Facebook Acquired Minority Stake in Jio – My Views

First thing I came to know in the morning today, after I managed to figure out it was actually morning and not afternoon, was that Facebook has acquired 9.99% stake in Jio; making them the largest minority stake holder in Jio. Afterwords I spent the entire day reading tweets and news reports talking about how this is the greatest thing to have happened to India’s digital ecosystem since the launch of Jio itself and how this can potentially be the digital moment India has been waiting for. Many talked about how this can help Facebook, while other spoke about the benefits Jio will make from this deal.

Few obvious things people pointed out, how Jio can sort out Whatsapp Pay’s troubles in going beyond pilot stage by pulling the weight of Mukesh Bhai (as some tried to suggest), while few meant that Jio’s massive cloud infrastructure can be taken advantage of. As this article from 8th Feb suggests that Whatsapp had already cleared the permission hurdle and was on its way towards a phase-wise launch of Whatsapp Pay in India. They would have moved with or without this deal; selecting Jio Cloud as storage partner will now have added advantage.

Then there were others who talked about how this could mean that we can now finally have India’s version of WeChat. Airtel has been trying to do that through Hike messenger for years with very little success. Even Jio has been pushing their own Jio Chat, which is an exact copy of WeChat since much before the launch of Jio, with very little success. The one mammoth disadvantage these earlier two attempts by these Telcos, was that they were competing against Whatsapp. Whatsapp has built their entire loyal user base based on the simplicity it offers and people were finding other alternatives too cluttered for the base function of messaging as compared to Whatsapp and didn’t move, despite these apps offering so many other features and functions.

One thing very few people deny that Indian consumer is extremely value conscious and doesn’t mind using multiple apps for same functions depending on, which is offering better value at that time. This is one of the reasons there is so much overlap between customer base of PayTM, PhonePe and GooglePay and these apps have so far found it difficult to build a loyal customer base. Now comes the question of adding additional functions to Whatsapp and make it into a super-app capitalizing on its loyal customer base. Well, you can try, however if you think it will see as much success as WeChat in China, you must be dreaming. India doesn’t want a WeChat. Stop pushing it down our throats.

Jio has their homegrown apps for almost everything the apps are being used for, be it payment (Jio Money), chat (Jio Chat), reading (Jio Mags), OTT (Jio Cinema), Music (Jio Saavn), Education (Embibe), E-commerce (AJIO); there are more. The idea is to tell you that they have an app for everything and they are all copies of the leading apps in that particular category barring a few exceptions which they have not built but acquired. Yet, none of these apps are market leaders in their respective categories despite the massive distribution advantage Jio telecom brings to the table. Very simple reason for this is, unlike telco, there is no friction when it comes to selecting the app you want to use for any of the other services. A customer finds these apps pre-installed and he/she tries to use them only to realize that there is a better alternative he/she was either already using or can switch to and promptly discards the Jio’s versions of apps.

The point I am trying to make here is that you can make an app; you can even push the app to consumer’s mobile phones, however you cannot force them to use that app for a prolonged period of time unless it offers better value than the next available alternative. This cannot be created by just copying the best available option in the app-store.

You can click here to read about my prediction on WhatsApp Pay.

Another extension of above argument it looking at it as a massive Fintech play encompassing other Financial services beyond payments. The opportunity clearly is there, and it will depend on execution. What I mean by this is that they need to think beyond copying Chinese models and build something inherently Indian. They clearly have the resources to do so. They also have a very robust distribution channel, very superior to what anyone else has. All they need is the right product and execution strategy and they can clearly become unstoppable.

Last point, which I believe is the real game-changer is combining Facebook’s online strengths with Jio’s offline presence. Together they can completely transform the O2O game. Jio has sellers and they are working on enhancing that network, combine it with the massive customer base that Facebook brings to the mix and it can build a highly efficient low cost O2O marketplace that any other player would find difficult to compete with. The only problem I see with this though is that till now Facebook has spent massive efforts on teaching the customer a behavior of constant scrolling, which is not suited for selling anything to the customer. In order to sell things customer needs to instinctively switch to browsing behavior. An Instagram could be a better place to sell stuff, however I have never used it so, it will be very difficult for me to predict how it would pan-out.

In the end there is one clear area I would suggest Facebook and Jio should together work on and that is figuring out how to do push sale without making the customer uncomfortable. Simply put, you should ask a customer to buy something, when you know he is looking for that thing. So far nobody has been able to crack this. (In my last post about Google Debit Card, I had briefly mentioned about Google potentially attempting to do something like that.) If they can crack this, it will make them the most preferred player to buy the Financial Services products from.

I am, like everyone else going to keep a close eye on the developments to see, which direction they are headed. I just wish they don’t try to convert WhatsApp into WeChat. I may have to then start looking for an alternative to WhatsApp, of which there are none at the moment. Is Telegram there yet?

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