Why Facebook Is Investing $5.7 Billion in India’s Reliance Jioand Why It Matters – Foreign Policy

Posted: April 26, 2020 at 4:41 am


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A man waters a tree outside the Jio World center in Navi Mumbai, India, on April 22. INDRANIL MUKHERJEE/AFP via Getty Images

Welcome to Foreign Policys weekly South Asia Brief. Were leading with a story that isnt about the pandemic this week: Facebooks $5.7 billion investment in India and why it matters. Also, deadly clashes in Afghanistan threaten the peace process, Sri Lanka marks a year since its deadly Easter Sunday bombings, and garment industry layoffs disrupt Bangladesh.

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Facebook Adds Asias Richest Man as a Friend

Amid a global economic recession, Facebook made a surprising announcement on Tuesday. It is spending $5.7 billion for a 9.99 percent stake in Jio Platforms, the tech subsidiary of Indias Reliance Industries. The investmentthe single largest in Facebooks historyis a giant bet on Indias online growth.

The deal could also speed up Jios evolution from a cellular internet service to a broader one-stop digital universeperhaps something like Chinas WeChat. News of the deal sent Reliance Industries share price soaring on Wednesday, enabling the chairman, Mukesh Ambani, to once again surpass Alibabas Jack Ma as Asias richest man.

Whats in it for Facebook? In the announcement on Tuesday, Facebook CEO Mark Zuckerberg wrote that he wanted to thank Mukesh Ambani and the entire Jio team for their partnershipa rare sentiment from the side investing big money. India has long been a major growth market for Facebook, but one that it has yet to successfully monetize. There are more than 400 million WhatsApp users in IndiaFacebook owns the messaging appand its core platform has more users in India than in any other country.

And there is still room for Facebook to grow: At least half a billion Indians remain offline. Partnering with Jio and its influential owner Ambani may help the company navigate an increasingly protectionist Indian market. Ambani himself has long advocated that New Delhi should take steps against data colonization by global tech giants. The new partnership may soften his stance, as well as Indias trend toward protectionism. As Ive described in my 2018 book India Connected, Facebook has previously been rebuffed by Indian regulatorssuch as when it tried to launch a free, gated version of the internet in 2016. Jio, now the biggest cellular internet provider in India, is a valuable friend for Facebook to have in its corner.

Whats in it for Reliance Jio? This is a bit more complicated. Reliance has been described as Indias Exxon, AT&T, and Amazon rolled into one. While it has fulfilled its goals of becoming an energy giant and the biggest telecommunications player, it has yet to seriously challenge Amazon or Flipkart as an e-commerce platform. This is where Facebook can help.

Since 400 million Indians already use WhatsApp, a tie-in with JioMartReliances online retail servicewould connect tens of millions of small-business owners with a larger base of potential consumers. The partnership could upend Indias e-commerce market. While Jio has its own apps for messaging, movies, and health care, it has not been able to monetize those subsidiary businesses. Joining the countrys most-used mode of communication could boost its hopes of becoming a retail giant and speed up Indias transition to digital commerce.

Why it matters. Beyond the economic implications, there is the larger question of what kind of internet India will have in the future. Will it be free and fair, as it is in much of Western Europe? Or will it be gated and controlled, as it is in China? If approved by regulators, the Facebook-Jio deal suggests that Indias data localization plans may not be absolute. It also suggests that Western tech behemoths will continue to have an important stake in Indias future.

The timing of Facebooks investment, while likely long in the works, may also be telling. The coronavirus pandemic has led companies around the world to seek more local and more secure supply chains. In Facebooks case, befriending a powerful Indian partner could help it gain greater local influence in a market that remains the digital worlds biggest hope for growth.

Coronavirus still rising as Ramadan begins. South Asia has now recorded more than 38,000 confirmed cases of the coronavirus. As we have reported for several weeks, nationwide lockdowns have helped slow the spread of the pandemic, but they havent been able to stop it entirely. Now, some countries are allowing certain sectors to get back to work. In India, for example, farm and industrial activity may begin in rural areas.

One concern for South Asia, which is home to more than 500 million Muslims, is the start of the holy month of Ramadan on Friday. In Pakistan, the government has caved in to demands from religious clerics to open mosques for prayers as long as they follow a list of rules, including maintaining a six-foot distance between worshippers. Given the countrys high population density, enforcing those rules may be easier said than done.

Trumps immigration plans. With a single tweet on Monday night, U.S. President Donald Trump sent South Asian workers and many others in the United States into a panic. In light of the attack from the Invisible Enemy, he wrote, referring to the coronavirus, I will be signing an Executive Order to temporarily suspend immigration. For now, Trump has not ordered a halt to specialty visas such as the H-1B program, through which tens of thousands of Indians work at U.S. tech companies and banksbut he has banned the issuance of new green cards. Most of the 800,000 immigrants in the United States currently waiting for a green card are Indian citizens.

Sri Lanka attack anniversary. Tuesday marked one year since the deadly Easter Sunday suicide bombings across Sri Lanka that killed 269 people. The country marked the anniversary with two minutes of silence, but there were no large-scale events because of the nationwide coronavirus curfew. Colombo says the local militant group National Thowheed Jamath was responsible for the coordinated bombings, though the Islamic State has also claimed involvement.

Deadly clashes in Afghanistan. Taliban forces killed dozens of Afghan security force members in separate clashes in the countrys east and north this week, threatening an already fragile peace process. The clashes come despite recent high-level meetings in Doha, Qatar, between the commander of U.S. forces in the region and the Talibans top leadership. The militant group has so far held off on targeting foreign troops.

The coronavirus pandemic has led to a steep drop in global demand for all kinds of commodities, including retail clothing. In Bangladesh, factories have now furloughed or laid off more than half of the countrys 4.1 million garment workers, according to CNN. What percentage of Bangladeshs total exports do garments account for?

A) 10 percent B) 30 percent C) 50 percent D) 80 percent

Scroll down for the answer.

Clear blue skies. Theres an unexpected silver lining to the coronavirus-related shutdowns across South Asia: cleaner air. One week after Indias lockdown was announced on March 24, average concentrations of PM 2.5the most harmful level of particle pollutionfell by 71 percent in New Delhi. Once-smoggy surroundings have given way to clear blue skies. Residents report that the air has for once lost its smoky, metallic taste. People living hundreds of miles from the Himalayas can now see its snow-capped peaks. The drop in pollution will hopefully provide respite to the regions growing number of asthmatic patientsand perhaps set an example for industrial changes that could be put in place once the pandemic subsides.

D) 80 percent.

Not only do garments account for four-fifths of Bangladeshs total exports, but they are also responsible for 16 percent of the countrys total economic activity. After companies such as Zara and Unimark cancelled bulk orders, more than 2 million garment workers have now lost their jobs. Several million more workers in transportation and other parts of the garment supply chain could also find their livelihoods endangered.

Thats it for this week.

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Why Facebook Is Investing $5.7 Billion in India's Reliance Jioand Why It Matters - Foreign Policy

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April 26th, 2020 at 4:41 am

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