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Facebook’s investment in Jio takes on US tech firms betting on India

via https://newsapi.org online business online marketing online business opportunities Facebook-Jio partnership sets the stage for a big tech war across the Indian internet ecosystem (AP)
Facebook-Jio partnership sets the stage for a big tech war across the Indian internet ecosystem (AP)

3 min read

. Updated: 22 Apr 2020, 06:46 PM IST


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Romita Majumdar

  • Earlier this year, telecom operator Bharti Airtel and Cloud announced a partnership to offer G Suite to small and medium sized businesses (SMBs) in India as part of its integrated information and communication technology portfolio

MUMBAI :
The stage is now set for a fierce competition among American tech giants betting on India’s online ecosystem. Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd (RIL) with Facebook as a shareholder, will now be engaged in a full-fledged battle with multiple internet-based businesses

In the ecommerce and hyperlocal space, Jio Platforms will now compete with Google, and Walmart-backed Flipkart. In the digital payments space, it will compete with Paytm, GPay and PhonePe.

Facebook will invest 43,574 crore for a 9.99% stake on a fully diluted basis in Jio Platforms to become the largest minority shareholder of the RIL subsidiary.

Jio now eyes 60 million small businesses across the country which are the fabric of the unorganised retail economy.

“With communities around the world in a lockdown, many of these entrepreneurs need digital tools they can use to find and communicate with customers to grow their business,” said Facebook Mark Zuckerberg in a Facebook post today.

By bringing together JioMart, Jio’s small business initiative, with the power of WhatsApp, will enable people to connect with small businesses, kirana shops and purchase products online from traditional stores.

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Earlier this year, telecom operator Bharti Airtel and Google Cloud announced a partnership to offer G Suite to small and medium sized businesses (SMBs) in India as part of its integrated information and communication technology portfolio. G Suite is a set of intelligent apps–Gmail, Docs, Drive, Calendar and more–designed with real-time collaboration and machine intelligence to bring people together and help them work in a smarter and safer way.

This partnership provided 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. Airtel serves over 2,500 large businesses and over 500,000 SMBs and across India.

In 2019, Reliance Jio announced a 10-year deal with Microsoft to help the operator set up a network of large data centres across India. The tech giant will deploy its Azure cloud platform in these centers to support offerings.

Jio had announced it will also provide the combined cloud-Microsoft app infrastructure free of cost to startups and for a monthly fee of 1,500 to micro, small, and medium enterprises.

Airtel, on its part, offers Google potential access to over 2,500 large enterprises and over 5,000 small enterprises through this partnership. Traditionally, Microsoft has a large enterprise presence in the country. Google has a presence in the B2C market, thanks to the prevalence of smartphones.

The telecom rivalry in India is supplemented by a larger rivalry of big tech companies like Amazon, Facebook and Google also trying to establish a lead in tapping the biggest open market for internet users. While the B2C market of advertising directly to users has its limitations, both in terms of the business that can be tracked and the personal information of users that can be shared, a B2B approach through small and medium businesses will give tech companies access to hyperlocal behavioural patterns across the country.

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Reliance’s recent investments in startups across or AI, e-governance and regional language platforms only multiplies this offering, setting the stage for a big tech war across the Indian .

Google has an existing investment in hyperlocal delivery startup Dunzo. Its attempt at mapping hyperlocal activity through Neighbourly didn’t quite take off with the app shutting shop this month.

“The clear gap that the likes of Facebook and Google faced with their Marketplace or Neighbourly models was the offline connection and Jio-Reliance Retail presence offers that scale,” noted Satish Meena, , Forrester Research.

The payments ecosystem in India includes Alibaba backed Paytm, Walmart owned-PhonePe as well as global players such as WhatsApp Payment, Google Pay, and Amazon Pay. These platforms are leveraging the highly engaged user base to drive the payments business (on the back of a strong P2P offering).

Due to regulatory issues around data localization, WhatsApp Pay had remained in the beta version. However, in February 2020, it was approved by the to go live with initial 10 million users out of its 400-million user base in India.

“As you know 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,” said Ajit Mohan, the Vice President and Managing Director of Facebook India.

Whatsapp had run into problems when the Indian government and the Reserve Bank of India (RBI) expressed concerns over some of WhatsApp’s features. Now between Facebook and Jio, they will own a large chunk of the hyperlocal, ecommerce, payments, telco provider and advertising ecosystem.

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