While its social media services and messaging services have been extremely popular in India, Facebook has however struggled to get past regulatory concerns in India over some of its ambitious projects such as its free limited Internet offering Free Basics and digital currency Libra ( the preference of people using Facebook will be more than other social media).
When the national and global economies have entered an unprecedented zone of uncertainty and turmoil on account of the massive disruption caused by COVID19, we have just witnessed the ‘largest investment for a minority stake’ by a technology company in India.
The biggest news in 2020 Facebook invested in Reliance JIO.
Facebook invested 5.7 Billion Dollars and they got a stake of 9.99% in Reliance Jio(The largest FDI deal in the tech sector in India).
Facebook subsidiary is Watsapp and Instagram where Reliance industries subsidiary is Jio Platform Limited (JPL) and Reliance Retail Limited (RRL) both are fully owned subsidiary of Reliance Industries Limited( if they have 100 shares all are owned by Reliance Industries).
Now, JPL, RRL and Watsapp they have entered into an agreement with each other.
Although the investment is not about data arbitrage or data acquisition embedded in the transaction, hidden from the public eye, as this investment is not about either. Also, by no stretch of the imagination is it an ‘opportunistic bid’ to extract resources from a Indian business or the burgeoning Indian digital market at a time when Government’s attention is diverted by a raging pandemic.
Jio-Facebook agreement vindicates the unique Indian way of doing business: of responding to the needs of the bottom of the pyramid.
If we try to understand the advantages or synergy for both.
We can consider Jio has a very good customer base over all on the other hand Facebook is good with its analytics of the preferences of the customers and the activities we do or rather where we spend some time more( accordingly pushing advertisements as it is their main source of income).
On the other hand Jio had an all cash deal it will help them to pay off most debts. (Mukesh Ambani in his AGM meet 2019 declared Reliance will be debt-free by 2021).( To know more about Jio -https://travellingabusiness.blogspot.com/2018/02/jio-joint-implementation-opportunities.html )
Average Revenue per User of Jio is Rs 120 now they will try to increase it (playing on no’s on the no. of subscriber).
This new digital platform will not displace small and local businesses. Instead, it will collaborate with them and amplify their reach as well as their profitability. The distinctly Indian ‘Kirana’ led retail model will be infinitely strengthened both in terms of business viability and their employment generation capacity.
How they will earn profitability if we see in China they have a model of WeChat which is quite similar to Watsapp the difference is it is also a shopping platform where buyers and sellers meet. When any transaction happens comapany earns money through transaction fees.
If we think of Facebook and Watsapp something like this in future if we don't forget there was a concept of Watsapp money too which is almost dormant now.
The agreement and the implicit trust of the investor in the Indian market validate the potential of fin-tech, e-commerce and a reliable data infrastructure to boost growth and development in India. This potential extends well beyond India’s urban middle classes.
It will be a big step towards giving form and shape to Prime Minister Narendra Modi’s ‘Digital India’.
Good observance, also be mindful that an online platform wants a stake in retail, so there would be much more to it than what meets the common eye. Nowadays business are also about making your clients or investments successful and profitable, in that case everyone wins. It's like Friends with Benefits.
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