The mega deal worth $5.7 billion between Reliance Jio and Facebook has been announced. As per this deal, Facebook will buy 9.99% share in Reliance Jio for Rs 43,574 crore, which is India’s largest FDI into tech sector ever.
However, this deal will now face the litmus test of CCI or Competition Commission of India, and as per the experts, this can be tough.
What are the reasons behind this
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Reliance Jio-Facebook Will File Papers With CCI
This mega-deal between Facebook and Reliance Jio will now face the trial of CCI or Competition Commission of India.
CCI makes sure that no company or a JV between companies can kill the competition, and free-market spirit of India.
As per reports coming in, both Facebook and Reliance Jio has completed the paperworks, and they will soon file them with CCI for their approval.
Facebook can only acquire 9.99% stake in Reliance Jio, once CCI approves it.
3 Reasons Why CCI Scruitney Will Be Tough
Massive Amount Of Data
While Reliance Jio has 38 crore customers, thereby becoming India’s biggest telco, Facebook has 35 crore users in India, along with 37 crore Whatapp users.
Now, CCI needs to dig into the data aspect, and make sure that no competitive clauses are broken.
In short, they will have to make sure that the data belonging to Indians is protected, and neither of these two companies can have unfair advantage using this data to crush their competitors.
As per some reports, CCI may handover the data scrutiny part to Data Protection Authority, which is a new authority being developed to look and examine data and privacy issues.
Predatory Pricing Issue
Now, Reliance Jio has been accused of unleashing predatory pricing in order to gain marketshare.
And this aspect will be now closely monitored by the CCI and TRAI.
TRAI can be roped in by CCI, and asked to determine if Jio can have any unfair advantage, if Facebook acquires 9.99% stake in their company.
Can this partnership negatively impact the telecom sector in India?
Data Privacy Issue With Facebook
On the other hand, Facebook is under investigation for leaking and not protecting users’ data in several nations.
The Cambridge Analytica issue is still open, and several Govt authorities are wary of facebook’s ability to handle data and protect it.
Even Facebook’s co-founder Chris Hughes has called to break up Facebook into smaller companies, since its always risky for one single company to hold and control so much users’ data.
Inshort, Facebook is being accused of being in a monopoly position, and this factor alone can jeopardize this mega-deal.
CCI and Govt of India will never want one single company to hold monopoly over any sector, and Facebook-Jio combining their forces can do the exact same thing.
Besides, there are questions pertaining to Whatsapp Pay, the UPI based payment platform which is expected to launch this year, and JioMart, the new ecommerce venture by Jio.
It will be interesting to observe how CCI handles these issues, and whether they will give the green signal to Facebook-Jio partnership or not.
We will keep you updated, as more details come in.