On Tuesday (April 21, 2020), Facebook announced an investment of US $ 5.7 billion (Rp88 trillion) in Jio Platforms, owned by Mukesh Ambani in India. Speculation is also widespread, that with that investment, Facebook will be able to expand the influence of Libra Stablecoin in India, because since last month the application of the blockchain and crypto assets has been widely opened.
Such money makes Facebook entitled to 9.9 percent of the total shares of India’s largest cellular telecommunications company.
The deal will give Facebook and CEO Mark Zuckerburg direct access to 370 million Jio customers and a strong foothold to the booming mobile market , Fortune said .
Jio Platforms is a subsidiary of the Reliance Industries group, which since 2016 was developed by Mukesh with funds of around US $ 33 billion.
In India, Jio Platforms is famous for its 4G broadband network services with cheap data rates and free domestic calls. The move succeeded in luring hundreds of millions of Indians to Jio and setting aside other competitors, Anil’s Reliance Communications.
Because of this, Mukesh became increasingly wealthy and made his company listed on the Fortune 500 in India in 2019, with revenues of more than US $ 82 billion in 2019.
Jio Platforms has now expanded to fields such as digital currency and education. Mukesh also plans to open Jio University in 2021 to educate the next generation of Indians in fields such as artificial intelligence.
According to Fortune on April 22, 2020, the biggest motive behind the Jio-Facebook partnership seems to be the plan to launch e-commerce , JioMart.
At present, Amazon and Walmart’s e-commerce company Flipkart control more than 60 percent of the e-commerce market share in India, according to S&P Global market intelligence company.
But these companies have been hit by the latest regulations in favor of domestic players like JioMart compared to foreign competitors.
In December 2019, Jio Platforms launched JioMart in three regions near Mumbai, offering more than 50 thousand food products. However, the early expansion plan for 2020 was hindered due to lock down in the country.
Fortune also said that India was the biggest market for Facebook’s WhatsApp, with more than 400 million users by July 2019. Facebook seemed to hope to use the platform as a tool to connect small businesses with online retail .
“JioMart and WhatsApp will empower nearly 30 million Kirana India small shops to transact digitally with every customer in their neighborhood,” Ambani told Fortune on Wednesday (April 22, 2020).
Facebook also has more than 300 million Indian users on its flagship social network, and its new partnership with India’s largest telecommunications provider will offer new insights into the Internet market which is expected to grow by more than 200 million users in the next four years.
In December 2019, Facebook’s Managing Director in India, Ajit Mohan, said that revenue per Facebook user in India was lower compared to other markets, but the company was investing more in the country in the coming years.
“It is a privilege for us to participate in the transformation of India, not like we can do in China,” Mohan said at the time.
Now JioMart has not benefited greatly from online shopping , because it has been blocked by lock-down since March 2020. But once the crisis has subsided, Jio Platforms and Facebook may be ready to take advantage intelligently.
Blockchain and JioCoin
Jio’s conglomerate is not not peeking at the potential application of blockchain technology in its business sector. On August 12, 2019 , at the Jio Company General Meeting which aired on Facebook, Mukesh Ambani plans to build the largest blockchain network in India, including the potential for JioCoin to be published .
Ambani said the blockchain would be the three main pillars in the company’s expansion, facing other competitors.
“Over the next 12 months, Jio will install throughout India one of the largest blockchain networks in the world, with tens of thousands of nodes operating on the first day,” Ambani said at the time.
Using blockchain, Ambani said, they also have the opportunity to create a new model for data privacy, where Indian data, especially customer data, is owned and controlled by Indians and not by companies, especially global companies.
However, in that year, the application of the blockchain especially related to crypto assets was still in the gray area.
A strong ban came from the Central Bank of India for several years, until early March 2020 the Indian Supreme Court formally canceled the instructions of the Central Bank of India which prohibits banks in India from serving financial transactions in the crypto asset exchange.
No wonder Binance’s crypto exchange was immediately taking steps quickly to acquire the largest crypto exchange in India, WazirX .
With India becoming more open to blockchain technology and crypto assets as well as a number of similarities Facebook and Jio want to develop blockchain technology, it is likely to perpetuate a rupee-worth stable through the Libra project commanded by Facebook since June 2019.
LibraINR may become a central part of payments via WhatsApp which will also be integrated into the online shopping platform , JioMart.
“India has always been sticking with the adoption of new technologies,” said Gabriel Rey, CEO of the Triv asset market in response to Facebook’s investment.
Rey said, before Facebook invested in India, Warren Buffet invested in Paytm which is the largest payment company in India. Amazon and Walmart also continue to compete to flush investment in the Indian e-commerce industry.
“Now, the implementation of crypto-asset blockchain is no longer gray in India, so Facebook has the opportunity to enter the digital money sector . But, there are a number of questions, whether Facebook and its Libra can win that market? ” said Rey.
Rey continued, the main obstacle to the crypto asset is the process of converting it to fiat money before it can be used. Crypto assets cannot be used directly to shop online .
The second obstacle is the problem of bitcoin volatility that is too high (if it really wants to be used). As long as Bitcoin volatility is high, it cannot be used as a payment method.
“I predict, if Libra is successfully launched, it will not necessarily affect the value of Bitcoin, because its use is very different. But it can bring higher liquidity to the crypto market and become an alternative to the USDT if traded later, including Libra which is worth rupees, “he added.
According to the DeepAnalysis Enterprise Blockchain – Market Forecast & Scenario 2019-2024 report , the market value of the blockchain in the corporate sector is expected to reach US $ 13.2 billion in 2024. The biggest growth will be driven by blockchain infrastructure towards business applications and consulting services.
According to Deloitte’s study , the application of blockchain technology in the telecommunications sector enables instant payment processes, while developing new revenue for companies, while minimizing fraud.