Reliance – Facebook deal : Not in the interest of entrepreneurs and innovators

https://economictimes.indiatimes.com/tech/internet/facebook-buys-9-99-stake-in-reliance-jio-for-5-7-billion/articleshow/75283735.cms

I have been thinking about this deal.

I feel this deal is a real waste of great opportunity. You would ask what is that opportunity?

This deal is more about just an opportunistic business transaction and not about innovation nor about entrepreneurship. Reliance needed the money urgently. It has huge debt of around $43Billion. The deal with Aramco is not going thru yet and Reliance needs money. They are good at deal making and they played that part very well in getting a valuation of over $60B for Reliance Jio! Even Reliance’s oil business was valued at $75B when Saudi Armco had agreed to buy 20% stake. A $60B valuation of Jio is unrealistic. This is not about the value of Jio, but this is to raise stakes very high to make it difficult for other players.

This deal also has high chances of compromising India’s strategic interest in safeguarding its digital space, after all Facebook is known to use the data to influence national elections in country after country through highly questionable methods.

Now, what was the opportunity?

For an entrepreneur, when you have such huge customer base, have access to good talent and have a brand equity, the opportunity lies in pushing the envelope further by going global. Creating a truly competitive, innovative alternatives to WhatsApp, Facebook and make a mark on the world was a clear opportunity. Reliance had an opportunity to be a leader, instill confidence in aspiring entrepreneurs and Indian talent that one can take on global brands if you apply innovation and entrepreneurship.

But with this deal, the combination of Reliance’s might, its leading position in telecom, retail and digital platform and Facebook’s ruthless business practices would stifle the innovation, would increase the barriers for upcoming players. Facebook is not known to encourage startup eco-system outside its own business empire, Facebook is not known to be good to the strategic interest of nations (other than USA), Facebook is known for ‘who cares’ attitude towards privacy policies. When such a player is joining hands with another business behemoth, it is certainly not good news for innovation and startup community.

But I am very optimistic that there would be other players who would come forward to challenge these companies. Like many business models were disrupted by technology companies, I am very sure, 5G would shake up the digital behemoths and throw up new players.

Let us keep innovating!