Reliance tech arm expands monopoly muscle in India
Reliance tech arm expands monopoly muscle in India – The Indian conglomerate Reliance Industries is using its newly minted telecom monopoly to expand into other sectors of the Indian economy in partnership with multinational companies including Google, Facebook, and Microsoft. Its 5G claims are a sign that it’s now a neighborhood of the US-led global alliance against China’s tech companies.
The combined market cap of the Reliance oil and telecom empire is US$189 billion, making it the sole Indian company within the top 50 global list and 10th in Asia. In four years, Reliance Jio used its parent’s oil and gas revenues to power its way into telecom and become the leading Indian player. It bled the others with its initial low, predatory pricing rates, until they surrendered, accepting Jio because of the undisputed market leader.
Jio has also made claims that its network is free from any Chinese equipment, and of an in-house, “indigenous” fifth-generation technology, positioning itself as a serious player within the US-China 5G trade war.
But even with its fat oil fund, the Reliance empire had an enormous overhang of debt. To liquidate the loans, it floated Jio Digital as a replacement platform for services riding on top of the Jio telecom network. during a scant few months, by selling stakes of about 30-32% during this company, it’s raised or within the process of raising capital to the tune of $22 billion, and wiping out a serious a part of its debt.
Apart from financing companies that have invested, there are key tech players with strategic investments starting from Facebook’s $5.7 billion to Google’s $4.5 billion and Microsoft’s $2 billion. the opposite $10 billion worth of investments in Jio is from a clutch of venture funds that include sovereign funds of Abu Dhabi and Saudi Arabia.
If we would like to know what Reliance Jio’s market plans are, we’d like to look at its technology partners that are making strategic investments in Jio. they need all decided that Reliance Jio is that the dominant player within the Indian telecom business, and if they need to succeed in either the Indian consumers or Indian business, they need to align themselves with Jio. The services are often from selling goods, video streaming services, videoconferencing, and payment gateways to providing digital infrastructure services to business.
With the Covid-19 outbreak, the web has become even more critical for people, and this is often getting to stay beyond the pandemic. The pipeline that connects all folks Indians – consumers or business – is now controlled by Jio, which is why global tech companies are queuing up to urge a share of the Jio pie.
Just as Reliance used its oil monopoly to leverage itself into becoming the leading Indian telecom player in only four years, it’s now leveraging its leading telecom position to make new monopolies that will provide digital services over this network. it’s also eyeing an area in the building of future 5G networks in other countries, aligning itself with the US against China within the 5G tech and trade war.
Successive governments of both major parties – the Indian National Congress and Bharatiya Janata Party (BJP) – have allowed Reliance to say its monopoly muscle. We are now within the end game of Reliance asserting its total control over the Indian market.
The current government of Prime Minister Narendra Modi has even allowed a Reliance back door into India’s largest bank, the depository financial institution of India, via its 30:70 venture with Jio Payments Bank. So Reliance has also the big resources of the SBI at its disposal.
All of the digital monopolies aligning with Jio compete against each other but also complement each other. Google is that the key player during a host of cloud services for the private market through its dominance of the program and Gmail. it’s this space that it uses to urge an enormous share of digital ad revenues.
Facebook competes with Google for ad revenues with its Facebook and Instagram platforms, but within the social media space. Its business offerings on WhatsApp has yet to develop as a serious platform for business.
Apart from the PC-based software market, where Microsoft is dominant, it’s also built an outsized cloud-services platform for businesses, where it competes with Amazon, the market leader during this area. Google offers cloud services to companies but remains how behind both Amazon and Microsoft. Amazon is that the biggest player on digital retailing, a two-sided monopoly: it’s a monopoly to sellers also on buyers.
All these companies need telecom infrastructure to succeed in consumers or businesses. As each of them tries to enter new areas, like finance and payment systems, they have not only tech infrastructure but also how of “negotiating” the regulatory structures that protect the consumers and therefore the sovereignty of the country
, And Reliance offering a double advantage. It not only has its huge telecom infrastructure but also has the power to bend India’s regulatory structures. Here both Google with its Google Pay and Facebook with its so-called digital money could find a back door into the Indian market using Reliance’s existing financial infrastructure like Jio Payment Bank.
In the area of retail, its tech partners aren’t the competitors to Reliance Retail. Amazon and Walmart-Flipkart are. it’s already a crowded marketplace, with many other players stepping into e-commerce.
Here again, the Reliance philosophy is simple: Build economies of scale, and bleed the others through under-pricing, albeit it means losses for a few periods. Once the competition surrenders, then the costs can increase, even as it’s within the telecom market. this is often tried and tested Reliance policy a compliant government and regulators. In this, Reliance has been twice blessed, both by the Congress government and therefore the current BJP one.
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