SUMMARY
Experts believe that the Facebook-Jio deal needs to be examined from a data point of view
The $5.7 Bn deal is the largest FDI transaction in the Indian tech industry
RIL's digital services company Jio Platforms operates Reliance Jio, JioSaavn, JioTV and more
With Reliance’s Jio Platforms attracting the largest FDI deal in the Indian tech industry with the stake sale to Facebook, the deal has got many wondering about the future of Indian tech startups and how it will impact the digital economy. But before that, it will need to get past industry watchdog Competition Commission of India’s (CCI) regulatory approval process for such large deals.
Industry experts and top government officials told Economic Times that the two companies are known as “data elephants” in the industry and have had to deal with and collect a lot of data of Indian internet users. Many fear the deal will provide an undue advantage to these companies over their competitors.
Given the scale of the deal, even tech giants like Google and Amazon might not be immune to the impact of the takeover. Therefore, officials believe that the Jio-Facebook deal needs to be scrutinised from a data point of view, and not just market share or the transaction amount. “Data is becoming a factor to reckon competitiveness and therefore the data aspects of the competition law need to be sharpened and revisited,” a government official told ET, seeking anonymity.
Mark Zuckerberg-led Facebook struck a deal with Reliance Jio Platforms for $5.7 Bn (INR 43,574) for a 9.99% stake, valuing the company at a whopping $65.95 Bn (INR 4.62 Lakh Cr).
In its press note, RIL highlighted that this is the largest investment for a minority stake by a technology company anywhere in the world, and also the largest FDI in the technology sector in India. It added that with this deal Jio Platform is valued at among the top five listed companies in India by market capitalisation.
Meanwhile, Anshuman Thakur, strategy head at Reliance Industries Limited (RIL), added that the company would soon approach CCI for approval.
Founded in 2016, Reliance Jio is the largest telecom service provider in India by market share, owning 32% of the Indian telecom subscription base. The company is followed by Vodafone-Ide and Bharti Airtel with 29.12% and 28.35% market share, respectively, as per Telecom Regulatory Authority of India’s (TRAI) report.
Since its launch, Jio has been a trendsetter in the Indian telecom space with its almost-free pricing and attractive offers. This forced competitors like Bharti Airtel and Vodafone to rethink their rates in order to state in the market. It kicked off a wave of consolidation in the market, with Vodafone merging with Idea Cellular/
While Jio has a subscriber base of over 388 Mn people, its services are not limited to the telecom industry. In December 2019, RIL put all its digital businesses including Reliance Jio, MyJio, JioTV, JioCinema, JioNews, and JioSaavn under one umbrella platform — Jio Platforms Limited. Facebook will also get indirect access to all these platforms as well, if approved, expanding its already large network.
Facebook, along with WhatsApp and Instagram, is one of the largest social media platforms. Facebook has over 336 Mn users, WhatsApp has more than 400 Mn, whereas Instagram 155 Mn users in India alone.
