Facebook invests Rs 43,547 crores in Jio – Implications of this mega deal on various market spaces.

jio facebook deal: Facebook buys 9.99% stake in Reliance Jio

On 22 April 2020, the social media giant, Facebook announced that it has invested Rs 43,547 crores in Reliance Jio for a 9.99 per cent stake in the company. This deal makes Facebook the largest minority stakeholder of the RIL-owned telecom company. 

India makes for the largest user base for Facebook. Even then this deal wasn’t easy to come through. There were concerns expressed by the Indian government and the RBI over some features in WhatsApp, a company owned by Facebook. Besides, there were also times when Facebook had come under fire for issues related to net neutrality and Pegasus spyware. The deal could only go through after the government approved WhatsApp’s digital payment service.  

What is this partnership about and how does it benefit both the parties?

WhatsApp and Jio plan to work with 3 crore kirana shops by empowering them to transact digitally with the customers. The companies will then extend the digital payment service to farmers, teachers, students and small and medium-sized enterprises. 

The merging of JioMart, the online grocery delivery platform, with WhatsApp will allow millions of consumers to stay connected with small businesses like Kirana stores, which constitute the unorganized retail sector of India. It will also allow Facebook to take over an emerging market by enabling resellers, small entrepreneurs to connect with potential customers through it.

With this mega deal, Facebook will have exposure to Reliance Jio’s 388 million subscriber base and would aid Reliance Industries Ltd. achieve zero debt status by the coming year. 

Impact on Payment Services 

With WhatsApp’s technology and reach and Jio’s vast network, WhatsApp’s digital payment service will be ready take on established players of the field like Google Pay, PhonePe and Paytm and may even dominate the industry. 

Impact on e-commerce 

This partnership is a wake-up call for e-commerce giants like Amazon and Flipkart. Backed by Facebook, Reliance e-commerce venture, JioMart will take on these formidable e-commerce players in the Indian online commerce marketspace. Jio-Facebook can make this happen because of their having an edge on data over the other platforms. 

Impact on other telecom companies

Jio-Facebook partnership is expected to have some impact on this already stressed sector. With this deal, Reliance Jio will improve its balance sheet but affect those of Vodafone Idea and Bharti Airtel. It is also speculated that these two debt laden companies might lose their users to Reliance Jio. 

WhatsApp is transitioning from a communication App to a commercial and transactional platform. India is in the middle of major digital transformation and Facebook has taken an advantage by opening new commerce opportunities in the country. This partnership will help India become world’s leading digital society and will also help realize Prime Minister’s goals of “Ease of Living” and “Ease of Doing Business”.