MUMBAI: The Competition Commission of India (CCI) has approved Facebook’s Rs43,574-crore purchase of 9.99% stake in Jio Platforms to social media giant Facebook. India’s antitrust watchdog was reviewing Facebook Inc’s purchase of a stake in Reliance Industries Ltd’s digital assets, a deal that would give the US giant another foothold in one of the world’s fastest growing internet markets. The deal was announced on 22 April.
In a tweet, the regulator said, “CCI approves acquisition of 9.99% stake in Jio Platforms by Jaadhu Holdings LLC."
According to a submission made to CCI, Jaadhu Holdings, LLC is an indirect wholly-owned subsidiary of Facebook Inc.
"Jaadhu is a newly incorporated company formed in March 2020 under the laws of the State of Delaware, US...Jaadhu is not engaged in any business in India or anywhere in the world," it said.
Facebook, in its application to the competition commission, said that the deal does not alter the competitive landscape in any relevant market. Regulatory filings show Facebook and its unit WhatsApp Inc have proposed to set up a digital marketplace as part of the investment in Jio.
Jio Platforms’ fully-owned arm, Reliance Jio Infocomm Limited, has 388 million subscribers.
The Mukesh Ambani-led telco commands a 32% market share with a base of over 1.15 billion SIM card connections. CCI, while reviewing the deal was 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 last week, quoting CCI chairman Ashok Kumar Gupta, without referring to any particular case.
The US social media giant’s investment in Reliance’s digital unit is the biggest among a string of investments amounting to $13.7 billion into Jio Platforms Ltd, controlled by Mukesh Ambani. Approval of the deal will help Asia’s richest tycoon stick to his debt reduction plan and create a formidable homegrown digital force that can take on the likes of Amazon.com in India.
Starting with Facebook, Jio Platforms concluded 11 deals in all with 10 investors in just over 8 weeks, securing Rs1.15 trillion in investments.
India, with its 1.3 billion population, is one of the world’s fastest growing online arenas, where Amazon to Google are vying for dominance. According to RIL annual report, this partnership will focus on India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector, in addition to empowering people seeking various digital services.
According to a Mint report last week, 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.
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.