“Data is the new oil. And data is the new wealth. India’s data must be controlled and owned by Indian people – and not by corporates, especially global corporations”, is what Mr.Mukesh Ambani had said emphasising on importance of data protection at the Vibrant Gujarat Summit in January 2019.
However, early this month Mr. Ambani stuck a warmer tone by partnering with one such global conglomerate: Facebook.
The answer lies in the age-old realpolitik diplomatic approach, prioritizing economic returns over ideological precept and not being a hedgehog but a wolf in specific sets of circumstances. Both the corporations jammed their necks on data localization not to retain an array of ethical values but to supplement their economic interests.
As the world’s largest social media company acquired a $5.7 billion (INR 43,574 crore)
stake amounting to almost 10% of the heavily indebted Jio, whose cut-price mobile internet service has attracted 388m Indian users since its birth in 2016, “Jio will receive a pre-money enterprise valuation of almost $66bn”, Reliance claimed.
As per FT’s report, earlier also, Facebook was “close to signing a preliminary deal for a 10 percent share,” but the deal was put off due to coronavirus outbreak.
In fact, The Indian conglomerate claimed it to be the largest investment for a minority stake by a tech company anywhere in the world and the largest foreign direct investment in the technology sector in India.
With over 280 million Facebook users in India and 200 million WhatsApp users, Facebook tends to monetize the ballooning number of internet and smartphones users in India at a time when the pace of growth in developed markets has slowed, Facebook now with investment in Jio tends to enhance the user base to another billion by lucratively robbing new users who are getting on the internet for the very first time in India’s dynamic economy.
After a grave setback in 2015, where Facebook introduced free basic, a free but restricted internet service, by which Mark Zuckerberg tends to make Facebook a gateway for the new users to the internet world and with control over the content that was free to the user, they tend to possess the potential to influence the ideology of the new users towards world wide web, also making Facebook a prominent face for online experiences.
Which, in 2016, was banned by TRAI stating that it violates the principle of net neutrality, The TRAI’s “Prohibition of Discriminatory Tariffs for Data Services Regulations” states that providers cannot “offer or charge discriminatory tariffs for data services on the basis of content being accessed by a consumer” — that is to say, they can’t offer content for free.
In a press release, the TRAI notes that its decision was “guided by the principles of net neutrality,” and that its end goal is “to ensure that consumers get unhindered and non-discriminatory access to the internet.”
With Free Basics gone, the social media giant was eyeing new ways of garnering traction with new internet users in India. So in 2017, it introduced a commercial Wi-Fi initiative branded express WIFI, facilitating retailers to provide consumers with web access through hotspots at a marginal cost, which needless to say was a “flop”.
So with Reliance Jio backing, Facebook can start afresh and reach more people in rural areas.With synchronized ad strategies being carried out by both corporations, more users will utilize the range of applications offered by Facebook. Also where at this point of time, when Facebook is confronted with the steep rise of Chinese apps such as TikTok and Bigo Live, Reliance Jio tends to be the ideal partner coupled with the recent amends made by Govt. to the foreign direct investment policy.
While Reliance Jio masterfully orchestrated an ambitious growth strategy in India, the equation is simple regarding incentives through this deal. The money is vital for fulfilling Mr. Ambani’s goal of making Reliance Industries financially secure by 2021. Over the past five years, Reliance Industries had invested approximately $39 billion in expanding the Jio digital ecosystem — a gambit that attracted over 370 million users but shot up net debt to around $13 billion. Facebook’s investment comes at a crucial time as a 20 percent stake in Reliance’s Jamnagar refineries to Saudi Aramco is likely to be delayed given the crude oil price fluctuations also noting that Reliance’s tech offerings haven’t been up to the mark, RIL’S LYF phones are witnessing a major sales decline and indigenous made-for-India projects, such as a maps service have all floundered.
Reliance has even attempted projects like a telemedicine service, and an-AI powered video call assistant. And now a partner with the ability to develop competent and profitable technological innovations such as Facebook might help turn the tide for the ambitious young carrier. And should Jio look outside India to access other economies, Facebook’s assistance might stimulate the negotiation process a little viably.
Though so far, neither side has made substantial funds from Indian customers. Only about 17% of Facebook’s revenue comes from the Asia Pacific region, of which India is the primary market, while Jio delivers mobile subscriptions in what many perceive as obscenely low-price levels but now with a huge user base of both Jio and Facebook, the future venture seems to be very bright.
With its recent announcement of JioMart, which is Reliance’s attempt under its “new commerce initiative” to launch an O2O model (Online to Offline) which will connect the local grocery retailers directly with the consumers and replace the cash-rich business model. A deal with Facebook means that connections with consumers can be stronger.
It will now turn to WhatsApp to facilitate the transactions, opening up immediate access to a pool of potential customers that even its most seasoned competitors will struggle to beat.
To summarize, Facebook and Jio would aim to monetize one another’s user bases by fostering potentials with their combined channels and engage over 500 million customers whom they are already interacting if combined and target next 300 million prospective internet users over the years ahead.
Though, the main basic premise of conflict is presumably how the data-sharing would transpire; both organizations are sitting on a tech gold mine. Responsibilities and expectations are ambiguous at such a juncture. Facebook aims forward to reinforce its ad gearbox by coordinating effectively with an entity like Jio whereas Jio’s endeavor would be to further intensify its industry-led tactic and accelerate its e-commerce prospects which so far have been inconsistent.
Also, whereas Facebook has taken a strong stance to support end to end encryption with regard to its WhatsApp subsidy, Jio has sharp contrasting opinions- by submitting to TRAI last year that all the over the top (OTT) platforms should provide decryption key and full access to data when requested by law enforcements, and with JioMart likely to operate in sync with WhatsApp after this deal, it will be intriguing to see what policy convergence will be at play.
Written By: Kartikey Giri
SOURCES:
Jio Health combines online and offline healthcare in Southeast Asia, starting in Vietnam
www.ril.com
Economic Times