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Exclusive | What does Jio-Facebook deal mean for their other startup investments?

The $5.7-billion investment will have a ripple effect through India’s startup and consumer internet ecosystem, say insiders.

April 22, 2020 / 05:52 PM IST

Facebook’s $5.7 billion investment in Reliance Jio Platforms for a 9.9% stake is expected to have a ripple effect through India’s startup and consumer internet ecosystem, sources have told Moneycontrol.

Industry insiders, however, were divided on whether the deal, the largest foreign direct investment in the technology sector in India, will have an impact on Facebook’s Indian portfolio companies--social commerce firm Meesho and online learning firm Unacademy.

“I don’t think Facebook’s other minority investments in India would hugely be impacted. This deal is meant to benefit Jio’s media and content portfolio, and increase the credibility of Facebook and its sister firms WhatsApp and Instagram,” a consumer internet analyst, requesting anonymity, said.

Though Unacademy and Meesho do get strategic inputs from Facebook via a common user base, both the companies are clear that the Silicon Valley-based social media giant is an investor and neither wants to sell out or give control beyond a certain limit.

“Their plans could change but currently both companies view Facebook as a partner but are also careful to maintain their individual identities and rights,” an investor in the space said, requesting anonymity.

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While Unacademy declined to comment, Meesho did not respond to an email seeking comment.

Also read: Facebook buys 9.9% stake in Reliance Jio for Rs 43,574 crore in largest tech FDI

Reliance’s startup investments and acquisitions and Facebook’s investments--current and future--may be bundled into a single app or property, the investor cited above said.

Anshuman Thakur, head of strategy at Reliance Jio Infocomm, told Mint that Facebook was collaborating with Jio Platforms and not integrating to develop a “super app” in the immediate future. This indicates a non-exclusive collaboration.

The so-called super app provides multiple services, including e-commerce, payments, games, and education.

Facebook’s broader India strategy has also piqued curiosity among investors and analysts. Facebook doesn’t usually make minority investments in companies, a convention it has broken with its Indian deals.

“For Reliance to really extract value from Facebook and its portfolio companies, a Jio or RIL investment in FB would have been ideal. However, the deal structure appears to be to inject cash into Reliance Group,” said Avimukt Dar, partner at law firm IndusLaw.

“Of course FB portfolio companies could benefit from the informal networks that Jio provides. So Facebook has a strong incentive to generally encourage them to work with Jio.”

Catch our entire coverage on the Facebook-Jio Deal here.


 

Disclaimer: Reliance Industries Ltd., which also owns Jio, is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
M. Sriram
first published: Apr 22, 2020 05:50 pm

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