Friends With Benefits

There is more to the friendship between Jio and Facebook than meets the eye

- K. Sunil Thomas

Stand in front of the mirror. Scribble ‘oil’ in upper case on a piece of paper and hold it up. What do you see?

It is an urban legend in the corridors of India Inc that Reliance Industries chairman Mukesh Ambani came up with the name ‘Jio’ for his company’s shift into digital economy from the mirror image of what has long been its core competency—oil and its derivatives, from polyester to petrochemicals. And last week, to ensure that the Ambani legacy outlives its original golden goose, he accepted a friend request from Facebook, worth nearly ₹44,000 crore, for a partnership that promises to upend the Indian business scape.

“Together, our two companies will accelerate India’s economy,” said Ambani. “Our partnership will be a great catalyst to make India the world’s leading digital society.” Facebook founder Mark Zuckerberg explained further: “We are going to work together on some critical projects which will open up a lot of opportunities for commerce in India.”

The binding agreement between Mark and Mukesh is technically for a minority stake of barely 10 per cent in Jio. But the optics are resounding—this is one of the biggest foreign direct investments in India, and it is significant considering it materialised during the peak of a global lockdown. Going by the valuation, Jio is now worth about ₹4.6 lakh crore, making up about half of the total Reliance kitty. For Zuckerberg, known for gobbling up competition or those with technologies he takes a fancy to (remember Instagram and Oculus Rift?), bagging a non-controlling share in a company is in itself against his modus operandi. The generous valuation of Jio platforms is his biggest investment since Facebook famously bought WhatsApp six years ago. So, what was the lure?