Accessibility to the majority of mobile internet users in India coupled with the ability to provide content and mobile applications in Indian languages gives Jio-Facebook a significant advantage to reach every currently internet-enabled Indian.
In April 2021, Mukesh Ambani, Chairman of Reliance Jio, announced in a video release an investment by global social media network giant Facebook for a 9.99% stake at Rs 43,574 billion, leaving Jio at a staggering Rs 4.62 billion. Rs rated. Subsequently, Jio has raised more than Rs.1 crore to reduce mounting debt and interest obligations on its balance sheet.
In January 2020, India’s Supreme Court declared internet access a fundamental right under Article 19 of the Constitution. The United Nations Human Rights Commission passed a non-binding resolution in 2016 that effectively makes internet access a fundamental human right. India had opposed this resolution at the UN at the time.
Mark Zuckerberg, founder and CEO of Facebook, published a 10-page white paper in August 2014 outlining his vision of how the internet should be made accessible to all people and how access to data should be a fundamental right. Around the world, many technology leaders and public policy experts were skeptical of Mark Zuckerberg’s intentions. Facebook has spent a huge sum of money through the internet.org initiative to promote this idea in India. However, they demanded that Facebook-related applications take precedence over the network, which was fiercely opposed by advocates of online equality rights. The courts supported this point of view and the efforts disappeared in a few months.
In the last decade. We have seen the impact of technology on social and other aspects of human life caused by the GAFA factor, where GAFA is an acronym for leading global tech giants Google, Amazon, Facebook and Apple. This does not include Whatsapp and Instagram (both now part of Facebook), Microsoft or Twitter, which, with the exception of Microsoft, tend to focus more on social media networking. Regional players are also excluded, including regional tech and telecom giants like Verizon, AT&T or Comcast, Walmart and other e-tailers in the United States, BSNL and Flipkart in India, or tech giants in China’s closed internet arena like search engine Baidu, the instant messaging Service WeChat or Jack Mas Alibaba. If two or three of these players were to join forces where they command a majority market share, they would have an almost insurmountable lead over their nearest competitor in second place. The Jio-Facebook deal spawned such a partnership with the idea of creating a mammoth JioMart that can compete with Amazon and Flipkart in the online marketplace, as well as hyper-local delivery giants for essential items like Dmart-Ready and Big Basket.
Facebook bought WhatsApp for $16 billion in February 2014 at an effective price of $55 per WhatsApp user. At that point, WhatsApp had almost no revenue as it was, and still is, ad-free. So what justifies such high acquisition costs? In 2014, WhatsApp had over 500 million users worldwide and more than 1 million users were added every day. Facebook had about 890 million users at the time, but grew much more slowly. Facebook acquired WhatsApp to achieve this growth in users. In a similar deal, Facebook acquired Instagram for $1 billion in 2012 when the company had just 13 employees.
According to Google, a majority of new Indian users join the Internet access content in Indian languages. This number makes sense given that nearly all of the English-speaking population already has access to the Internet, and the majority of the users who are now being added are from rural areas where Indic languages are the primary medium of communication. Jio has already launched many of its phones and applications in the main Indian languages. Access to virtually all mobile internet users in India coupled with the ability to deliver content and mobile applications in Indian languages gives Jio-Facebook a significant advantage to reach every Indian who is currently internet enabled.
The Jio Facebook and therefore WhatsApp with its Indian user base of over 400 million gives the partnership a very wide reach in India, rivaled only by Google. In addition to its search business, Google also owns Gmail and YouTube, the world’s leading providers of email and video streaming services. Unlike Google Pay, Facebook-owned payment service WhatsApp has been in the pilot phase in India for over two years. This was due to the delay in complying with RBI’s data localization regulations. WhatsApp subsequently submitted a report to the Supreme Court that its payment platform now complies with RBI requirements. The audit report was prepared by an independent external auditor certified by the central government cybersecurity firm CERT-in. WhatsApp Payment was recently launched in India. This could potentially integrate well with the Jio-Mart platform.
Regulatory bodies such as TRAI and the Competition Commission of India must ensure a level playing field. From a government perspective, they could encourage other industry leaders to enter into similar collaborations. For example, Google, with its search, Gmail and YouTube user base, could partner with Vodafone, Airtel or BSNL depending on the target market. They could further work with DMart or Big Basket to be a healthy competitor for JioMart. These are exciting times as India is set to roll out 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 towards realizing the dream of universal basic internet access as the foundation right.
