Tech this week | Jio-Facebook’s e-commerce monopoly isn't a foregone conclusion
Earlier last month when Facebook made a $5.7 billion, (₹43,574 crore) investment to buy 9.99% share in Jio Platforms ltd, it resulted in plenty of analysis how this deal was going to impact the Indian digital ecosystem.
There is, of course, plenty to learn into. To begin with, you could say that for Facebook, this is all an extended ploy to monetize WhatsApp. WhatsApp may be the dominant method of communication in India. In 2017, Indians made 50 million minutes of WhatsApp video calls a day.
Considering the dilemna, Indian traffic on WhatsApp will be substantially higher. WhatsApp has likely acquired a sizeable number of Indian customers since 2017 and the statistic above does not even take into account time spent by Indians on voice calls and texts.
India is an enormous market chance of WhatsApp, and considering the platform is end to get rid of encrypted and will not run ads, the marketplace dominance does not directly result in revenue. It is no wonder that WhatsApp has been trying to launch a payments service in India for over 2 yrs now. ‘WhatsApp Pay’ has recently been granted regulatory approval to roll out the service in a phased manner. Chatter following the deal focused on the blend of WhatsApp and ‘JioMart’ bringing kirana stores online, making a decisive entry right into a new, relatively unexplored landscape.
When asked to accomplish a ‘TalkPoint’ by The Print about them, I came across to my surprise, the widespread speculation around whether this news was the beginning of an inevitable monopoly. The short response to this question is that the Jio-Facebook alliance translating into a monopoly is definately not a foregone conclusion.
The long answer begins with my information economics class for The Takshashila Institution. During the segment on standards wars, among the key topics is around what are the key assets for a technology to establish itself as a typical. According to Hal Varian (Chief Economist at Google), there are seven key assets to a standards war; control over an installed base of users, intellectual property rights, capability to innovate, first-mover advantages, manufacturing abilities, strength in complements, brand name and reputation.
Just looking at the deal and the type of JioMart and WhatsApp, it is evident that the alliance gets the first mover advantage. Kirana stores are an unexplored market and there's a significant possibility to be tapped here. But an initial mover advantage does not directly result in victory.
History of modern tech (a fascinating topic for a different column) has repeatedly taught us that doing something right could be more important than doing something first. The iPad had not been the first tablet and Microsoft Zune was launched before the iTouch. But Zune, and the early opponents to the iPad have already been relegated to being case studies in product failure.
Put this into context, and the others of recent news starts to seem to be such as a natural flow of events. The week the news headlines broke, Amazon’s homepage was updated with articles by Gopal Pillai (VP, Seller Services) titled ‘Local Shops on Amazon, a fresh beginning for offline retailers, highlighting Amazon’s shift of focus towards the issue. The timing is not a coincidence, competition moves fast. In the coming months, expect similar developments from Flipkart and Snapdeal aswell.
It is also important to note that core competences are likely to play a crucial role here. Jio and Facebook can boast unparalleled national integration and scale. However, neither of these companies have the knowledge in seller interactions, operating complex supply chains, and consumer preference data that Amazon boasts.
Therefore the first mover advantage isn't definitive. Comparative strengths in other assets will be established as time passes. It is prematurily . to state who the players will be. You will find a whole couple of plausible combinations involving payment apps, telcos, and e-commerce giants that may be possible. The Jio-Facebook alliance is likely the first alliance in a battle that is going to be long and drawn out. In addition, we have no idea yet how the capability to innovate and strength in complements will demonstrate itself over the coming times.
Borrowing from Donald Rumsfeld, there are known knowns; there are things we know we realize. We also know there are known unknowns; that is to say we know there are several things we do not know. The outcome of the deal on the e-commerce landscape in India is filled up with known unknowns.
Sure, given Facebook’s financial might and Jio’s demonstrated knowledge of the Indian market, it really is so simple to classify the move as the beginning of a monopoly. It may well turn out to be one. But to summarize that a monopoly is inevitable or that in a few sense we are already there, is jumping to conclusions.
Source: www.deccanchronicle.com
