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Business News/ Opinion / Columns/  Opinion | We can mark the day that data actually became the new oil

Opinion | We can mark the day that data actually became the new oil

The Facebook-Jio deal is a game-changer, signalling the final ascent of the new digital economy

The Facebook application is seen on a phone screen. (REUTERS)Premium
The Facebook application is seen on a phone screen. (REUTERS)

Last week, two post-covid earth-shaking events took place, almost on the same day. One was a crash in oil prices, with some traders even ready to pay to take oil off their hands. The other was the announcement of Facebook Inc.’s deal to buy nearly 10% of Reliance’s Jio Platforms, the Indian firm’s telecom and internet subsidiary.

While both might seem unrelated, I believe that they signal a single watershed moment. Mathematician Clive Humby said in 2006 that “data is the new oil". As historians look back, this could be seen as the day that it happened. Oil plunged, data soared.

Why is the Facebook-Reliance Jio alliance so significant? The answer lies in the new golden quadrilateral. India’s original Golden Quadrilateral was a reference to the late Prime Minister A.B. Vajpayee’s ambitious project to link the four corners of India via a highway network to assure connectivity, prosperity and accessibility to vast parts of the country. That one is done and dusted, and a new one is upon us, its corners being the four Cs of content, carriage, customer and commerce.

Through the past decades, different companies have owned or dominated these corners. TV and studios owned content, telecom firms owned carriage, the customer was touched by multiple players, and online retailers had commerce. Some ventures have tried to own two of the Cs. Say, Amazon’s play for commerce and customer, or AT&T’s botched acquisition of Time-Warner to dominate carriage and content. But this is perhaps the first grand move to own all parts of the quadrilateral.

Content: Jio has been investing in a clutch of such properties over the last few years, from music aggregator Saavn to news company Network 1, and has used them as well as its own content to create vast libraries of movies, films, and so on. Add the treasure trove of user-generated content on Facebook and the platforms it owns, such as Instagram and WhatsApp, and the combine’s content hoard would have no parallel.

Carriage: Jio is already India’s largest telecom player by some counts, and is far better placed than its rivals. It now touches more than 350 million wireless customers, and its cables are rapidly snaking their way to every household in India. Jio may soon own the data highways, streets and even the alleyways that connect Indians over the internet.

Commerce: This is where there is scope for the most disruption. Two large firms, Amazon and Walmart’s Flipkart, own the nascent but fast-growing e-commerce market in India. This field is still only a thin sliver of the overall retail business, about 2% of the total, with large-format stores making up another 2-3 percentage points. More than 90% of retail sales are through small kirana stores. Each of these shops uses WhatsApp or Facebook. So, the combined strength of these two with the Jio telecom network, JioMart and a payment play could forge a grand strategy to create a new kind of e-commerce company: a widely distributed one, connecting millions of neighbourhood stores to a billion consumers. In the words of Reliance Industries Ltd chairman Mukesh Ambani, “JioMart and WhatsApp will empower nearly three crore small Indian kirana shops to digitally transact with every customer in their neighbourhood. This means all of you can order and get faster delivery of day-to-day items from nearby local shops. At the same time, small kiranas can grow their businesses and create new employment opportunities."

Customer: It is very difficult to “own" a customer, since it is usually the customer who owns you. However, Jio, as a telecom provider, has a billing relationship with the customer, which grants it direct access and data, and puts up high exit barriers. The buying habits of Indians could serve Facebook’s ravenous advertising engines. If most customer needs are met—data, shopping, entertainment, food—she is unlikely to go elsewhere, and firmly become a inhabitant of the data quadrilateral.

Strategically, it is a game-changer, signalling the ascent of the new economy of data and content over the old economy of oil and physical mobility. The deal still leaves some questions unanswered. There are still no data- sharing agreements, so there could be divergence in the intent of players and their strategy. The competition regulator will likely take a look at the alliance, and advocates of an open internet would closely watch the implications. But, the biggest question would be how the customer gains and how she will react. Will she be a happy citizen of the new golden quadrilateral, or feel the need for options?

Jaspreet Bindra is the author of ‘The Tech Whisperer’, and co-founder of Unqbe

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Published: 30 Apr 2020, 10:54 PM IST
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