Jio-Facebook Deal: A Lurking Peril on the Competition

I. Introduction

The mega Jio-Facebook deal will be regarded as the ‘data mammoth’ in India. They hold a very dominant position in their pertinent market and any action on their part can have a deep-rooted on their competitors. Reliance Jio has since its inception been famous for bringing out a revolutionary impact on the economy especially in the field of tele communication. Reliance Industries invested $23 billion before launching Reliance Jio back in 2016. In its early years it offered low cost, nationwide cellular broadband services. Jio since then has ranged its services housing from Jio Infocomm to Jio Mart. Its ventures have changed the life of a common may in the most extraordinary way.

Facebook has been a ubiquitous name in the social media platform since 2004. Facebook is a protuberant name in the realm of acquisitions. The social networking giant acquired Instagram for a hefty amount of 1 billion dollars in 2012. In the year 2014, the corporation bought Whatsapp for 19 billion dollars and later, a VR Firm Oculus VR for a sum of 2 billion dollars. In all the occurrences, the group attained majority entitlement in the firms. However, the latest covenant with Reliance Jio made a deviation and purchased minority stakes.

In a press release³, the major objective stated behind the pact was to create new business opportunities and up surge the small scale business using the social media platforms. The M.D of Reliance Industries expressed that the coalition between Jio and Facebook will help realise Prime Minister Narendra Modi's 'Digital India' Mission with its two ambitious goals -'Ease of Living' and 'Ease of Doing Business'- for every single category of Indian people without exception. ⁴ Soon after the deal, the Reliance Industries had launched its ‘local kirana store’ initiative which goes by the name of Jio Mart whereby the local vendors could connect with the customers through the ‘Power of WhatsApp’ and thereby enjoy local purchasing a seamless mobile experience. In the post-corona era this is something that may be a crucial and an unavoidable luxury that can be soon availed.

The Jio- Facebook deal comes as a major setback to other players in the market because of the huge amount of data possessed by these two giants combined. Facebook is a parent company of Instagram, WhatsApp which are few among other social media platform. Combined it holds a data of over 388 million Jio users, 328 million Facebook users and around 400 million users on WhatsApp.⁵ Mutually the two companies with have a hold over the following platforms from the different arena of industry.⁶

The past decade has been under propped by widespread digitization of data, information and technological intelligence, which is affirmed by the fact that the comprehensive world-wide construction of data and information has nurtured from 2 zetta bytes in 2010 to 50.5 zetta bytes in 2020 which amounts of multiplication by 25 times.. This swift evolution in the establishment of data has invigorated the all-encompassing commercial application of data as well.

Hence, it is vital that the scrutinization of anti-competitive behavior of the organizations in data businesses includes the careful consideration of non-price factors, including the strength of privacy of data the competition regulatory authorities.

The Jio- Facebook deal has now got Competition Commission’s acquiescence on the matter. However, the latest investment has the impending possibility to abate the prevailing consumer market and create monopolistic condition that can debilitate the consumer interest.

II. Impact Of Data Agreements On The Competition

(A) Jio Mart

The conflation of data between Reliance Jio and Facebook will succour Mukesh Ambani to establish Reliance’s e-commerce endeavour Jio-Mart. The venture proffers precipitous delivery of groceries by local stores located in the neighbourhood. Jio through its vast network has listed over 30 million indigenous grocery stores on its online platform. Reliance envisages creating a cumulative platform which will create a syndicate of online and offline conduit.

The ubiquitous presence of Jio’s network in India and the data mammoth Facebook consortium has the possibility to edge out multinational retail platforms like Amazon and Walmart. It will also pose an arduous challenge to FMCG companies and native rivals with minor capitals like Grofers and Big Basket who also bid upon home-grown stores and local suppliers at every segment of dispersion.

Existing online and offline suppliers and wholesalers of FMCG companies will steadily become inconsequential as the inventories will be regulated by the Reliance network. Besides, Reliance is likely to shift all payment to Jio Money which will provide alluring cash back offers. Consequently, native traders and other local departmental stores would become progressivelyreliant on the Reliance’s establishedgrid on all sides, i.e., acquiring of goods, its online distribution and offline sales. Subsequently, after-math of this venture will be unification of vertical chain of distribution at wholesale and retail segment, since both the entities will be regulated by the Reliance group along with the compulsion of Reliance payment gateway. Furthermore, the data colossal Facebook’s proficiency in behavioural advertising will act as a catalyst in espousal of Jio Mart app.

Moreover, another menace lurking behind the silhouette of this syndicate is the unification of Facebook’s long mired payment app ‘WhatsApp Pay’ which was devised to operate on Unified Payment Interface. However, the project failed to acquire clearance although this consortium will provide the opportunity to Facebook to recuperate WhatsApp Pay with Reliance’s Jio Money. The immense data of Jio and WhatsApp combined will open the new horizon for the venture, which will have the proficiency to encompass every corner of the country, but with great power comes great dangers. WhatsApp with the aid of Reliance can edge out its deep-rooted competitors like Paytm, Phonepe or, Google pay, consequently, paving way to monopolise the market in the country.

