Senior executives of Facebook and Jio, however, sought to allay such fears by highlighting that there was no data-sharing agreement between the two.
Within days of announcing their $5.7-billion deal, JioMart Platforms reportedly kick-started pilot projects in Navi Mumbai, Thane, and Kalyan, testing its WhatsApp-based online shopping portal. It is still early days for the stated objective of the Facebook-Jio deal: Empower 25-30 million small grocery stores to digitally connect and transact with their customers using Facebook’s WhatsApp application.
Already some trader bodies have raised concerns over sharing the customer data with the Reliance group, which also runs modern retail stores under the Reliance Mart brand. One such body, Federation of All India Vyapar Mandal, issued a statement urging the government to take necessary steps to maintain data security
and confidentiality before allowing the deal. Senior executives of Facebook
and Jio, however, sought to allay such fears by highlighting that there was no data-sharing agreement between the two.
Legal experts point out the wide-ranging impact of the deal on sectors, such as retail, telecom, and e-commerce, could blur several regulatory contours going forward.
On the face of it, the regulatory scrutiny of such a deal comes under the ambit of the Competition Commission of India (CCI) to analyse its impact on the competitive landscape. Based on the information provided by the parties, the regulator is likely to evaluate the impact of this deal on different segments of the market. This would involve looking at horizontal overlaps and vertical or complementary links between the two parties, say experts. “It would probably end up becoming an elaborate review,” says Sajai Singh, partner in law firm J Sagar Associates. However, given the sheer size of the deal, the government may want to keep a close eye on the kind of products launched and the probable impact on competition, consumers and the market, he adds.
Shriram Subramanian, founder-MD of InGovern Research Services, agrees, saying this deal would have a deep impact on sectors like retail, telecom, e-commerce as the competitive intensity would only increase because of the coming together of Jio and Facebook.
His biggest concern is: “As India doesn’t have a data privacy law yet, and customer rights aren’t paramount, and given the history of these companies, it needs to be seen how they respect individual privacy”.
Many analysts have argued given the multi-sectoral dimensions of the deal, both Competition Commission and Telecom Regulatory Authority of India (Trai) should work together to scrutinise the transaction. If needed, the regulators could jointly suggest measures to mitigate the impact of any potential abusive business practices, they add.
“The key would be the actual interplay and functioning of the combined businesses on aspects of data privacy, and the use of the collected data to bring about a monopolistic situation in the areas of telecom, retail and e-commerce,” says Anand Desai, managing partner, DSK Legal.
The government will need to be mindful of the overall impact and potential of the combination, as also the security
concerns, he adds.
Salman Waris, managing partner at TechLegis, points out it is important to recognise that the Facebook-Jio-type deal signifies a global trend, whereby some ‘telcos’ are turning into ‘technology’ players, or merging with them, while cloud players are becoming network-owners or operators.
“Prima facie, it surely needs to be looked upon by the competition regulator as creating an ‘e-commerce monopoly’ and inherently anti-competitive in nature,” he adds.
Not everyone is sure if Trai
could step in to scrutinise the deal at this stage. “As Facebook
has acquired less than 10 per cent, it is unlikely the DoT or the Trai
will have much to say about this as their powers are limited in this context,” says Harish Narasappa, partner, Samvad Partners.
Also, there is no precedent for the CCI taking a holistic view of any deal. “Impact on each of the relevant market has to be examined,” says Narasappa.