The Facebook and Reliance Jio Deal

The current case speaks about the judgement taken by Facebook to pick up a 9.99% stake in Reliance Jio platforms. The case focuses upon the reasons why Facebook took this particular step. It briefly describes the intent of Zuckerberg and Ambani, which is to frame individual and joint values to attain their aspiring goals.

The present case highlights the motive of the founders of Facebook and Jio to come up with a super app like WeChat from China, given the fact that both these firms had a unique value proposition. Jio has an enormous reach, whereas WhatsApp has omnipresence. The case takes instances of uncertainty that were created by the COVID-19 pandemic and where there was a fallout in the prices of the assets. Constraints on the movement of individuals had an adverse effect on the service industry, and economies around the world faced the threat of incurring huge losses. In the Indian business scenario, online commerce market possibilities were expected to grow substantially. The number of internet users in the nation is expected to surge from 450 million in 2017 to approximately 850 million in 2022. It was also supported by the fact that an average of 9.80 GB of data is used by a consumer every month, which is expected to double by 2024. Facebook, on the other hand, is an American social media and technology company, which is known for its acquisition measures over the years. Facebook had bought Instagram and WhatsApp, which assisted in giving it a wide consumer base. Facebook had tied up with Reliance Jio to present distance electricity under the initiative named digital Udaan. The deal between Jio and Facebook would assist JioMart to compete vigorously against Amazon and Flipkart in the Indian market, especially in the context of grocery store space. This would give a competitive edge as Amazon and Flipkart had no data advantage that Facebook and Jio had. However, there were few concerns that were needed to be addressed. These concerns included net neutrality, threat to local interest, and collaboration playing a role in monopolizing data and wiping out media platforms such as Direct-to-Home (DTH) and Over-the-Top (OTT).

WhatsApp opposed the request from the Indian government in providing access for tracing certain messages while Ambani was of the opinion that the data of Indian citizens needed to be owned and controlled by Indians and not by foreign firms.

The elementary idea of this collaboration included accessing the closest kirana stores by the consumers, which would be significant in delivering the products and services to their respective homes. The collaboration would also pave a new way for connecting the customers to businesses, shops and products for purchase and would minimize the delivery time for the daily products. This would be significant in framing a new pathway for individuals and ventures to function more efficiently in the expansion of a digital economy. Interestingly, experts had diverse opinions about this collaboration. Some experts were of opinion that this deal would lead to an enhanced confidence level of the global investors in the telecom industry, and it would be profitable for other players such as Airtel and Vodafone Idea.

In the last section, the case briefly discusses the ideas of both Ambani and Zuckerberg. Ambani had a firm opinion that this collaboration would be significant in the nation’s evolution into an influential ecosystem which would also provide digital services to millions of people in India. Zuckerberg, on the other hand, had a firm notion that small ventures, being the core of an economy, needed their assistance. Under his vision, he wanted Facebook to be a key factor in making the global economy flourish again by assisting entrepreneurs in locked down communities. This included assisting with digital tools to communicate with customers and thereby grow their ventures. In this context, he planned to use the WhatsApp payments services to offer dedicated payment services to small-scale grocers.

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Figure 1.

Source: The authors.

The possible set of measures which can be taken taking into account the factors included in the SWOT analysis (Figure 1) are as follows:

The heads of these two firms, that is, Mukesh Ambani and Mark Zuckerberg, have to come to a common agreement that they should use this alliance for common profits.

Mukesh Ambani has the largest say in this particular alliance as the firm is backed up by an enormous Indian customer base and government support, which would be prominent in determining the possible future of WhatsApp payments.

There has to be a holistic consideration of the aligned profits and losses as a result of this alliance. Tough negotiations are crucial in order to make this alliance fruitful in order to make it mutually beneficial in the long run.

Given the fact that both these firms are market players in their own sector, it is difficult to predict who is going to play the role of a lesser partner, that is, who is going to have a less control in the alliance. Therefore, it is significant to come to a common set of agreements for this deal to make significant profits.