(B) Data Agreement

One of the foremost issues that have to be addressed is the combination of the database of these data mammoths. Since, the rivals are now collaborators.

The acquisition of Jio stakes by Facebook may now resolve these differences. Facebook and Reliance Jio have a massive amount of data of their combined 600 plus million users which if shared, would most definitely give an unfair advantage to these companies.

Furthermore, the merging of data in consequence of the combination will act a game changer for the Facebook’s Artificial Intelligence venture. As the cosmic data will cater to the need of AI algorithms which can easily place the ball in Facebook’s court and can turn the tables for the other players in the market.

III. Role Of CCI

The recent syndicate of Mukesh Ambani led Reliance with the data mammoth Facebook which has been currently approved by the competition watchdog Competition Commission of India. The customer database of the resulting syndicate have a massive amount of data of their combined 600 plus million users which if shared have an imminent aptitude to exploit the Big data created in order to edge out the existing competitors. This ambitious deal has compelled the existing competitors in the market to apprehend some anti-trust concerns.

When appraising the appreciable effect of any combination in the existing market, the regulatory authorities have usually focused on price, outputs and turnovers. They provide miniscule to no heed towards additional factors having an appreciable effect on the competition such as privacy, data and different factors proving to be backstage player in this case giant infrastructure of both the companies and Facebook’s deep-rooted seat in social media platform and immense experience in behavioural advertising.

This constricted and traditional methodology of the regulatory authority fails to take into consideration the negative connotations of assortment of personal data, especially when done at an enormous level.

Additional, lurking peril for the competition is the bundling of services in one app resulting in limiting of the competition. The e-commerce venture of Jio i.e. Jio Mart has coalesced messaging, payment and e-commerce, with support of the deep pocketed debt-free Reliance group the venture can easily edge out other native business.

The German competition regulatory authority had earlier asserted emphasis on the fact that access to personal data of the customers and users is quintessential for the company and has an exemplary impact on the prominence of the company in the market, and the usage of such data not only concerns the data regulatory authorities but in this digital era it has become an important relevant factor of trepidation for the competition protection authorities too.

Based on conventional competition rubrics, it was arduous for the authorities to gauge the resources and market positions of the combining consortium, especially in the technology sector. However, if the CCI had undertaken the appraisal of the combination emplacing database of the companies as a relevant metric evaluating the impact of the combination then would have been proved that the consortium was in violation of the Section 3(1) of the Competition Act, 2002 which prohibit any enterprise from entering into any agreement which has appreciable adverse effect on the competition. Moreover, any agreement in violation of Section 3(1) is void. Therefore, if CCI had given regard to data sharing then it would have been affirmed that deal had appreciable adverse effect on the competition and the results would have been very different.

Foregoing data propelled transactions, such as WhatsApp acquisition by Facebook and Microsoft- LinkedIn and the recent approval of the Jio- Facebook deal by The Competition Commission has proved that the importance of data in the competition sector has been not yet acclaimed.

IV. Conclusion

The Competition Commission of India is the sole supervisory authority that undertakes the scrutiny of any agreement which could have appreciable adverse effect on the competition in the market. Jio- Facebook approach towards data administration could prove to be a menace not only for the competitors in the market but also for the small organisations which share data with these platforms.

It was anticipated from the anti-trust watchdog of India that it shall yonder from its conventional methodology and scrutinize this deal as an unusual one especially when the data protection laws in the country are not very assuring.

The escalation in the consolidation of data in the digital era has ominously increased the necessity for amendments or at least restructuring of laws and policies to confrontation the challenges proffered by the manipulation of data by enormous organisations. Those challenges comprises of segregation of burgeoning players from the market due to the ascendant positions held by such enormous companies rebuffing the users to transfer their data to nascent competitors in the market, the leverage of access to personal data users across different social media platforms owned by the same company (Facebook is the owner of Instagram and Whatsapp, and Microsoft owns LinkedIn for instance), and the dearth of pellucidity on the data that is perceived and surmised from users, which provide undue advantage to such companies which in consequence hamper the competition in the market.

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Footnotes

1. Author is a student at Amity Law School Delhi, GGSIP University, India.

2. Author is a student at Amity Law School Delhi, GGSIP University, India.

3. Press release by Facebook (21.04.2020), https://about.fb.com/news/2020/04/facebook-invests-in-jio/ ↩

4. https://www.businesstoday.in/current/corporate/facebook-reliance-jio-deal-social-media-giant-pumps-in-rs-43574-crore-in-mukesh-ambani-telco-10-points/story/401654.html ↩

5. https://economictimes.indiatimes.com/tech/internet/deal-to-go-to-cci-trai-may-also-step-in/articleshow/75306062.cms ↩

6. ibid. ↩