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Reliance Jio-Facebook Deal: Shaping the Digital Future of World’s Largest Democracy

Reliance Jio-Facebook Deal: Shaping the Digital Future of World’s Largest Democracy

Jio and Facebook joining hands will also bring smaller businesses on the fringes of Digital India into the fold.

Vani Kola
  • Last Updated: April 30, 2020, 12:09 PM IST
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Facebook’s $5.7 billion investment in Jio platforms is not only the largest FDI for a minority investment in India, but it is amongst the largest strategic investments by a technology company. Among the ongoing Covid-19 crisis, we are seeing rampant valuation corrections happening in the start-up ecosystem. However, this investment is a testament that businesses that show a promise of great value will continue to attract the right valuations.

Mark Zuckerberg and Mukesh Ambani couldn’t be more different in our imagination as leaders, and Facebook and Jio have little in common on first consideration. These differences, however, fade when businesses are aligned for a common outcome, creating interesting allies to drive market leadership in new ways.

“The core of our commitment is that Mark and I share for the all-around digital transformation of India. JioMart and WhatsApp will empower nearly 3 Crore small Indian kirana shops to digitally transact with every customer,” Ambani had said.

Jio and Facebook have each played a massive role in India’s digital transformation. For 380M+ Indians, Jio has built a massive infrastructure to democratise digital connectivity. Facebook, on the other hand, has built a strong distribution network in India with 400M+ users on WhatsApp, 280M+ on Facebook, and 88M+ on Instagram. The partnering of these two powerful platforms will not only give rise to richer consumer experiences, but also open up access to the Digital Indian dream for 400M consumers.

Their joining hands will also bring smaller businesses on the fringes of Digital India into the fold. Reliance has been committed to ‘New Commerce’ initiatives, i.e. to digitize and empower millions of small shops. The partnership gives them faster, cheaper, and deeper access to Indians in urban areas and the hinterlands.

The elephant is on the table, no question that Jio+Facebook will stress many existing start-ups and several business models will fail unless they readapt. If history has shown one thing, smart entrepreneurs always find new opportunities to create success. While most retail chains in India have struggled to turn profitable, DMart has now grown to 200 locations, with $20B+ in market cap, on cost efficiency across the value chain, enabling them to pass the benefits to the consumers, and reach enviable profitability.

Indians no longer just aspire for ‘Roti, Kapda, Makaan’, though these are a big portion of the spend that this new commerce platform will target with groceries, apparels and home segments.

While consumers and SMEs benefit the most, there is an opportunity for start-ups too. Consumers will see deeper integration and solutions from Jio driving content, whether it is gaming or entertainment or education. And JioMart will offer SMEs financial services, more efficient supply chain solutions and allow small merchants to benefit and grow.

While talking about Jio+FB, let’s not forget the not too long ago Jio+Microsoft partnership. The Microsoft partnership enables start-ups to reduce their cost to innovate.

Innovators and start-ups should think of how to build new solutions on top of Jio+FB+Microsoft infrastructure. Start-ups need more efficient distribution channels in India to scale. And JioMart does just that.

It offers an efficient platform to reach 400M digital Indians. And Indians are hungry to explore new brands and new experiences in many categories. There is reason to be excited and optimistic about the second-order impact of the partnership, and the future of India’s digital economy. Companies creating disruptive technologies, interesting brands, engaging content, and development tools will see tailwinds from this partnership, and will potentially build enduring businesses.

Against the backdrop of Covid-19, dwindling revenues and funding crunch, and increasing market competition, we should expect to see consolidation and conservation of cash to create market leaders.

“The history of value creation in free India has, time and again, seen successful enterprises coming together to better the lives of Indians – be it Maruti and Suzuki for automobile, Hindustan and Unilever for FMCG, Walmart and Flipkart for e-commerce, or Disney and Hotstar for content. These partnerships have delivered product innovation and changed the face of an industry. The story of Facebook and Jio is that of defining India’s digital economy for the decades to come.”

Disclaimer:The author is managing director, Kalaari Capital. Views expressed are personal.

News18.com is part of Network18 Media & Investment Limited owned by Reliance Industries Limited.

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