Access to most mobile internet users in India along with the ability to provide content and mobile applications in Indian languages give Jio-Facebook a substantial advantage to reach every currently internet-enabled Indian.
In April 2021, in a video release, Mukesh Ambani, the chairman of Reliance Jio announced investment by global social media network giant Facebook for a 9.99% stake for Rs 43,574 crore, which values Jio at a mind boggling Rs 4.62 lakh crore. Subsequently, Jio has raised more than Rs 1 lakh crore in a bid to reduce the mounting debt and interest obligations on its balance sheet.
In January 2020, the Supreme Court of India declared access to the Internet as a fundamental right under Article 19 of the Constitution. The United Nations Human Rights Commission had in 2016 passed a non-binding resolution that effectively makes internet access a basic human right. India at that point had opposed this resolution in the UN.
Mark Zuckerberg, founder-CEO of Facebook had in August 2014 published a 10-page whitepaper outlining his idea of how the internet should be made accessible for every person and access to data should be a fundamental right. Globally, many technology leaders and public policy experts were sceptical of Mark Zuckerberg’s intentions. Facebook spent a massive amount of cash promoting this idea in India under the internet.org initiative. However, they required Facebook related applications to have priority over the network which was fiercely opposed by proponents of the right to equality on the internet. The courts supported this stand and the effort disappeared in a few months.
In the last decade. we have seen the impact technology has had on social and other aspects of human life caused by the GAFA factor, where GAFA is an acronym for leading global technology giants Google, Amazon, Facebook and Apple. This does not take into account Whatsapp and Instagram (both now part of Facebook), Microsoft or Twitter which with the exception of Microsoft are more focused just on social media networking. Regional players are also excluded which would include regional technology players and telecom giants like Verizon, AT&T or Comcast, Walmart and other e-tailers in the United states, BSNL and Flipkart in India or technology giants in the closed internet arena of China like search engine Baidu, instant messaging service WeChat or Jack Ma’s Alibaba. If any two or three of these players were to combine forces where they command a majority market share they would have an almost insurmountable lead over their closest second place competitor. The Jio-Facebook deal has given birth to one such partnership with the idea of creating a mammoth JioMart to rival Amazon and Flipkart in the online marketplace, as well as hyper local essential items delivery giants like Dmart-Ready and Big Basket.
Facebook purchased WhatsApp in February 2014 for $16 billion dollars 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. Then what justified such a high acquisition cost? In 2014, WhatsApp had over 500 million global users and were adding more than 1 million users per day. Facebook had about 890 million users then but were growing at a substantially slower pace. Facebook acquired WhatsApp to get this growth of users. In a similar deal, Facebook had acquired Instagram in 2012 for $1 billion when the company had just 13 employees.
As per Google, a major part of the new Indian users are joining the internet access content in Indian languages. This number makes sense as almost all the English speaking population already have access to the internet and the majority of users now being added are from rural areas where Indian languages are the primary medium of communication. Jio has already launched many of its phones and applications in major Indian languages. Access to effectively all the mobile internet users in India along with the ability to provide content and mobile applications in Indian languages give Jio-Facebook a substantial advantage to reach every Indian that is currently internet enabled.
The Jio-Facebook and by extension WhatsApp with its India user base of 400+ million gives the partnership a very wide reach in India rivalled only by Google. Google in addition to its search business also owns Gmail & YouTube, the world leading email and video streaming service providers. Unlike Google Pay, Facebook owned WhatsApp’s Payment service was in its pilot phase in India for over two years now. This was due to its delay in complying with RBI’s data localisation regulations. WhatsApp had subsequently submitted a report to the Supreme Court that its payments platform is now compliant with RBI’s requirements. The audit report was prepared by an independent third-party auditor, certified by the central government’s cybersecurity firm CERT-in. WhatsApp Payment was recently launched in India. This could potentially integrate well with the Jio-Mart platform.
Regulators like TRAI and Competition Commission of India need to ensure a level playing field. From a government perspective, they could encourage other industry leaders to form similar collaborations. For example, Google with its search, Gmail and YouTube user base could tie up with Vodafone, Airtel or BSNL based on target market. They could further collaborate with DMart or Big Basket to be a healthy competitor for JioMart. These are exciting times with India scheduled to launch 5G services in 2022. Multimedia content, e-commerce and other services provided over high speed networks, coupled with rural penetration would go a long way in realising the dream of Universal Basic Internet access as a fundamental right.