Why Mukesh Ambani Joining Hands With Mark Zuckerberg Could Be Bad News For India’s Richest Person? 

Is Asia’s richest business tycoon Mukesh Ambani going the Mark Zuckerberg way? Billionaire Mukesh Ambani may have convinced Silicon Valley heavyweights to buy his idea of transforming Reliance Industries into an e-commerce giant, however, there are fears that his growth antics might be similar to that of Facebook’s Mark Zuckerberg.

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Facebook is currently facing several lawsuits in the US for illegally buying companies to remove competition, The Times of India reported.

While the 2020 Covid-19 pandemic has plunged the world economy into the worst recession since World War-II, it failed to make any dent in the fortunes of 63-year-old Ambani, who is now Asia’s richest businessman.

In April, the Ambani-owned Reliance Industries, India’s most valuable listed company as well as the second-biggest conglomerate by total revenue, won votes of confidence from US tech giants, Facebook and Google.

File:Mark Zuckerberg F8 2018 Keynote (41793468182).jpg - Wikimedia Commons
Facebook founder Mark Zuckerberg

These votes were in the form of strategic investments in Jio Platforms, Reliance’s mobile telecom and internet service subsidiary.

Jio also welcomed backing from renowned private-equity funds such as Silver Lake Partners, Global US firm KKR, TPG, and chipmakers Intel and Qualcomm, raising a total in investments of around $21 billion for an aggregate 33.5% equity stakes.

Not just that, the conglomerate also successfully sold a total of 10.9% in its retail subsidiary, Reliance Retail Ventures, plus a few sovereign wealth funds, for a combined total of Rs 472.7 billion.

File:Rohit Mehta Reliance smart print shoot pics.jpg - Wikimedia Commons
Reliance retail

It has also managed to raise an additional Rs 531.2 billion in equity through a rights issue to domestic stock investors. Reports suggest that with this amount, the Reliance Group would clear its consolidated net debt of nearly Rs 2.6 trillion at the end of this fiscal year.

However, while Facebook might have set the ball rolling for his firm, Ambani would do well to not ignore the fact that his ties with the social media giant could prove troublesome for him in the future.

The California-headquartered Facebook is currently left dealing with a major antitrust suit filed by the US Federal Trade Commission (FTC) as well as by a number of state governments, as part of the global backlash against the tech giant’s market dominance and anti-competitive practices.

Facebook’s acquisition of popular apps like Instagram (2012) and WhatsApp (2014) have been termed by FTC’s suit as illegal anti-competitive acts. Therefore, the possibility of Facebook losing these apps can’t be ruled out as yet.

The partnership between Ambani’s Reliance with Facebook is centered around the formation of a new e-commerce platform called JioMart, that will aim to compete against India’s current e-commerce leaders — the Walmart-owned Flipkart and Amazon.com.

File:Flipkart.svg - Wikimedia Commons
Flipkart logo

The key to the partnership is that Reliance’s JioMart receives access to WhatsApp’s 340 million users. Moreover, since the instant messaging app has a de facto monopoly in the Indian messaging app market, Ambani is looking to stamp its dominance on mobile telecom and messaging services through the partnership.

However, should Facebook be separated from WhatsApp under the ruling of the US court, the basis of the partnership will go for a toss.

Whatsapp Communication Smartphone - Free image on Pixabay
WhatsApp logo

Another challenge looming over Ambani’s dream project is the backlash against him by an increasing number of legal experts and business commentators, who feel that Reliance’s dominance in retailing does not augur well.

In the past three years, the company has made 25 acquisitions and is now armed with its strongest-ever balance sheet. These acquisitions have mostly been start-ups in e-commerce with the latest being one of India’s top online drugstores, Netmeds, in August.

That being said, according to analysts and market experts, the Reliance Group will only step up its purchases from here.

The objections against Reliance’s practices began after it announced in August, that it had agreed to purchase the core retail and logistics businesses of Future Group, India’s pioneer in modern retail.

What was specifically controversial was the fact that Future is already in a partnership with Amazon, which is currently Reliance’s biggest rival. This particular antic of eradicating potential rivals by acquiring them is similar to Facebook, and is, therefore, a reason as to how Ambani might just be following in the footsteps of Zuckerberg.

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