Facebook is splurging on an objective to capitalize on India’s resurgent Internet space. Per reports, the Silicon Valley giant has purchased a 10 percent stake in Jio Platforms, the digital technology arm of local business conglomerate Reliance Systems.
A Partnership of Two Behemoths
Reliance is owned by Mukesh Ambani, the country’s richest man and one of its foremost industrialists. Jio has become one of the firm’s most profitable subsidiaries, and its mobile network, Reliance Jio, is one of the country’s top communications service providers with almost 400 customers.
The service was established less than five years ago, starting a price war and forcing industry behemoths like Vodafone and Airtel to conduct mergers of their own and adjust prices to stay competitive.
Jio also has JioSaavn and JioTV, which serve as a music and video streaming service, respectively. Facebook has now purchased a tenth of the business, with the deal reportedly worth about $5.7 billion.
The acquisition marks Facebook’s biggest purchase since 2014, when it acquired WhatsApp. The new investment in Jio also reportedly includes a commercial agreement with the mobile messaging service, which could provide an avenue for Facebook to enter the e-commerce market leveraging on its 340 million WhatsApp Indian users.
It’s also a significant period in India’s tech space, as the government appears to be opening up the sector more and allowing firms to incorporate themselves. However, foreign firms have still found it difficult to operate, as regulations appear to be regularly shifting. Thus, the need to merge.
Facebook’s chief executive Mark Zuckerberg explained that India is home to the firm’s largest market, as well as over 60 million small businesses that will need digital and communications services that will help them to scale.
Could Libra Come to India?
The deal could also put Facebook in a pole position to run pilot programs for its Libra cryptocurrency. The digital asset has been criticized by regulators both at home and abroad, but it could find a home in India.
It’s common knowledge that the country has a massive market. Also, given Jio’s reach along with the firm’s payment service JioWallet—it could serve as a valuable partner for Facebook to launch Libra in India.
It’s also worth noting that the Indian Supreme Court ruled earlier this year to reverse a blanket ban on cryptocurrency activities. Access to these assets has been deemed illegal by the Reserve Bank of India for years, but the Supreme Court’s ruling has now breathed new life to the country’s crypto space.
Several firms have already begun to prepare for entry into India, including crypto exchange Binance. Facebook could be gearing up for a possible entry as well.