In its largest foreign investment of $5.7 billion, Facebook is taking a 10% stake in Indian...

In its largest foreign investment of $5.7 billion, Facebook is taking a 10% stake in Indian telecommunications operator Jio Platforms. The Indian firm’s subsidiary, Reliance, has upended India’s mobile sector by spending billions to build a nationwide 4G network and offer dirt-cheap data plans, which hundreds of millions of poor Indians have used to enter the internet economy for the first time. The union provides Jio with cash, Facebook’s WhatsApp, and access to Facebook’s expertise in reaching consumers and using their information to sell ads.

Q1 -Why does Reliance need Facebook in the Indian digital market?

Q2 - Why does Facebook need Reliance?

Q3 - Is this an alliance of equals or does Reliance risk being squashed by Facebook in the relationship?

Solutions

Expert Solution

Reliance needs Facebook in the Indian digital market because :

Facebook has the expertise of reaching consumers and using their information to sell ads.
Whatsap is installed in more than 450 million smartphones in India, which is much higher than the reach of the Jio family of apps
Whatsap's reach can be used to leverage Jio's offerings
Jio plans to launch e-commerce operations by tying up with local retailers. Whatsap's integration with Jio and Whatsap's data mining capabilities can be invaluable in this venture

Facebook needs Reliance because :

Reliance is one of the biggest Indian conglomerates, with far-reaching government influence
It is one of India's most trusted brands. It can be a very useful partner for Facebook, which wants to make Whatsap into a super-app like WeChat.
Jio is the largest telecom operator in India, with better technology and financial health compared to other operators.

This is an alliance of equals. Reliance is one of the biggest Indian conglomerates, with huge influence. Reliance retains 90.01% of Jio, and Facebook has less than 10%. Reliance does not risk being squashed by Facebook in the relationship. It is a mutually beneficial relationship because each company has its strengths which they contribute to Jio.

jeff jeffy answered 1 year ago

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