Facebook’s deal with Jio for a 10% stake in the largest telecom operator in India has caught the eye of the Competition Commission of India (via Bloomberg). The commission is looking to review the $5.7Bn deal under suspicions of anti competitive activities.
Mark Zuckerberg’s deal with Jio netted the company a 10% stake in the telecom giant’s parent Jio Platforms, for a staggering $5.7 billion. Jio, which has taken the Amazon route and transitioned from its core business — i.e. telecom — to a technology led platform, has raised $13.7 billion in a record fundraising spree, never seen before globally. All of this investment brings Mukesh Ambani just a little closer to taking on the role of Amazon in India, as ecommerce is the central piece for Jio Platforms’ future expansion plans.
However, where there’s Facebook, there’s drama. The entire deal is under the review of the Competition Commission of India, India’s antitrust watchdog, which looks to prevent misuse of data in all the deals it assesses. The Chairman Ashok Kumar Gupta said that “strong network effects, high returns to scale and access to a huge amount of data” may entice digital companies to engage in anti competitive practices, without naming any names. However, who can value user data more than the company famous for running personalised ads? And who can provide more data than the biggest telecom operator in the second most populated country in the world, with one of the cheapest data rates? You get the point. And apparently, so does the Competitive Commission of India.
The main agenda of the investigation would be discovering if the deal affects competition in the affected markets, and if it will help any of the companies establish a monopoly. Facebook has argued that the deal does not alter the competitive landscape in any relevant market. However, the company was keen to set up a digital marketplace as part of the investment in Jio, so the Commission isn’t sure if it can just take Facebook’s word for it. The commission hasn’t given a timeline on the review’s arrival.
This isn’t something new for the social media company. Its acquisitions elsewhere in the world are under scanner as well. The company’s deal with Giphy is under similar review by a European watchdog, even though Giphy hasn’t made any real money yet. It seems like you just can’t be too sure when Facebook is involved.