Facebook has become the largest minority shareholder in Indian oil and telecoms tycoon Mukesh Ambani’s cut-price Jio mobile internet network with a $5.7 billion deal.
Facebook and Jio said they planned to work together to connect India’s army of 60 million small shopkeepers, known locally as kirana, with WhatsApp users via the mobile network’s eCommerce platform.
The deal is Facebook’s largest single investment to date and represents a huge bet on one of its biggest markets, which is home to 400 million of WhatsApp’s 2 billion users. Facebook and Jio have both faced headwinds despite huge user bases in India.
The social network has been pressed by the Indian government to address misinformation spread on WhatsApp, which led to a spate of lynchings while facing regulatory pushback on the launch of its WhatsApp-based digital payments service. Reliance Industries, Jio’s parent company, has a $40 billion debt pile and Ambani’s oil refining business will have been impacted by the global slump in oil prices.
The deal is the latest attempt by a Silicon Valley giant to crack what is one of the world’s biggest markets. Amazon announced plans to invest $1 billion to help small Indian businesses operate online in January, as part of its battle with Walmart’s Flipkart while Google Pay has fought for market share against local mobile payments rival Paytm.
Key quote: “In the near future JioMart … and WhatsApp will empower nearly 30 million small Indian kirana shops to digitally transact with every customer in their neighborhood,” Mukesh Ambani, Reliance CEO said in a video statement.
Key background: A family feud gave hundreds of millions of Indian access to mobile internet, and bolstered Mukesh Ambani’s fortune. The Indian billionaire launched Jio in 2016 after losing control of Reliance’s telecoms business to his younger brother, Anil, when they divided their father’s business empire. Jio sparked a price war that gave 388 million users access to fast, and cheap, mobile internet, but squeezed the incumbent networks and led to to Anil Ambani selling his telecoms network to his older brother in 2018. Facebook’s deal with Reliance Jio values the business at $66 billion and Forbes estimates that Mukesh Ambani has a $48.6 billion fortune.