Google to become Jio Platforms second-largest investor

Reliance Industries has announced Google is the latest company to purchase a stake of its digital ventures business unit, paying $4.5 billion for the privilege of a 7.7% share.

The news might come as somewhat of a surprise, as the internet giant has been linked with a cash-injection into Vodafone Idea, a financially strained rival of Reliance Jio, though it nonetheless makes sense.

“Reliance Industries, and Jio Platforms in particular, deserve a good deal of credit for India’s digital transformation,” said Google CEO Sundar Pichai.

“The pace and scale of digital transformation in India is hugely inspiring for us and reinforces our view that building products for India first helps us build better products for users everywhere. Google is proud to invest ₹ 33,737 crore into Jio. I am excited that our joint collaboration will focus on increasing access for hundreds of millions of Indians who don’t currently own a smartphone while improving the mobile experience for all.”

As part of the deal, Reliance Jio and Google will jointly develop an entry-level smartphone which will be optimised for the Android operating system and the Google Play Store. This should be viewed as a massive win for Google.

With an existing subscriber base of 388 million, Reliance Jio has demonstrated its ability to democratise connectivity and gain the buy-in of Indian consumers. However, it has also demonstrated its ability to develop smart feature phones, adding more momentum to the fast-growing digital economy.

In late 2017, Reliance Jio unveiled a KaiOS powered 4G smart feature phone. Not only does the team attribute roughly half of its new subscribers in 2017 to this launch, the 70 million units it launched were sold out within a matter of weeks. The Jio Phone has lost its top spot in the affordable segment nowadays, but it has shown it can develop and sell these devices very effectively.

Another interesting element to this story is the cloud capabilities of Google. Partnering with telecoms operators is an interesting route to engage enterprise customers, and perhaps this will give Google an edge over its rivals, AWS and Microsoft Azure, as the Indian enterprise segment goes through its own digital transformation.

For the US corporations wanting to profit from the rapid Indian drive towards the digital economy, this is certainly one way to influence matters. As a 7.7% owner of the Jio Platforms business unit, Google will have more control over how connectivity is delivered, while also ensuring it is in prime position in the entry-level devices market.

Having an office in India is like having a ticket to the show but buying a stake in one of the most prominent technology companies allows it to help write the script.