Inked, not closed; CCI & TRAI may have a view

The manner of media reporting a deal with catchy headlines is far away from the actual status of the deal. You will find several media reports stating, ‘Facebook has bought...’, ‘Facebook invested...’, ‘Facebook acquires....’. There is a difference between inking-a-deal and actually consummating a deal. Like any other deal, there will be “condition(s) precedent”, which needs to be fulfilled before the actual investment can flow from Facebook into Reliance.  

Reliance Jio has confirmed that the only regulatory clearance required to consummate Facebook’s investment is the ‘CCI Approval’. Given that Jio is now one of the largest telecom player in India, involvement of TRAI cannot be negated. The question is whether TRAI will react now, or will wait for the deal closure, and keep a watch on net-neutrality issues. It will be interesting to to see how will WhatsApp (including WhatsApp payments) work on Jio network vis-a-vis other networks.     

Also, there’s no doubt that the two companies (Reliance Jio & Facebook) are ‘data mammoths’ and would together control a lot of data consumers. There will be many issues, which CCI will have to consider, before giving a green-light to the proposed investment. In my view, the important considerations will be, inter-alia: 

• How will this proposed investment adversely affect the tech-giants and the local tech-startups; 
• Deal scrutiny to be more from the data advantage point of view, and not merely market share; 
• What kind of data sharing arrangement has been inked between the two parties; and to what extent it will be made available to the regulator / public; 
• Given that Whatsapp will be used for digital commerce now, how will Facebook deal with/ use the data;
• Whether there will be complete sharing of data between the two parties. 

I am eager to see, whether this deal will change the stance of Facebook on India’s demand for traceability, data localisation and sharing of user data to the enforcement agencies in India. Reliance Jio has always made statements agreeing to these demands of the Government.

Though Reliance Jio has stated that they will not offer preferential treatment to Facebook / WhatsApp, it will be interesting to see how CCI reacts to the detailed arrangement between the parties. 

Interesting times ahead! 

Abhishek Sinha