Jio — Facebook Deal: Everything You Must Know.

Jio — Facebook Deal.

Facebook announced to invest $5.7 Billion ~ Rs 43,574 Cr for 9.99% of Jio (Reliance Jio Infocomm Limited). Reliance Jio Infocomm Limited is a fully owned subsidiary of Reliance Industries Limited.

As a result of this Foreign Direct Investment, Facebook became the largest minority shareholder. The Jio — Facebook deal is the largest investment in the world’s history for a minority stake. After this announcement, Jio is valued as one of the top 5 companies in India by market capitalization.

Vision Of The Jio Facebook Deal.

The vision of Mark Zuckerberg and Mukesh Ambani regarding this deal is to empower the unorganized sector of India.

The main focus of this deal is to come up with digital-based solutions for 60 million micro, small and medium business, 120 million farmers, 30 million small merchants, and millions of small and medium enterprises in the informal sector.

Function

This deal will serve the collaboration of Facebook’s WhatsApp and JioMart, the e-commerce platform of Reliance Industries.

With the help of this collaboration, The synergy will empower nearly 3 crores small Indian Kirana shops to digitally transact with every customer in their neighborhood.

The companies already have started rolling out this feature but only on a very small scale in the suburban Mumbai areas of Navi Mumbai, Thane, and Kalgan.

However, both WhatsApp and Jio will remain independent entities and will compete with each other where is necessary.

“Jio and Facebook will collaborate with each other but they will not integrate themselves”, as said by the officials.

Benefits of Facebook

India is one of the largest markets for Facebook with nearly a billion accounts combined for Facebook, Instagram, and WhatsApp. Jio is also one of the largest Telecom operators in India with nearly 388 million of users. Both companies may benefit from each other due to their consumer database.

As a result of this deal, Facebook has secured a board seat in Jio without voting powers.

With the help of Reliance Industries, Facebook will enter e-commerce and will compete against Google and Amazon.

This deal also may help Facebook to introduce its UPI based platform WhatsApp Pay which had faced regulatory issues in the past.

Benefits of Jio

This deal is an all-cash deal and it will help Mukesh Ambani’s vision to make Reliance Industries debt-free by 2021. ( As in past days RIL have secured multiple funding from large investment firms as Mukesh Ambani is serious to make RIL debt-free by 2021).

This deal will also encourage Reliance to promote its Retail services, products and JioMart will get a massive kick start in the e-commerce venture.

Due to the large audience of Facebook in India, Jio might able to bring some consumers of them to their services.

Benefits to the Indian Consumers

The local Kirana shops will serve as the warehouse for the Jio Mart and as a result of this, the delivery will be very faster.

Earlier, Amazon has introduced a fast delivery service through its prime subscription. But the fast delivery facility is available in only selected tier 1 cities.

As in the case of Jio Mart, the local Kirana shop will be nearby, so fast delivery will be not a major issue.

The consumers can support the homegrown company and boost Indian economic space.

The local Kirana shops will also get benefitted by receiving more orders.

Setbacks

As most of us are aware of a Facebook data breach in the past. So many people have trust issues regarding Facebook as now it will have access to a large amount of data.

Some experts said that this tie-up between the large giants may lead concerns about net neutrality especially the preferential treatment to Jio from Facebook and WhatsApp or Vice versa. But all these reports were denied by Jio.

Conclusion

In my opinion, after the lockdown, the Indian economic space will change drastically and the Jio — Facebook deal will play a crucial role in it. Amazon has also started working with local vendors. These giants are moving towards the Indian unorganized sector because there is a huge market for it that needs to be digitalized. They will benefit the companies, consumers, retailers, vendors as well as the country’s economy.

This collaboration might lead to the production of WeChat type of platform which is immensely popular in China.

It will be interesting to see how competition occurs between the large giants. Even the local vendors will compete with each other as in a single locality there are multiple Kirana shops. What will happen only the time can tell us.

But the end consumer will always get the benefits of the competition.

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