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CCI, which is reviewing the Facebook-Jio deal, is also considering whether new parameters should be included in its assessment criteria.  (Photo: Ramesh Pathania/Mint)
CCI, which is reviewing the Facebook-Jio deal, is also considering whether new parameters should be included in its assessment criteria. (Photo: Ramesh Pathania/Mint)

Internet startups raise concerns over Facebook-Jio deal

  • In April, Facebook bought a 9.99% stake in Jio Platforms for $5.7 billion. Jio Platforms is a Reliance Industries subsidiary
  • Jio also has made more than ten investments in internet firms such as Fynd, EasyGov, Embibe among others

BENGALURU : A slew of venture capital firms and internet startups plans to appeal to India’s anti-trust regulator over concerns of data sharing and misuse in Facebook Inc’s Rs43,574 crore investment in Jio Platforms Ltd, said three people aware of the development.

The appeal is yet to be filed before the Competition Commission of India (CCI), even as the Facebook-Jio deal is currently under scrutiny by the latter, pending approval.

Mint couldn’t ascertain the identity of the other VC and Internet firms said to be involved in the petition.

An 18 June version of this story had mentioned Naspers Ventures as being one of those likely to approach the antitrust watchdog.

The South African internet giant denied this in a mail on Saturday.

“Naspers has no plan to appeal to India’s Competition Commission over Facebook’s investment in Reliance Jio," it said. The company had declined to comment earlier.

Jio also has made more than ten investments in internet firms such as Fynd, EasyGov and Embibe.

In April, Facebook bought a 9.99% stake in Jio Platforms for $5.7 billion. Jio is a subsidiary of Reliance Industries Ltd.

In January, Jio overtook other telecom companies to become the number one operator in India in terms of both subscriber base as well as revenue market share. The Mukesh Ambani-led firm commands a 32% market share with a base of over 1.15 billion SIM card connections.

CCI, which is reviewing the Facebook-Jio deal, is also considering whether new parameters should be included in its assessment criteria.

Peculiarities such as “strong network effects, high returns to scale and access to huge amount of data may incentivize digital firms to engage in anti-competitive conduct," a Bloomberg report said on Wednesday, quoting CCI chairman Ashok Kumar Gupta, without referring to any particular case.

Legal experts told Mint that Jio and Facebook both command a dominant position in their respective markets. Hence, CCI’s review will have to separately look at whether their dominant positions might lead to data monopoly in the future.

“CCI will need to closely examine the terms of the deal, and scrutinize any deal-term that could lead to potential abuse both of their dominant position, especially from the perspective of big data. In the absence of a valid data protection authority in India, this analysis is important since there are questions being raised (by experts, critics) around potential abuse of power," said a Bengaluru-based lawyer who advises digital firms, asking not to be named.

In the past, Facebook has run into several stumbling blocks with Indian regulators, especially on net neutrality. In early 2015, both Facebook and Anil Ambani-led Reliance Communications forged a partnership to offer Free Basics in India—a massive Facebook project that used to provide free access to a dozen digital products and services.

India’s telecom regulator TRAI, however, found it to be “discriminatory" as it violated net neutrality norms, after which the service was discontinued in the country.

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