Access to most mobile internet users in India along with the ability to deliver mobile content and applications in Indian languages gives Jio-Facebook a substantial advantage in reaching all Indians currently connected to the internet.
In April 2021, in a video release, Mukesh Ambani, the chairman of Reliance Jio announced an investment from global social media giant Facebook for a 9.99% stake for Rs 43,574 crore, which values Jio at a mind-boggling Rs 4.62 lakh crore. Subsequently, Jio raised over Rs 1 lakh crore in a bid to reduce growing debt and interest obligations on its balance sheet.
In January 2020, the Supreme Court of India declared Internet access a fundamental right under Article 19 of the Constitution. The United Nations Commission on Human Rights passed a non-binding resolution in 2016 that makes internet access a basic human right. India then opposed this resolution at the UN.
Mark Zuckerberg, founder and CEO of Facebook, published a 10-page white paper in August 2014 outlining his idea of how the Internet should be made accessible to everyone and access to data should be a fundamental right. Globally, many technology leaders and public policy experts were skeptical of Mark Zuckerberg’s intentions. Facebook has spent a huge amount of money promoting this idea in India under the internet.org initiative. However, they demanded that Facebook-related apps be given priority over the network, which was fiercely opposed by internet equality rights advocates. The courts supported this position and the effort disappeared within a few months.
Over the past decade. we have seen the impact that technology has had on social and other aspects of human life caused by the GAFA factor, where GAFA is the acronym for the major global technology giants Google, Amazon, Facebook and Apple. This does not take into account Whatsapp and Instagram (both now part of Facebook), Microsoft or Twitter which, with the exception of Microsoft, focus more on social networks. Regional players are also excluded, which would include regional tech players and telecom giants like Verizon, AT&T or Comcast, Walmart and other e-tailers in the US, BSNL and Flipkart in India or tech giants in China’s closed internet arena like search engine Baidu, instant messaging service WeChat or Jack Ma’s Alibaba. If two or three of these players were to combine forces where they have a majority market share, they would have an almost insurmountable lead over their closest competitor in second place. The Jio-Facebook deal spawned such a partnership with the idea of creating a gigantic JioMart to compete with Amazon and Flipkart in the online marketplace, as well as hyper-local essentials delivery giants like Dmart- Ready and Big Basket.
Facebook bought WhatsApp in February 2014 for $16 billion at an effective price of $55 per WhatsApp user. At that time, WhatsApp had almost no revenue as it was and is still ad-free. So what justified such a high acquisition cost? In 2014, WhatsApp had over 500 million users worldwide and was adding over 1 million users daily. Facebook then had about 890 million users, but its growth was much slower. Facebook acquired WhatsApp to achieve this user growth. In a similar deal, Facebook acquired Instagram in 2012 for $1 billion when the company had just 13 employees.
According to Google, a large portion of new Indian users are joining Internet access content in Indian languages. This number makes sense because almost the entire English-speaking population already has internet access and the majority of added users come from rural areas where Indian languages are the primary means of communication. Jio has already launched several of its phones and apps in major Indian languages. Access to all mobile internet users in India along with the ability to deliver mobile content and applications in Indian languages gives Jio-Facebook a substantial advantage in reaching all Indians currently connected to the internet.
The Jio-Facebook and by extension WhatsApp with its Indian user base of over 400 million gives the partnership a very wide reach in India, rivaled only by Google. Google, in addition to its search business, also owns Gmail and YouTube, the world’s leading providers of email and video streaming services. Unlike Google Pay, Facebook-owned WhatsApp’s payment service had been in its pilot phase in India for more than two years now. This was due to its delay in complying with RBI’s data localization regulations. WhatsApp then submitted a report to the Supreme Court stating that its payment platform now complied with RBI requirements. The audit report was prepared by an independent third-party auditor, certified by the central government cybersecurity firm CERT-in. WhatsApp Payment has recently launched in India. This could potentially integrate well with the Jio-Mart platform.
Regulators like TRAI and the Competition Commission of India must ensure a level playing field. From a government perspective, they could encourage other industry leaders to form similar collaborations. For example, Google with its search user base, Gmail and YouTube could partner with Vodafone, Airtel or BSNL depending on the target market. They could additionally collaborate with DMart or Big Basket to be a healthy competitor for JioMart. We are living in exciting times with India planning to launch 5G services in 2022. Multimedia content, e-commerce and other services delivered over high-speed networks, coupled with rural penetration, would go a long way in realizing the dream of basic universal Internet access as a fundamental element. law.
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