we share holder need a clear picture..we know about reliance retail

  2. This need minority share holder approval as small investor have invested since many year and the deal has to be transperent with share holder and need aporoval ..Reliance owner can not only decide to sell 10%Stake but its a concern for petty small investor who have been investing their hard earned money simce so many year and moreever its a deal witj jeo and whats up not for reliance and facebook so this need to ne clear and jeo was orignated only with reliance investor and if they decide for split in future or IPO ..we share holder need a clear picture..we know about reliance retail

  3. Sir – From available accounts, FB & JP are in different stages of development of their e-commerce business to support small businesses and kirana stores. The two would collaborate on sharing their respective technologies to encourage e-commerce business and e-payment services for such entities. Reliance Retial is in the process of launching its marketplace JioMart. It will allow millions of local retailers and kirana merchants to list their products on the portal and sell to customers. It is currently under trial in select areas of Maharashtra – Navi-Mumbai, Thane and Kalyan. WhatsApp is already active in connecting small businesses in India; for this the existing users have to simply change their status to WhatsApp Business. Many small businesses are already using the services to promote their offerings and take orders from clients, get their feedback etc., via WhatsApp. It can be used conveniently from any network, whether it is Bharti Airtel or Vodafone Idea or Reliance Jio or BSNL / MTNL. I hope FB & JP will work closely to ensure that consumers are able to access the nearest kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp.

  4. May i submit a broader point. In the tech field, every day every company should challenge itself and bring out new and interesting services. Afterall, there is a natural cap, you cannot sell more than a specified number of SIMs, but there is always a possibility of expanding & offering new services which are attractive for the consumers. Those companies which lack agility and want protection for their lethargy start kicking and screaming whenever someone innovates. Please don’t mind. I don’t just mean the legacy media and telecom companies 😉

  5. Respected Sir, The investment is for a minority stake. It is not a merger. The data with respective groups are very dear to either party. Why would they share the same with each other? Moreover, Net Neutrality and Data Protection laws are very rugged and strong in Modi ji’s India. Where’s the question of any misuse or violation? Yes, certain vested interests, have started misinformation campaigns and are engaging in false propaganda against this investment by issuing tweets, columns and white-papers alleging that the deal would allow sharing of subscriber data and violate the net-neutrality norms. These allegations are comical. A highly reputed US based technology company, investing in another highly reputed Indian company, both committing to abide by the Indian laws, doesn’t deserve illiterate suspicion.

  6. Dear Sir – There’s good reason to welcome the $5.7 billion foreign investment agreed to be made by Facebook for a 9.99% stake in Jio Platforms or Reliance. Isn’t it heartening to note that such a big investment has come amidst worldwide business gloom? Isn’t it an opportunity for a much needed FDI infusion in fueling of our Nation’s economy?

  7. Sir-Let’s get the facts here, There is *no* exclusivity in the Jio-FB deal. If, Bharti Airtel or Vodafone Idea, also have concrete plans, they too can persuade FB or any other global tech giant or OTT for investments and technology tie-ups. Also, there is *no* consumer/subscriber data sharing between the two groups. Conversely, if FB sees any value in others’ products, they are also free to take such calls. There is *nothing* to show that Jio/FB will exclusively promote each-others products or services on their platforms. There is also *no* preferential treatment in the allocation of network resources for traffic handling.

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