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Facebook-Reliance Jio deal is big game changer for India's digital ecosystem: India Inc
Facebook is investing ₹43,574 cr in Reliance Jio Platforms for a 9.99 per cent stake. This 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.
This partnership will accelerate India's all-round development, fulfilling the needs of Indian people and the Indian economy. The 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.
Concurrent with the investment, Jio Platforms, Reliance Retail and WhatsApp have also entered into a commercial partnership agreement to further accelerate Reliance Retail's New Commerce business on the JioMart platform using WhatsApp and to support small businesses on WhatsApp. The companies will work closely to ensure that consumers are able to access the nearest kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp.
The implications of the Facebook-Reliance Jio deal for India's digital ecosystem are many. Adgully spoke to some of the industry leaders to understand these implications.
What does the Facebook-Jio deal entail for the digital ecosystem in India?
Ashish Bhasin, CEO APAC & Chairman India, Dentsu Aegis Network: "This partnership is a good sign that the Indian digital ecosystem is recognised at the world scale. Facebook is one of the world's largest companies and their partnership with Jio is good news. Things look very bright for digital as you know digital AdEx growth is 2.5X to 3X times that of the traditional advertising. Digital is also poised to take over print and become the 2nd largest advertising medium over the next 12 months or so.
These partnerships evolve over a period of time, but you have two very strong players with financial clout and good distribution joining hands. Facebook has many products like WhatsApp, Instagram, and Messenger. This gives both businesses access to many more Indians. Another 100-200 million consumers are joining the digital ecosystem in the next few years. Through this partnership, their digital journey will be accelerated. Digital literacy will also improve governance over a period of time.
These players coming together also means that they can facilitate business at a smaller SME level. Such a partnership could lower the cost of digital transactions and benefit the market due to the sheer size and scale of these companies. Payments being facilitated on WhatsApp platform will be a huge asset over a period of time and will accelerate growth of the digital ecosystem."
Subrat Kar, Co-founder & CEO, Vidooly: "Jio entered the Indian telecom industry with a big bang and completely revolutionised digital consumption in India – be it driving more viewership on OTTs, social video platforms or short video making apps. Now with this latest partnership with Facebook, the possibilities are endless because both are giants and can change any ecosystem in a short period of time.
I hope this deal between Jio and Facebook gives the much needed push to Indian economy in the post lockdown period. On the other side, we might see re-introduction of Free Basics."
Lloyd Mathias, Business Strategist: "This is a big game changer for India's digital ecosystem as this tie-up enables Jio to consolidate its telecom offering that comprises network (pipe) devices, applications, content at a very competitive price. Given RIL's large interest in retail, they can effortlessly use the synergy of pipe+content+commerce to touch every Indian.
Raman Kalra, Partner, PwC India - TMT | Entertainment, Media & Sports: "Across various platforms (Facebook, WhatsApp, Instagram), FB enjoys significant time wallet share of Indian consumers, and with Jio telco reach services across content & commerce, it creates an attractive value proposition and stickiness for the existing consumers as well as the incremental net new consumers. This boost can fuel the digital adoption across multiple untapped segments of society across end consumers and small businesses. With Facebook focus around groups and communities, the extended reach can provide an exponential boost across healthcare and education segments.
From a media & entertainment perspective, the combined force will carry the potential. However, a lot would depend on the content creation and sharing strategies between the two. With extended reach into the hinterland and rural segments, Facebook will have the opportunity to provide extended services around short form video creation like TikTok and end the monopoly in that segment. I do expect Sports streaming to become a strategic focus for the combined force in times to come. All this leading to higher time share on FB platforms could also help them with a few incremental points gain in the digital advertising market share."
Shailesh Kapoor, Founder & CEO, Ormax Media: "The deal is an affirmation of the importance of the Indian market in the global digital economy. India has emerged as a huge market in the last few years for digital content and services, for example, it is the No. 1 market for WhatsApp. With China having ample restrictions, India is the only country with a huge audience base that the global digital giants can look at to build their worldwide presence."
Shrenik Gandhi, CEO & and Co-Founder, White Rivers Media: "Glad to be seeing such positive news in such grim times. This investment not only has monetary benefits for both organisations, but has economic benefit for the nation. This deal will empower digital transformation of millions, which shall boost not only digital ecosystem but also the nation. The next 100 million Internet users will be easier to get onboarded thanks to this deal. I am pretty sure, in the post-COVID-19 world, the world will be closely watching India!"
Shibu Shivanandan, Founder & Managing Director, PivotRoots: "As CISCO's report estimates that India may reach over 900 million users in a few years, this is a massive opportunity for both the giants. The deal will give access to millions of mom-and-pop shops across the country to be present online, increase visibility & sales on e-tailing platform. One can only imagine the positive impact it will have on jobs both in the rural and urban sector and how robust Jio-Digi-ecosystem will become."
In what ways will this deal benefit the two companies? Who gains the most out of this?
Shibu Shivanandan, Founder & Managing Director, PivotRoots: "As this opportunity can monetise customers through non-telco revenue stream, there are high chances that the collaboration will turn beneficial for both the companies.
