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What all one can expect from the Facebook and Reliance business deal

Facebook’s investment of $5.7 billion (Rs. 43,000 crore) for a very small minor share raises many questions in the technology circle . The deal with Reliance also gives Facebook access to the latter’s bouquet of digital apps. These include in-house apps such as Jio Money, Jio TV, etc in addition to the young startups acquired by Reliance or its subsidiaries across categories such as logistics, e-commerce and artificial intelligence.

 

It is quiet evident that, Jio Platforms will help Facebook to build similar products for the other key markets around the world, as per Mark Zuckerberg, CEO, Facebook.

 

A definitive question arises in everyone’s mind on how Reliance Jio is going to challenge the e-commerce behemoth Amazon and Walmart in the long run.

 

As per Mark Zuckerberg, “all the products and technology that we’re building to enable that (Jio) partnership are going to be things that we want to do around the world. So we’re very excited about working with them to drive this vision forward and then extending it everywhere over the coming months and years.

 

The capability of Reliance Jio  is undoubtable in India with massive retail infrastructure and pan-India presence and the timing is perfect as grocery business is booming worldwide – be it online or the neighbourhood kirana store – in these social distancing times. However, now due to coronavirus, netizens are also not comfortable to receive any goods from any e-commerce portals, it will be expected to continue for some more time.

 

Jio is gradually transforming from a telecom enterprise into an IT/Tech company with multiple emerging technologies, including Artificial Intelligence (AI), Internet of Things (IoT), Blockchain, Virtual Reality and Cloud Computing.

 

With this mega deal , Jio along with the Facebook and Whatapp network , he will try to enhance it’s dream project JioMart ,where Jio is targeting millions of small businesses and shops across India and they want to try to help get them on to a single network that you’ll be able to communicate with through WhatsApp and do payments online through WhatsApp. Seems it is a straight competition to the existing players into this segments including Amazon, walmart-led Flipkart, Grofers and Big Basket.

 

 

Facebook has placed a right bet on Reliance Jio as it has a has a massive retail infrastructure and pan-India presence and the timing is perfect as grocery business is booming worldwide and in India too.

 

Facebook has long been striving to enter the big club of the e-commerce world and now, India which has a huge growth potential in the segment can become a fertile ground for its dream to go global and launch similar investment plans in other countries as well, according to leading industry experts.

 

Facebook has an expertise in all these areas and the collaboration can open myriad new ways for the Indian telecom giant to leverage it and become a tech behemoth in the country in new-age technologies and passing those on to its over 388 million Jio subscribers.

For Menlo Park, California-based Facebook which is largely a B2C company with a current $512 billion market cap, the B2B India experiment can open the door for a bigger opportunity globally, taking on the e-commerce leaders. The social networking giant has got deep pockets too.

Facebook has been trying to figure out e-commerce for the last decade like with its seller-focused Marketplace, but its prior retail initiatives have mostly failed to take off.

 

WhatsApp has over 400 million users in the country. The vision of Zuckerberg to make it big with merging all its family of apps. Hence, any small businesses can have a presence on all of the apps — Facebook, Instagram, WhatsApp and Messenger and can communicate organically with people and then increasingly can do things that can help them drive transactions,” he said.

 

“We started rolling out things like catalogs in WhatsApp, we’re working on payments to be able to complete transactions and we’ve rolled out a new ad format, click to messaging ads, where basically small businesses and different businesses are finding that their message threads with people perform better for driving sales than their websites or other presences; they basically buy ads inside Facebook or Instagram and send people through chat threads,” Zuckerberg explained.

The Reliance and Facebook alliance inserts a powerful new competitor into an arena already contested by Google, Walmart Inc., Amazon.com Inc. and SoftBank Group Corp.-backed local outfit Paytm. But none of them have the reach of WhatsApp, the nation’s most popular communications platform.

This collaboration will bring hundreds of millions of Indians closer to online ordering and their first digital financial transactions,” said Nandan Nilekani, chairman of Infosys Ltd. Competition between players will fuel innovation on better features and newer solutions, further driving adoption.

“The next digital payments battleground is online to offline commerce,” said Vivek Belgavi, a Mumbai-based partner and fintech leader at consultancy PwC. “Every e-commerce player will want wallet share in the adjacent digital payments industry.”

India is already Facebook’s single largest market. Another advantage we can see , this tie-up is, Jio’s mobile telecom service leads the country with nearly 400 million users. They can target  for the WhatsApp payment-Reliance combination into crowded digital payments, India is poised for a fresh round of intensive competition,” said Nilekani, who also helped develop the country’s digital transactions backbone, the Unified Payments Interface. “This is going to take digital payments to a new level.”

There is a main concern on,  as the Facebook’s track-record on data privacy issues, executives of both companies said that, data sharing was not a part of the deal. “There will be areas that we will collaborate in but there will be areas where we will potentially not agree with each other,” a Jio official said. Facebook, on the other hand, maintained its stance in favour of an open ecosystem for data to flow across boundaries.

 

How WhatsApp looking to pursue digital money lending in India?

WhatsApp is apparently looking to pursue digital money lending in India. The Facebook-owned instant messaging company has listed to offer “advance money or give credit on such terms as may seem expedient, and with or without security, to customers and others,” as one of the areas that it is looking to explore, in a Ministry of Corporate Affairs filing earlier this month.

WhatsApp is barred by law from doing banking business, it will have to partner with existing banks to provide loans in India. Now it is possible with the tie-ups.