What does Facebook’s $5.7 billion investment in Reliance Jio mean for the digital industry?

• After Facebook invests $5.7 billion in Reliance Jio, we talk to digital experts to find out what it means for the industry.
• Experts opine that this will be a win-win situation for both the players as Facebook can now cast its net wider, reach out to Tier III and rural markets, and help boost the digital ecosystem.

US social media giant Facebook has bought a 9.9% stake in Reliance Jio for $5.7 billion (Rs 43,574 crore). The deal is expected to give the social media giant a stronger foothold in what is seen as Facebook’s largest market.

While Facebook has been known for large acquisitions in the past (Instagram, Whatsapp and Oculus), the deal with Reliance Jio only gets it a minority stake. However, it could have some far-reaching implications.

We reached out to some digital experts who spoke to us about the possible implications of this move. Here’s what they had to say:

Shamsuddin Jasani, Group MD, Isobar - South Asia:

The investment from Facebook in Jio is going to be a big game-changer. I believe this is just the start of a longer collaboration, which is going to be beneficial for both the companies and also going to change the entire landscape, help us evolve into the future. What we have witnessed in the COVID scenario, this deal is only going to accelerate that even in the post COVID scenario. Digital is here to stay and people realise its power now. With Jio, Facebook can now go deeper and engage with smaller towns and cities. It has a tremendous penetration but through all of its products and backing on Jio's plans on becoming a huge player in the market, I think the possibilities are endless. The future holds some great innovations in business that can be brought forward by this combination. I also think that this will help Facebook come into the payment thing in a much bigger way than through WhatsApp alone, so I do believe that this is a game changer for the industry. Understand that pretty much hundred percent of Jio customers come in after their Aadhar cards have been verified. Imagine that data now also synching up with Facebook data. So the opportunities are tremendous, from an advertisers perspective, reach, consumer and SME perspective.

Sabyasachi Mitter, Founder and MD, Fulcro:

On the face of it, the close to 10% stake purchased by Facebook in Jio Platforms is a bold move to get into retail e-commerce through Jio Mart. This will help both players in taking the challenge to the entrenched players like Amazon and Flipkart, especially in grocery retail by tapping into the reach of Jio and co-opting the local kirana stores. On paper taking orders and payments through WhatsApp is a game changer, however, we have to bear in mind that the Indian consumer behaves very differently from theory. For starters most kirana stores and small businesses already extensively use WhatsApp for order taking. The use of UPI and Paytm has become widespread and second nature. While people trust WhatsApp for communication and conversations where security is not much of a concern, whether they will trust WhatsApp payments over specialised payment solutions is something that time will tell.

Varun Duggirala, Co-founder & Content Chief, The Glitch:

The FB-Jio deal is what one would call the coming together of two data super powers. While the implications for both companies to extend their reach and grow their data set is immense along with the possible e-payments and e-commerce implications it can drive (mainly through WhatsApp but through other social platforms that FB owns as well) what remains to be seen is the net neutrality implications this can have and where that balance will lie. But all in all, it’s definitely going to drive major competitive advantages for both parties.

Ambika Sharma, Founder & MD, Pulp Strategy:

The Facebook investment in Reliance Jio making it the largest minority shareholder in Jio and values the platform at an enterprise value of Rs 4.62 lakh crore. It is the largest FDI in the technology sector in India and with this, the deal values Jio Platforms among the top 5 listed Companies in India by market capitalization. Apart from this, there is a commercial partnership, which has been signed between Jio, Reliance Retail and WhatsApp for Reliance’s new e-commerce platform called Jio Mart, which will be targeting seamless Kirana transactions with Jio Mart using WhatsApp. Jio now eyes 60 million Small Businesses across the country, which are the fabric of the unorganized retail economy. The aim is to grow and transform India’s digital ecosystem and the focus of the collaboration will be to enable new opportunities for more than 60 million Small Business owners across India. With communities around the world in a lock down, many of these entrepreneurs need Digital Tools, which they can use to find and communicate with customers to grow their business. Whatsapp Payments is in the middle of a beta trial for a million users and we are hoping to get regulatory approval, but this collaboration (with Jio Platforms) is meant to really fuel the small business side of the economy. As the Economy is in crisis the deal comes as a fresh air to the market and RIL stocks today closed at 10% gains. This deal will be a win-win deal for both the partners and the deal will play a meaningful role in mobile commerce space. With Facebook as a shareholder, Jio will be in a full-fledged battle with multiple internet-based businesses. This partnership will own a large chunk of hyper-local, e-commerce, payments, telco provider and advertising ecosystem. It will also provide a platform for both companies to tap growth opportunities in India, which ranks among the fastest growing economies and has the second highest number of internet users in the world. India is the next best thing, especially now that Mukesh Ambani has made it accessible by forcing down data charges and offering low-priced handsets and services in all Indian languages.

Roopak Saluja Founder & Chairman, The 120 Media Collective:

"This is an ultra-synergistic power play, the likes of which can be orchestrated by very few. For Facebook, this will likely spell the end of any further major regulatory hurdles; few factors can match up to a Reliance partnership when it comes to increasing the ease of doing business in India. And Reliance gets to pare down its burgeoning debt to some degree. You can expect them to make a gateway play together. Get ready for the wechatification of WhatsApp in India- a super app for everything from delivery to payments to content and much much more. If you thought Jio was a game-changer for digital penetration, watch this space for more."

Shrenik Gandhi, Chief Executive Officer and Co-Founder, White Rivers Media:

Glad to be seeing such positive news in such grim times. This investment not only has monetary benefits for both organisations, but has economic benefit for the nation. This deal will empower digital transformation of millions which shall boost not only digital ecosystem but also the nation. The next 100M internet users will be easier to get on board, thanks to this deal. I am pretty sure, in the post-COVID world, the world will be closely watching India!