On Breakingviews: Facebook is paying $5.7 billion to buy a 10% stake in Reliance Industries' digital business. ugalani writes how WhatsApp could power the retail ambitions of India’s richest man and perhaps eventually help him build a lucrative super-app
For an outlay of just 1% of its own market capitalisation, the company led by Mark Zuckerberg gets a piece of Ambani’s newly reorganised and fast-growing tech business. Jio Platforms houses Reliance’s music, TV and cinema streaming services. It also includes a high-speed mobile network that has signed up 388 million customers in less than four years.
The duo’s first focus will be powering up JioMart. The business aims to connect customers to mom-and-pop stores that dominate the $800 billion retail market, including groceries. JioMart sets standard prices and shopkeepers can offer discounts. Users also can redeem coupons handed out by other Reliance businesses from petrol pumps to fashion, a mechanism that might help keep them transacting within the broader empire.
If JioMart is integrated into, or featured on, WhatsApp, it would accelerate growth of a service still in trial phase. Businesses large and small rely on the chat app to share information. WhatsApp’s new payment system could serve as one of many payment options, too. Further out, Facebook and Reliance might try to embed a variety of online services together along the lines of what WeChat has done in China, where Facebook is shut out.
Minority stakes have their limitations. There’s nothing to stop WhatsApp, which counts India as its biggest market, from integrating other non-Reliance services. And competition in everything from groceries to payments is fierce with Amazon, Walmart-owned Flipkart and companies backed by Alibaba and Tencent all committing big bucks to India. The country’s digital landscape is changing fast, and everything is up for grabs.
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