Jio shows where Google, Facebook see opportunities to co-exist

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Published: July 16, 2020 5:50 PM

Google and Facebook are competitors in India with both controlling around 80 per cent of the digital ad market in the country, and the two also compete in other markets like cloud and payments, said BofA Securities.

In another report, Credit Suisse noted that Jio will introduce entry-level 4G smartphones to upgrade 2G customers and added that the Google partnership will be leveraged to design an operating system for these smartphones.In another report, Credit Suisse noted that Jio will introduce entry-level 4G smartphones to upgrade 2G customers and added that the Google partnership will be leveraged to design an operating system for these smartphones.

Google and Facebook taking minority stakes in Jio Platforms indicate that both have non-overlapping commercial arrangements with the company, are focused on non-competing partnerships and see value and opportunities to co-exist, according to a report.

Google and Facebook are competitors in India with both controlling around 80 per cent of the digital ad market in the country, and the two also compete in other markets like cloud and payments, said BofA Securities.

“Both taking minority interest in JPL (Jio Platforms) indicate both have non-overlapping commercial arrangements with Jio, both are focused on non-competing partnerships and both see value and opportunities to co-exist,” it said in a report.

It is now less likely for Google to buy a stake in a competitor, it said, while pointing to past reports which had suggested that the US tech giant could be eyeing a stake in another telecom operator.

Google will invest Rs 33,737 crore to buy a 7.7 per cent stake in Reliance Industries’ technology venture, Jio Platforms, adding to a series of investments from marquee investors since April.

The investment by Google pegs Jio Platforms at an equity value of Rs 4.36 lakh crore. With this, the total investment from financial and strategic investors into Jio Platforms stands at Rs 1,52,056 crore.

Alphabet Inc joined Facebook, which opened the investment cycle in Jio Platforms by picking up 9.99 per cent stake for Rs 43,573.62 crore, as well as chipmaker Intel Corp and Qualcomm Inc.

Pointing to nuances of the partnerships — Google’s focus on phones and Facebook’s on social media/commerce — the BofA report of July 15 said “balancing the interests of both companies will likely have some complications for Jio, both want access to users in India for their services, with a friendly gatekeeper.”

In another report, Credit Suisse noted that Jio will introduce entry-level 4G smartphones to upgrade 2G customers and added that the Google partnership will be leveraged to design an operating system for these smartphones.

“These new smartphones should help accelerate the conversion of these 2G users to Jio users. In our view, while these users have lower ARPU (Average Revenue Per User), the same users can be monetised through advertisements, etc. which increases overall profitability of these users,” the Credit Suisse note said.

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