Jio has been one of the eminent market disruptors when it introduced its telco service, followed by Jiofibre net, with a significant digital transformation story, large audience base and growing digital eco system. Facebook will be able to leverage Jio's already existing audience (customers & traders).
RIL can leverage the technology expertise of Facebook and the scale as well. In India, Facebook has over 350 million, and Whatsapp has around 400 million users. The plan to take-off a payment app in the country will be easier having a native partner's help in steering critical issues. The deal will help Facebook have an increased penetration in India because of the constant increase of internet users in the country for the last few years."
Subrata K, Co-founder & CEO, Vidooly: "If we analyse it in depth, both the giants will be benefitted immensely, but Facebook will gain the most out of this deal. A telecom giant as partner in the biggest market in the world is a blessing to have in such tough times."
Lloyd Mathias, Business Strategist: "It is clearly a win-win for both. For Facebook, it gives them penetration into the 'bottom of the pyramid', given Jio's 350 million subscriber reach. This will help Facebook realise their ambitions planned around the internet.org/ Free Basics program. It will also help them counter the impact of apps like TikTok, which has already become a large engagement tool for rural India.
For Jio, a partnership with the world's largest social network helps it cement it pre-eminence as a pipe + content. Also, it helps pare its debt and consolidate it digital services offering."
Shailesh Kapoor, Founder & CEO, Ormax Media: "Both Facebook and Jio will get strategic value from the deal, as there are a lot of synergies on offer. The exact nature of these benefits will only be known in the times to come, but one can expect co-creation of content and services, and specific benefits to Jio customers."
What does this deal mean for the Kirana sector?
Ashish Bhasin, CEO APAC & Chairman India, Dentsu Aegis Network: "Kirana stores, particularly during COVID-19, have proven to be a very reliable last mile resource. While the big shops were closed, it was the kirana stores that kept going and ensured that necessities were reaching the consumer on time. Facebook-Jio partnership could facilitate access to digital channels give these stores the ability to reach out to more people which will only benefit them."
Shibu Shivanandan, Founder & Managing Director, PivotRoots: "JioMart will now be able to use WhatsApp to enable people to connect with businesses of all sizes, especially small businesses by bringing millions of local vendors, independent hawkers and small kirana stores online. Mukesh Ambani mentioned that the deal will not only use Whatsapp for delivering goods from small merchants and kirana stores, but will also empower nearly 3 crore small Indian kirana shops to digitally transact with every customer in their neighbourhood. This will lead to faster operation of order and delivery of day-to-day items, from native shops. He also added that small kiranas and merchants will be able to grow their businesses and create several new employment opportunities using digital technologies. Hence, I believe that the entire digitally transformed business model will make life easier for the buyers as well as the vendors expecting to bolster economy post COVID-19."
Subrata K, Co-founder & CEO, Vidooly: "We can expect more digitalisation of the sector with two of the biggest internet giants in the game. The lockdown has set the field for this players to drive in more revenue out of e-commerce specifically grocery items.
We all know Reliance has been looking to enter the largely unexplored Kirana sector in India from a long time and with Facebook in, this might just be the perfect time to make Reliance style grand entry."
Raman Kalra, Partner, PwC India - TMT | Entertainment, Media & Sports: "I'd always said India will be eventually a hybrid e-commerce market with neighborhood kirana stores being an integral part of fulfilment strategy. JioMart and WhatsApp have the potential to significantly build on this model and change the rules of the e-commerce landscape in India. While on one side, the ease of WhatsApp will make it convenient for consumers to transact, the reach and prowess of JioMart engine will provide the necessary boost to WhatsApp to exponentially grow as a business platform. It will be interesting to see how Google Spot and Paytm Mall playout their strategies in this space."
Shailesh Kapoor, Founder & CEO, Ormax Media: "The JioMart plan is an ambitious one. One has to wait to see how it unfolds. If even 50 per cent of the ambition is achieved, it will be huge leap for the kirana sector."
Lloyd Mathias, Business Strategist: "The impact on the kirana sector remains to be seen – but clearly RIL's retail presence within this framework could be hugely disruptive."
How will it help Whatsapp further entrench itself as a business platform?
Shibu Shivanandan, Founder & Managing Director, PivotRoots: "The deal will enable JioMart platform to use WhatsApp in order to support small businesses on the messenger. This plays an imperative role in helping people and businesses get connected in India. Facebook already has over 400 million Whatsapp users in India. Due to the Facebook-RIL deal, Whataspp will have access to Jio's user base of 388 million which will lead the platform to have an overall growth of users."
Subrata K, Co-founder & CEO, Vidooly: "Might seem surprising, but we all know that both these companies are capable enough to make bold decisions and changes. I feel there might be a special integration of Whatsapp in My Jio app and both may join hands by having one payment interface (merging Jio Pay and Whatsapp payments) to tackle the competition of G-Pay in India.
Lloyd Mathias, Business Strategist: "Whastapp is already India's default chat platform. Now, with the tie-up with Jio, it can easily strengthen its usage as a business platform with a secure payment gateway."
Shailesh Kapoor, Founder & CEO, Ormax Media: "Whatsapp is already very big in India. So, I am not sure if this deal would have any direct impact on its further entrenchment.
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