Facebook Minority Stake with Reliance as a Big partner
Facebook’s entry into India has seen the company do things differently from other markets. Facebook (FB) is no stranger to significant acquisitions. The social media giant purchased stakes in Instagram for $1 billion, WhatsApp for $19 billion, and virtual reality firm Oculus VR for another $2 billion from 2012 to 2014.
In all three business deals, the common denominators were obvious. The arrangements all gave FB majority ownership and brought in technology that the world’s largest social network either didn’t have or saw as prime bolt-on acquisitions.
Its most significant and latest investment of almost $5.7 billion in Reliance’s Jio — for just 10 percent stake — makes the deal an aberration.
This is the single most significant minority investment by a technology player in India. India is the largest community globally for the company, with 328 million users approximately. Instagram has more than a million users in India, and WhatsApp announced in 2019 that it had 400 million users in the country, making it the most significant market outside the United States.
Reliance Jio recently announced that it had the most extensive subscriber customer base with approximately 400 million users, to bank on. The larger scenario is that with everything going on in China and the growing reluctance to engage with businesses there. India would then be the most significant “user base in the world that has not been entirely harvested.
Given that the market of Facebook and Instagram may not overlap low-cost telecom services, FB could be vying for other targets.
Online payments will only accelerate The FB-Jio partnership could create a gateway that serves commerce for the future. Facebook didn’t respond to a brand new messenger system built in the future.
The business partnerships between Jio and JioMart, a new commerce initiative by Reliance Retail, will see WhatsApp messenger service for a multiplying enabler.
Facebook’s entry into the Indian market has seen the firm do differently from world markets. The model flipped here as users first accessed Facebook on the phone instead of a P C, thus making the mobile the cornerstone of their strategy.
The platform was launched in 2012, in vernacular Indian languages. Yet, it hasn’t enabled the company to monetize the market as much as it had targeted. The digital advertisement share was valued at Rs 13,700 crore in 2019, with Google and Facebook reaping 70 percent of the same. Industry big names estimate Google to be holding on to the lion’s share of the slice.
Facebook hasn’t invested in large in India over the last eight years, the analyst said. There are no critical development centers in Bengaluru, nor an R&D office for cutting edge technology. This makes FB’s sudden and massive investment point towards some catching-up being done.
FB’s payment dias WhatsApp Pay, which had attempted to debut in India last year but without success. It serves to offer a significant business advantage when combined with the way retail is poised to operate once it gets approvals.
WhatsApp Pay is struggling to get regulatory approval, even though others like Google Pay have cleared similar hurdles. Mark Zuckerberg is known to tell his managers to adopt “the hacker way” or “move fast and break things.
Time will tell if dialing Jio will lead Facebook to break new ground.