Recently, Reliance industries and Facebook announced that Facebook would be acquiring 9.99 per cent stake in Jio Platforms limited, the holding company of Reliance Jio, for $5.7 billion.Currently, this deal has to be scrutinized by country’s competition watchdog CCI in order to be approved. This deal could be a huge prospect for both Jio and FB as they could bring about a change in digital space.
India is the largest market for both FB and WhatsApp as it has a huge user base in India. This deal with Jio,a leading telecom operator in India could be a win-win situation for both.Below table,mentions the different kind of services provided by both Jio and Facebook.
| Category | Apps |
| Digital payments | WhatsApp pay,Libra and Jio Pay |
| Social Media | WhatsApp,Facebook,Instagram and JioChat |
| E commerce | WhatsApp for Business,Facebook MarketPlace,Ajio and Jio Mart |
| Augmented/Virtual Reality | Jio Holoboard and Facebook Occulus |
| Entertainment | JioTV,Jio Cinema,Jio Saavn and Facebook Watch |
| Others | Jio Phone,Jio Fibre and Facebook Portal |
The deal seems to be only for the temporary benefits as Facebook has acquired stake in the form of FPI(Foreign portfolio investment ).This kind of investment is considered unfavorable as they can be sold off easily and mostly meant for short term gains.
Benefits of the deal
- Jio has started JioMart to provide access to the customers from buying at local kirana store through this app.After the approval of deal, WhatsApp can be used as a means to order products online. This could radically revolutionize the retail sector , as Jio did earlier in the telecom sector since its inception.This could also boost the morale of local retailers who are facing cut throat competition from organized retailers.
- This deal could also open the doors for cross-selling through Whatsapp,similar on the lines of WeChat in China.This deal would also benefit Jio by leveraging its product offerings.
- This strategic partnership could also give impetus to future technologies like Virtual Reality(VR’s) ,Augmented Reality(AR),Internet of Things(IoT),5G and block-chain technologies ,as the deal has potential to create synergy .
- Facebook could experiment its Libra cryptocurrency service in India.
- UPI based payment services could be rolled out by Facebook in the form of WhatsApp Pay .
Drawbacks of the deal
- Strong market position of both the players could be a matter of concern for the other players in the markets.
- Allegation of preferential treatment being provided to Jio by other players.
- Data of the users collected could be used by third parties ,which could occur due to data breach.
- Allegations made by other telecom operators regarding violation of net neutrality by TRAI(Telecom Regulatory Authority of India)
Conclusion
There are both pros and cons which could arise due to this deal.It is a win-win situation for both as Jio could reduce its debt ,whereas Facebook could expand its already existing footprint.As far as customers are concerned ,they could be relieved from further rise in mobile tariffs as Facebook is a part of Telecom Users Group(TUG),which is against revising TRAI’s floor pricing(Jio is a strong advocate for floor pricing).
Water 
Wonderful article
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Thanks Vinay
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