Facebook Invests $5.7 Billion In Jio Platforms, Ready To Take On TikTok

On Tuesday, Facebook announced that it would pour $5.7 billion into Jio Platforms. This investment will make the company behind the social media site Jio’s largest minority shareholder at roughly 10%.

In less than four years, the subsidiary of Reliance Jio has helped 388 million Indians to go online, making it India’s biggest carrier.

Back in 2016, Facebook did attempt the same thing but it was banned by the government because of some violations of net neutrality rules.

With this investment, the company hopes to make WhatsApp, a messaging service with 400 million users in India, to become a digital payment method at the stores Jio owns.

Jio’s Ambition

With Facebook acquiring nearly 10% of stake, Mukesh Ambani, Reliance Industries Chairman, said this partnership would serve as a catalyst to help India become one of the leading digital societies in the world.

Speaking in a video conference, Ambani shared that he was delighted to have Facebook as a long-term partner. The two companies would collaborate to bring about digital transformation to India.

As the U.S-based tech giant wants to offer its highly popular WhatsApp messaging app as a digital payment service, it will but 9.99% of stake in Reliance Industries’ telecom unit. The investment is worth $5.7 billion, around Rs 43,574 crore.

Explaining how the partnership will work, Ambani shared that WhatsApp, in collaboration with Jio’s commerce platform JioMart, will allow around 3 crores of Indian kirana shops to make digital transactions with customers in their neighborhood.

When kirana businesses and local vendors register with the online grocery delivery platform JioMart, they can enjoy quick and seamless orders and payments on WhatsApp.

What Is In It For Facebook?

Apart from having WhatsApp a digital payment method for a large number of Indians, Facebook can also create an edge in its competition with TikTok, an ever-growing short video platform.

In 2018, TikTok was a sensation in India with over 100 million downloads. In the last few years, its popularity seems to only grow.

As of this year, the platform has over 200 million users in India and 120 million active users. It expects to reach the 300 million mark by year-end. 

In 2019, the number of downloads was 323 million, accounting for 44% of TikTok’s global number of users. This speaks volumes of Indians’ love to create and to consume video content.

As Facebook eyeing TikTok’s market shares, it launched a similar version called Lasso in 2019 in the U.S market.

And now with the partnership with Jio Platforms, Lasso is expected to reach more Indians in the future.

2019 saw 451 million people registered and became regular users on the Internet, thanks to Jio.

As stated in a report of Nielsen and IAMAI (Internet and Mobile Association of India), 72% of urban Indian users of the Internet go online daily. This is an equivalence of 139 million people. In rural areas, this figure is 57%, or 109 million.

This large growth in Internet users is attributed largely to Jio’s affordable data plans, giving more people in India access to the Internet.

That is not all. India is also one of the leading countries in terms of love for consuming video content and social media. A report released in 2019 by EY revealed that these are the most common activities on apps.

So with this partnership, Facebook will have two things in its hands, the reach, and the audience.

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