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16 July 2020

Google joins Jio’s US investment club years too late – why now?

A number of US technology giants have been struck down with Jio fever in July 2020, with Google the latest to contract the contagious checkbook condition – responding with a $4.5 billion injection into the Indian technology trailblazer.

Any investment in Jio, or the Indian internet market in general, is something we can fully get behind. What we cannot quite fathom is why Silicon Valley is about 3-4 years behind Faultline in identifying Jio as an investment prospect. Perhaps higher political powers were in play to prevent US technology firms investing in Jio early on when our coverage of the riotous company peaked, when acquiring these minor stakes would have a cost a fraction of the price.

Google’s 7.7% stake in Jio Platforms, the video and broadband technology division of Mukesh Ambani’s behemoth Reliance Industries, closely follows Qualcomm’s $97 million funding this week in return for a 0.15% stake and Intel’s $253 million investment earlier this month for a 0.4% return in the country’s disruptive digital services provider (Jio prefers not to be referred to as a telco these days). Google, Intel and Qualcomm join the likes of Facebook, Silver Lake and General Atlantic as US shareholders in Jio Platforms. Facebook’s investment was significant, with the social media giant taking a 9.99% share worth approximately $5.7 billion in Jio Platforms.

So, why now?

China’s app banishment from the Indian market might have served as a catalyst for US investors to pile in, spying an opportunity to fill the void left by the likes of TikTok and WeChat, owned by Tencent, which were recently kicked out of India over political tensions between the two countries. Similarly, the US-China trade war has basically walled off that part of the world from US technology powerhouses gaining any foothold for the foreseeable future, so India and its 1.3+ billion population is the next best thing.

E-commerce or data? Video or 5G?

For Google, growing YouTube’s penetration must be high on the list of priorities in a heavily mobile-first video streaming market, while some of pointed to cloud computing as Google’s absolute priority. On the search front, Google is already India’s de facto search engine, dominating with 98.3% of the search engine market, according to Statcounter, while Android is also the dominant mobile OS by a similar margin. Job done then, surely?

Apparently not, as the first joint effort between Google and Jio Platforms is not to climb further up the ladder to stifle any attempts by Apple to take the high-end handset market, but to jointly develop low-end devices with a tailor made Android OS. In doing so, Google and Jio plan to bring internet access to potentially hundreds of millions of new users across India without access to a smartphone.

“Even though we have sold over 100 million JioPhones, there are many feature phone users who are waiting to upgrade to a conventional smartphone, if only it were somehow more affordable. So, we have decided to address this challenge,” commented Ambani. Previous affordable JioPhones run the Chinese-owned KaiOS, so the Google deal is effectively another gesture to China that its technology is not welcome in India.

As for the cloud computing angle, this is less clear-cut, as that scalp appears to have already been claimed by rival Azure, after Jio inked a 10-year deal with Microsoft in mid-2019, building data centers across India to support cloud services based on Microsoft Azure for Indian businesses. The companies are offering connectivity, computing and storage, with associated technologies and services in data analytics, AI, cognitive services, blockchain, IoT and edge computing, mainly for small and medium enterprises. However, given Jio Platforms’ increasingly multifaceted business, there could be wiggle room for Google Cloud to host and deliver Jio’s video streaming assets and services, as well as getting involved with cloud computing for mobile where Google has lagged compared to cloud infrastructure rivals.

It just so happens Jio launched Jio TV Plus this week, an all-in-one app designed to collate and curate content from different OTT video platforms into a single voice-enabled app. Many have tried and failed before Jio to master the all-encompassing content application and it usually doesn’t take long before service providers and app developers realize that silos really aren’t all that bad – and the majority of consumers in today’s landscape like it that way. Jio TV Plus may have something slightly different up its sleeve though.

In more miscellaneous endeavors, Jio Glass was also revealed, a new mixed reality headset supporting holographic video. Weighing in at just 75g, Jio Glass supports 25 applications and is being targeted at the video conferencing market, although a downside is that it requires a hardwired connection.

As well as throwing telecoms into disarray, Jio Fiber’s arrival on the video market in Q3 last year triggered a flurry of activity among DTH operators. Jio Fiber is an aggregator model – collecting content from multiple platforms which is purchased in thoroughly tiered fiber broadband packages. Notably, Jio Fiber’s set tops do not offer cable or DTH channels, which instead are provided as separate subscriptions.

Amazingly, Jio represents Google’s largest ever investment in a non-US company, driven by Indian-born Google CEO Sundar Pichai. About time.