The $5.7 billion Facebook-Jio deal could lead to the creation of one of the world’s largest digital services firms.
Launched in September 2016 and owned by India’s richest man, Mukesh Ambani, Jio has spread its wings from digital money to online retail and even content production, among other things. A subsidiary of his Reliance Industries (RIL), it even has its parent firm’s massive network of broadband services to tap into.
Meanwhile, for Facebook, India is the world’s largest user base. The country is also the largest market for the social media platform’s messaging service, WhatsApp, with over 400 million monthly active users. At 80 million users, India is second only to the US in terms of the number of users for its photo-sharing app, Instagram.
In due course, the “confluence of forces with common interests” could create a behemoth, said Sanchit Vir Gogia, founder and CEO of Greyhound Research said. Together, the two, partake in businesses across connectivity, community, content, commerce, currency, and capital.
Here’s an overview of how massive they are together:
For now, Jio and Facebook are treading softly. The first tie-up between the two companies is an e-commerce venture called JioMart, which allows users to order groceries via WhatsApp messaging. The services have not been integrated fully yet.
“Not all users will be comfortable with the Jio-Facebook partnership and will rightfully have concerns about Jio’s plan to integrate all security under one JioID,” said Gogia. “This is a growing issue in India.” This is especially so, given the mounting concerns over WhatsApp since the Pegasus attack.
However, given RIL’s deep penetration in the Indian market, this could be a breakthrough for Facebook, which has struggled to diversify beyond social media in India. “Despite tedious efforts with the National Payments Corporation of India, it has not been able to boil the ocean in its favour” with regards to payments, Gogia notes.
WhatsApp Pay began beta testing two years ago but hasn’t been launched yet. And that’s only one of the many woes faced by the Mark Zuckerberg-led firm in India. The Jio deal might help, but it can’t solve all of Facebook’s issues overnight.