Facebook, Google see value and opportunities to co-exist in Jio Platforms

New Delhi : Facebook and Google both are now investors in Jio which indicates that the two have non-overlapping commercial arrangements with the Indian platform.According to a research report by BofA Securities, RIL announced that Google will be buying 7.73 per cent stake in Jio Platforms (JPL) by investing $4.49 billion at a valuation of $58.9 billion. The investment is from the committed $10 billion fund for India.Interestingly, JPL already has Facebook as the largest minority investor which bought 9.99 per cent stake at the same valuation.”We note that Google and Facebook are competitors in India with both controlling 80 per cent plus of the digital ad market in India. They also compete in other markets like commerce, payments,” the research said.Both taking minority interest in JPL indicates that both have non-overlapping commercial arrangements with Jio, and both are focused on non-competing partnerships and see value and opportunities to co-exist.”We also note that Qualcomm and Intel investment arms also have minority stakes in JPL. By partnering with Google, it is now less likely for Google to buy a stake in a competitor. Previous media articles stated that Google might buy a stake in VIL,” the report said.The report noted that balancing the interests of both the companies will likely have some complications for Jio, as both want access to users in India for their services, with a friendly gatekeeper.In the case of Google, with the China-US tech war, risks remain that Android’s presence in China may diminish.
Google might be focusing on India to offset a part of that income with its $10 billion investment focus.The Google-Jio partnership focuses on digitisation across the length and breadth of India. JPL and Google have also entered into a commercial agreement to jointly develop an entry level affordable smartphone with optimisations to the Android operating system and the Play Store.”We note that Jio’s 4G feature phone on KaiOS ecosystem has 120 million users. An affordable 4G and 5G smartphone would help both. Developing an Android 5G app ecosystem focused on emerging markets could also be an area of focus for Google from medium-term perspective,” the research said.On the other hand, Facebook’s partnership with Jio focuses on integrating the JioMart app inside WhatsApp.WhatsApp has also entered into a commercial partnership agreement with Reliance Retail to further accelerate its online commerce business, while Facebook could improve traction of its “Facebook marketplace” by leveraging JPL’s feet on the street team as it could help remove the merchant friction with tech, the report said.”We expect Jio to have access to 500 million mobile users, 20 million households and 10 million SMEs. Furthermore, RIL also has India’s biggest physical retail stores. Such a wide reach of users and merchants allows RIL to have clear and demarcated non-overlapping partnerships with each of them,” the report said.Apart from FB and Google, JPL partners with Microsoft to offer bundled SME products consisting of MS office/Azure offering. RIL also partners with Netflix and Disney to offer content to its mobile and household broadband users.