It is uncommon for Facebook and Google, giants in their own right, and intense competitors, to come together for a common cause. Even less so when it involves billions of dollars invested individually and the next big thing at stake.
Google’s investment in Jio- Rs 33,737 crore for a 7.7% stake, indicates the size of the possible opportunity, the only reason to put differences with its American rival aside. Despite starting off differently- a search engine and a social network- they have repeatedly chased the same goals as they grew bigger.
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In the last few years, Facebook realised video is the next big thing, promoting it in its Newsfeed, pushing Facebook Watch and its videos over Google-owned YouTube’s links. Virtually overnight, YouTube links which frequently went viral on Facebook, struggled to gain traction.
Even before that, Google took a shot at the social media pie with its own Google+. It eventually ended as one of tech’s most famous failures from a giant, but not before Facebook feared the Google challenge and CEO Mark Zuckerberg, in one of his famous Roman general speeches,mobilized the company to rise to the challenge.
Facebook was upset with the partnership between Jio Platforms and Google, according to people familiar with the matter. But Jio chose to ally with Google after Facebook invested only $5.7 billion of the $15 billion it committed in the Reliance Industries digital unit, they said, asking not to be named. Jio had no option but look for a strategic and deep-pocketed financial investor like Google, according to one of the persons.
At RIL’s all-virtual annual general meeting on July 15, CMD Mukesh Ambani devoted some time highlighting the Facebook deal. “… We are privileged to enter into another strategic partnership with Facebook, one of the very best technology companies in the world. We had announced our partnership in April of this year, and we have now received all the necessary regulatory approvals. Both Facebook and Jio share a strong vision for digitally empowering consumers as well as small businesses and entrepreneurs across India,” Ambani said in his speech.
A video message from Facebook CEO Mark Zuckerberg played immediately after.
Broadly, Facebook and Google are courting for the same few data points everywhere. Your location, your consumption trends (video vs audio vs text) and websites you visit, helping them serve up more and more relevant ads. Hence the rivalry. They have fought across countries for acquisitions, investments and ad dollars. So what brings them together today?
Also Read: Facebook buys 9.9% stake in Reliance Jio for Rs 43,574 crore in largest tech FDI
Simply, the size of the India digital opportunity. At a time when the US market is saturated, antitrust awareness is higher than ever, and both companies are banned from China, even as the US and the world rebukes Chinese tactics more than ever, India becomes the next battleground for any global technology player looking for its next big growth market.
No other country has these many people discovering the internet at record low data prices. Monetizing these roughly 300-400 million new internet users, along with Reliance Jio’s might in telecom, and its promises in every other sector, make it irresistible for tech giants like Facebook and Google. Irresistible enough to keep aside its differences and become common investors in Jio.
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Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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