Facebook Attempts to Monetize Investments

Facebook Attempts to Monetize Investments in India

Tech investment in India continues to grow as companies around the globe look to monetize the opportunity to bring technology to more than 1-billion people. In April, Facebook announced that it was spending 5.7-billion dollars for a 10% stake in Jio Platforms.  This is one of Facebook’s largest single investment in the history of the company.

India’s Jio Platforms is a technology subsidiary of Reliance Industries. The company focuses on next-generation technology delivering digital services across India. Its product, which is a data-centric 4G LTE network was launched in India in 2016. The company has the largest average revenue per user in the industry.

The deal between Jio and Facebook could accelerate the companies evolution from cellular internet services to a broader one-stop digital platform. News of the deal sent Reliance Industries’ share price soaring.

India is a major growth market for Facebook, but the company has yet to figure out how to successfully monetize its investment. Currently, Facebook has more than 400 million WhatsApp users in India, and the Facebook platform which includes messenger has more users in India than in any other country. Jio’s goal is to provide digitizing services for consumers, allowing them to shop online and pay online.

Facebook is Not the Only Investor In Jio

While Facebook is not the first major investor in Jio they are surely not the last. In the last 8-weeks, Jio has raised more than Rs Rs 67,194.75 from private equity investors. This includes companies like Silver Lake Partners, Vista Equity Partners, and General Atlantic.

What Does Jio Want From Facebook?

There are several services that Facebook offers that can help Jio with its next move. Jio’s online retail service would connect tens of millions of small-business owners increasing the number of partners that would rely on Jio. The partnership could change the face of India’s e-commerce market. Like Facebook Jio, which has its apps for messaging, has been unable to monetize those businesses. Joining the country’s most popular communication in Whatsapp could boost its hopes of becoming a retail giant and accelerate Jio’s presence in digital commerce. While the Facebook stock is near record highs, the company is using its clout to try to monetize several assets.

Another issue is how will this impact the growth of the internet in India. Will the internet by controlled and gated like in China or free like in the US and Western Europe?

Taking the Place of China

Facebook’s foray into India has supplanted some of the technology investment that has come from China. China has been a major investor in India’s star-up technology sector. The goal of the investments is two-fold. To take advantage of a blossoming area as well as hold influence over the way India digitizes its economy.

One issue that will hold back future Chinese investments is the skirmish that these countries are having near the Himalayan border which remains tense. The Indian authorities reported that 20 of its soldiers were killed and 17 critically injured form a recent skirmish. China said there were fatalities on its side as well. These are the first confirmed deaths in 45 years of conflict. The fighting between the two sides was reported as hand to hand as both sides respected the traditional disarmament in the region. While the risks are likely small this could be a rallying point for both sides which forces some form of escalation.

The Bottom Line

What is clear is that there is an opportunity to figure out how to monetize digital assets that are prevalent throughout India. Facebook’s Whatsapp have propagated throughout the country and Facebook is one of a few companies that are looking to monetize digital platforms.

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