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Jio-FB 2020

Updated: Mar 22, 2023

Amid the deleterious Coronavirus and the crashing world economy, with falling stock markets and lost jobs across the big corporate ventures, one of the biggest tech giants of the United States and the richest businessman of India have joined their hands presenting a Jugalbandi to the world. Facebook recently became the largest minority shareholder in all Jio platforms by purchasing a 9.99% stake in Reliance Jio for $5.7 Billion which is almost equivalent to Rs.43000 Crores. While the deal is done between Facebook and Jio, this deal is more relevant for Whatsapp owing to its past image in India, which is one of the biggest consumer bases for Facebook. This deal is the biggest FDI ever made by a Tech company in India, as the rules for FDI were changed overnight by the Modi government, strengthening the corporatism in India and showing the Modi-Ambani bond to the world. The deal has its implications for both parties attached, while it directly affects the users owing to questions of data privacy which have not been mentioned in the draft of the report of the FDI.

On Jio’s part, this deal will be very important for Jio to waive off their debt which currently stands at INR 40000 Crore. According to several reports, Jio will be using 28000 Crores out of the deal to redeem optionally convertible preference shares. For Jio, this deal will help them with their new digital venture Jio Mart as they will collaborate with Whatsapp to reach 3 crore MSMEs, Kirana stores, and small businesses. Jio will also profit from this deal, as it will help Jio gain backing for Jio Cinema and Jio TV, as it will have the bragging rights with backing from Facebook, and obtain access to exclusive content that it earlier couldn’t obtain. JioSaavn, which is the music platform of Jio will also integrate with Facebook which will be a big competition for rivals like Gaana and even Spotify India. Facebook with its advertising base that is only second to Google, Jio will profit off the advertising base of Facebook which will help it increase its subscriber base.

The advantages of Facebook are fewer but outweigh those of Jio as Facebook has more qualitative advantages over Jio. Due to questions of privacy, encrypting data, and regulations, the Indian government has had a sour past with Facebook operations. Back in 2015, when Whatsapp launched its Free Basics Programme in India, there was major opposition from the corporate giants and the people, thus this deal will help Facebook gain back its reputation in the eyes of the Indian government. Whatsapp had also been denied its license for Whatsapp Pay in India, and this deal might help Whatsapp obtain its license as the deal hints at a merger of Jio Pay and Whatsapp Pay.

This deal holds a lot for the people and other companies that are rivals of both Jio and Facebook. The deal nowhere mentions data sharing agreements and privacy and how data will be shared/sold/rented to third parties and on what grounds the data will be shared with the government which is an unethical practice. This deal comes across as a big threat to China, as the base of the Chinese application TikTok (which overtook the number of users using WhatsApp) will be shaken with this deal, as the total investment of Chinese markets in India stands at $4 Billion, and Facebook has overtaken it by $1.7 Billion, displaying its economic hegemony even in times of a profuse biological aberration and economic fallouts. The tremors of this deal were felt even in Silicon Valley as the big four (GAFA: Google, Apple, Facebook, Amazon) shook. The deal entirely shook Amazon and Google, as both Amazon and Google Pay exist in India, and Whatsapp will capitalize on their base, with the help of the massive Jio subscriber base in India. In India, the tremors were felt by Airtel, as Jio is also providing other Value Added Services along with cell services, which Airtel fails to deliver which will make it lose its subscriber base to Jio.

This deal comes across as a big positive for the Digital economy and provides an economic benefit to small business owners to go digital. The big problem with this deal is an apparent threat to the privacy of the users it creates an uneven spread of economic benefits in the country, which means the lowest rungs will remain poor and the rich and cronies will profit off this deal. From an economic standpoint, this deal might help strengthen the fallen and dilapidated state of the Indian economy cronies but does not ensure how the welfare is going to reach the people.

Written by Team PublicTunes

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