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Facebook invests in Jio


In a major boost to Reliance Jio, social media giant Facebook is investing $5.7 billion (Rs 43,574) in it, making Facebook its largest minority shareholder. The deal has been announced this morning, with Jio putting out a media note and Facebook talking about it on its official blog post.

There are a number of key takeaways from the announcement, which was in the works for a while. The formal announcement comes days after a business newspaper in the UK talked about Facebook making plans to invest in Jio.

The key part in the announcement of the Facebook-Jio deal seems to be about the word “platform”. Both Jio and Facebook talk of “Jio Platforms”, which is basically a term for the services that Jio is building on top of its network. It is in these services that Facebook is most interested in. In particular, Facebook wants to integrate of a lot of these services with WhatsApp, which is one of the most popular apps in India. The social media giant is hoping to monetize the messaging app by partnering with Jio and enabling a local business-customer interaction on it through JioMart.

If you are just waking up to the big Facebook-Jio announcement, here are 5 key points to note:

Facebook has made an investment of $5.7 billion (Rs 43,574) crore into Jio Platforms on Wednesday. This investment by Facebook values Jio Platforms at $65.95 billion (Rs 4.62 lakh crore) pre-money enterprise value. Facebook has bought a 9.99% equity stake in the company on a fully diluted basis. This makes the social media giant, Jio’s largest minority shareholder.

Why the deal? The primary motivation for Facebook seems to be JioMart. Keeping the huge user base in mind, Facebook wants to bring small Jio’s small business platform JioMart — to its messaging app-WhatsApp. This would help users to connect with small businesses over WhatsApp. “Our goal with this investment is to enable new opportunities for businesses of all sizes, but especially for small businesses across India Our focus will be India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector, in addition to empowering people seeking various digital services,” notes a statement by Reliance .

Talking about the business deal, Facebook CEO and founder Mark Zuckerburg said that the investment has been made because the two companies want to work on major projects that would open up job opportunities for people across India. “India has more than 60 million small businesses and millions of people rely on them for jobs. With communities around the world in lockdown, many of these entrepreneurs need digital tools they can rely on to find and communicate with customers and grow their businesses. This is something we can help with — and that’s why we’re partnering with Jio to help people and businesses in India create new opportunities. I want to thank Mukesh Ambani and the entire Jio team for their partnership. We’re looking forward to getting started,” Mark Zuckerberg said in a statement.

—Reliance Industries chairman and managing director Mukesh Ambani said the deal between Facebook and Jio will help “Digital India”. He said, “The synergy between Jio and Facebook will help realize Digital India Mission with its two ambitious goals — Ease of Living and Ease of Doing Business for every single category of Indian people without exception. In the post-Corona era, I am confident of India’s economic recovery and resurgence in the shortest period of time. The partnership will surely make an important contribution to this transformation.”

Jio said that the Facebook investment that it is receiving is the “largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India.” As far as Facebook is concerned, Mark Zuckerberg and his top executives must be hoping that it gives his company a foothold in India and on the phones used by Indians, similar to what the company was aiming to achieve with Free Basics program around 5 years ago, which ran into regulatory issues and had to be scrapped.

Courtesy – IndiaToday

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