With over 630 Million active internet users as of 2019 and with one of the youngest populations in the world, India is a rich vein for all things tech-related.
Even during the upheaval of its economy due to the COVID-19 pandemic, this sector of it is growing. On the 21st of this month, Facebook, the California based giant invested in Jio with a 9.99% stake for a humongous 43,574 crores. While the exact motive of why this happened remains in the dark, there could be several potential reasons.
Benefits For Facebook
1) Monetising On The Dormant Indian population
Dealing with the richest man of the second-most populous country may have its benefits. With over 0.5 Billion people still not connected to the Internet, Facebook along with Jio could now claim a total monopoly on the consumer base. Tapping into this rich ve in of consumers may thus prove profitable for the company.
2) Safe Heaven From Scrutiny
Collaborating with Ambani may have other subtle benefits for Facebook. With ever-increasing scrutiny into the company, Jio’s influence and stature in India may help it avoid inspection and regulation. Furthermore, Facebook could effectively bypass the calls for ‘data localisation’ arising from the Indian populace.
Benefits For Jio
1) Possible E-Commerce Expansion
While Jio is one of the biggest players in the telecom industry it still does not have enough foot-hold in the world of online shopping. With apps like JioMart and JioMoney drying out on the metaphorical shelf, collaboration with Facebook and its subsidiary WhatsApp may enable the company to take Amazon and Flipkart head-on. Connecting the local ‘kirana’ shops with JioMart may enable the company to gain higher profits.
Also Read: Find Jio Store Nearby Your Location
2) Debt Relief
With Reliance Industries Ltd. being in a significant pool of debt, this deal with Facebook may yet prove to be the life-jacket. According to The Wire, Jio’s debt stands at Rs 640 Billion and it may be reduced as the company is going to get 15,000 crores out of the total 43,000 crores for its usage. This considerable sum may be invested in the company’s apps like JioMart, Jio Cinema and Jio Money. In growing the company on the Indian soil, R.I.L had invested nearly 18000 crores while selling just 10% share in the company resulted in more than double the profit in a single shot.
While the exact reason for this historic deal may not be clear, what is clear is that the Jio-Facebook collaboration may reap some rather large rewards in the long term. But with the question of data privacy and data localisation still hanging in the balance, what exactly the partnership means for the Indian consumers is yet to be seen.