Indian Internet and Facebook's 9.99% stake in Reliance Jio

Indian Internet Industry: India is in the spotlight for all the good reasons even during battling the Coronavirus Pandemic along with the rest of the world. What made everyone talk about India again? This time it the decision of Facebook Inc. led by Mark Zuckerberg to buy 9.99% shares of Jio Platforms limited led by Mukesh Ambani for a sum of Rs. 43,574 crore. This values the company Jio Platforms at a 4.62 Lakh crore ($65.95 billion at the assumption of Rs.70 a dollar) pre-money enterprise value.

A company invested in another company. What’s the big deal, you might be wondering now. Well, here’s the catch! This is the largest investment ever made for a minority stake by a technology company anywhere across the globe! Also, this is the largest Foreign Direct Investment (FDI) into the Technology sector in India that has ever been made to date.

Now that we have understood the magnitude and importance of the investment of Facebook in Jio, let us explore how the Indian Internet industry will change due to this. As one might expect there are both pros and cons of the investment. We shall look at both of them below:

Pros -

Without doubts, this business transaction has brought in a lot of positive notes to the Indian internet industry.

• The services being offered from Jio platform such as JioTV, JioCinema, JioMusic and more can get better for clients
• The reach of these services will increase across India. This will help achieve the prime minister’s goal of a digital India moves a step ahead.
• From the initial talks with Jio, it is believed that it is targeting 60 million micro, small and medium businesses, 120 million farmers, and 30 million small merchants that can make use of their services. Apart from this, of course, there are millions of other smaller informal sectors.
• Jio also mentioned that about 3 crore Kirana shops take advantage of their services in the near future.
• This also means that the number of people using the internet increases. The requirement for internet service providers will spike up
• Every business will have to look at digitalizing their operations to stay on top of the game. Services like ERP will be in demand.
• Subcontracts might be on the rise when there are services or products that are required to run the main Jio Platform.
• Data farms will be on the rise as we will need more space to store the data being called.

Cons -

Every coin has two sides. The same way, this deal also has negative sides to it.

• We already know that Facebook’s maximum users are from India with about 328 million monthly users excluding the 400 million users of WhatsApp in India. Jio boasts over 388 million clients! Both combined give a huge edge over other players in the ecosystem.
• Net neutrality is a major worry. Jio might favorite Facebook and WhatsApp in a few of it’s offering. But, of course, Jio has already mentioned that no such thing will be done.
• The way businesses happen will in itself be changed. People will be too dependent on the internet for everything.
• With huge data of the public, safety is certainly another concern.

With this, we can conclude that the decision of Facebook to invest in India’s Jio Platforms has shown the world that India is the new epicenter that drives the world’s economy. This will pave the way into more tech giants looking at various opportunities to rip the benefits of the Indian market.