The deal between Reliance’s Jio Platforms and Facebook for the latter to pick up a 9.99% stake in Jio Platforms was widely publicised but is still pending approval from the Competition Commission of India. In filings with the CCI, it was revealed that Facebook has floated a new entity to acquire a stake in Jio Platforms.
Facebook has floated ‘Jaadhu’, an indirect wholly owned subsidiary, to purchase the minority non-controlling stake in Jio Platforms. “Accordingly, the Proposed Transaction does not alter the competitive landscape in any potentially relevant market. Facebook and Jio Platforms will continue to operate independently,” it said.
“Jaadhu is an indirect wholly owned subsidiary of Facebook. Jaadhu is a newly incorporated company formed in March 2020 under the laws of the State of Delaware, United States. As on the date of the Notification Form, Jaadhu is not engaged in any business in India or anywhere in the world,” the filing with the CCI states.
WhatsApp also simultaneously seeks to enter into a separate agreement with Jio Platforms and Reliance Retail for JioMart, as JioMart plans to integrate WhatsApp with JioMart.
The companies also said that there is no “significant horizontal overlap” in the segments they operate — consumer communication applications and advertising services. Calling the proposed deal ‘pro-competitive’ and they said it would benefit “consumers, Kirana stores and other small and micro local Indian businesses, and take forward the vision of digital India.”
Over the last two months, leading technology investors such as Facebook, Silver Lake, Vista, General Atlantic and KKR have announced aggregate investments of Rs 78,562 crore into Jio Platforms. KKR will invest Rs 11,367 crore, General Atlantic will invest Rs 6,598.38 crore, Vista Equity Partners will invest Rs 11,367 crore and private equity firm Silver Lake will invest Rs 5,655.75 crore. Facebook’s investment will be the largest at Rs 43,574 crore.
There have been concerns regarding Facebook’s investment into Jio Platforms, due to the data that they will collectively control. Speaking to the Economic Times, FB India Managing Director Ajit Mohan said that there would not be any data sharing. “Speaking on behalf of Facebook, there is no data sharing in this… I don't think we're going into this assuming that we will have agreement or alignment on everything. I think as Facebook, we continue to believe in an open ecosystem for data to flow across boundaries. And that continues to be our point of view,” he said.