Social media giant Facebook will invest Rs. 43,574 crore or $5.7 billion into Reliance Jio. It will enable them to own a 9.99 percent stake in the Reliance Jio. This investment values Reliance Jio at a whopping $65.95 billion or Rs. 4.62 lakh crore. It will help Mukesh Ambani led Jio to reduce debt further. This deal will also help Facebook to have a strong foothold in the Indian market.
Why Facebook Is Spending That Much
Acquisition or buying a stake in a company is nothing new for Facebook. It has already acquired Instagram for $1 billion in 2012, Whatsapp for $19 billion in 2014, and virtual reality company Oculus VR the same year for another $2 billion. This deal is somewhat different than those previous deals. Either those companies were a direct competitor of what Facebook was offering or they were offering technology that Facebook wanted.
This is the single biggest minority investment by a technology player in India. This also indicates future possibilities in India. India already is Facebook’s one of the biggest user-bases consisting of approximately 328 million users. Facebook-owned WhatsApp has its biggest market outside of the US in India.
This deal will help Facebook acquire the unharvested user base in India. WhatsApp Pay has been struggling to get regulatory approval in India. But now because of this partnership with Jio will help Facebook offer other things through WhatsApp which can help Facebook gain more revenue from India.
In a statement, Mukesh Ambani said, “In the very near future, JioMart – Jio’s digital new commerce platform, and Whatsapp – will empower nearly 3 crores small Indian Kirana shops to digitally transact with every customer in their neighborhood. This means all of you can order and get faster delivery of day-to-day items, from nearby local shops.”
Whereas Facebook said, “Our goal is to enable new opportunities for businesses of all sizes, but especially for the more than 60 million small businesses across India. They account for the majority of jobs in the country and form the heart and soul of rural and urban communities alike. In the face of the coronavirus, it is important that we both combat this global pandemic now, and lay the groundwork to help people and businesses in the years to come.”
Facebook taking different routes in India than other countries. Facebook already lost a big market in China where the Chinese authority has banned Facebook. Now Facebook doesn’t want to lose a bigger market like India.