Social media giant Facebook Inc and Reliance Industries (RIL) have made corporate history of India by clinching the largest-ever deal worth Rs 43,574 crore in the technology space. This is the largest amount of money that a company has ever spent to acquire a minority stake. While it has also brought back the crown of Asia’s richest person to RIL chairman Mukesh Ambani, the deal attests to the growing interest in Indian companies across the world.
By paying Rs 43,574 crore for a 9.99 per cent stake in Jio Platforms, a holding company of Reliance Jio Infocomm and Reliance Jio Digital Services, Facebook has valued the unlisted telecom major at a humongous Rs 4,36,176.17 crore. The numbers of this deal validates a comment that Ambani made a few years ago, where he called data to be the new oil. The market capitalisation of Reliance Industries Ltd, which owns Jio Platforms, was Rs 8,69,434.23 crore as on April 23. Of this, Jio Platforms itself contributes Rs 4,36,176.17 crore or 50.17 per cent of the mother company’s valuation. This makes Jio Platforms more valuable than RIL’s combined businesses of petrochemicals and retail, which are valued Rs 4,33,258.06 crore as per the market capitalisation on the BSE.
While the valuation of Jio Platforms holds great promise for Indian companies, it also raises concerns about net neutrality. By all measures, a majority of people in the country are accessing the Internet through Jio mobile. As such if Jio gives a preferential treatment to Facebook applications, it would hinder the natural development of its alternatives and would be inherently uncompetitive. Even if Facebook gets access to the personal data of Jio subscribers such as their location and preferences, it would give Mark Zuckerberg-led company a distinct advantage over others in selling targeted advertisements. The Competition Commission of India (CCI) and Telecom Regulatory Authority of India (Trai) should ensure that firewalls are put in the deal to provide a level playing field to every technology firm.