In 2017, the chairman of a telecom company spoke at the annual general meeting of the “creative destruction” that had taken place in the sector over the previous few years. “[The] wireless sector from a hugely customer-friendly, choice-driven, 10-player market is slowly moving towards what is referred to in economic terms as either oligopoly, duopoly or potentially a monopoly. Is that something 1.2 billion people in India deserve? ... Is that what customers really want?”
That man was Anil Ambani, whose Reliance Communications was one of the telecom firms that has had to fold up over the past few years because of the relentless onslaught of offers from Reliance Jio, run by his brother, Mukesh Ambani, the world’s six-richest person.
Anil Ambani may have simply been admitting to sour grapes. He had not only lost the “world’s most expensive sibling rivalry”, but also towards the end, he needed a bailout from his brother to prevent being sent to jail, even as his company had declared bankruptcy.
But his comments were not without relevance.
Mukesh Ambani’s Reliance Jio has rapidly become India’s biggest telecom carrier and indeed one of the world’s most sought-after companies, assisted in no small measure by a series of regulatory changes that permitted it to enter and take over the market.
India now has only two other national telecom firms: Vodafone Idea – which has struggled to remain a going concern – and Bharti Airtel, which still holds a massive amount of debt. Meanwhile, Jio has not only become the country’s biggest telecom player, it has now tied up with some of the world’s biggest companies.
Over the last month, it announced investments from both Facebook and Google, two tech behemoths that have themselves been accused of and are being investigated for monopolistic behaviour around the world. In fact, Google is currently under investigation in India for abusing its market position and Facebook has struggled to get approval for WhatsApp payments.
In an ideal world, these deals should be cause for more scrutiny of Jio. As Competition lawyer Anupam Sanghi explained, “Given that both Jio and Facebook are among the top three holders of subscribers in India in their respective services, are these companies in a position to unfairly compete against competitor service providers by ‘directing’ its customers to use, for instance, the Jio Mart service? ... In other words, will users of Jio/FB/WhatsApp/Instagram be led into content cul-de-sacs owned and operated by Jio/Facebook?”
However, far from increasing scrutiny, the deal is expected to smoothen the regulatory processes for both the companies, giving them a foothold – and an extremely well-connected partner – at a time when India has created a “splinternet” by banning Chinese apps from the country.
Few expect India’s antitrust authorities to be able to actually take a close look these digital giants.
“Possibly due to the fact that most competition authorities in India have really tiny budgets, and nowhere near the staff that their US counterparts do, they have come across quite poorly in many cases,” says an editorial in the Financial Express. “The [Competition Commission of India]’s inability to act on RJio’s below-cost pricing, for instance, is a big reason for the state the telecom industry is in today.”
That should be a source of concern for those worried about monopolistic behaviour in India, particularly in the digital space where holding companies accountable becomes even harder.
It was not long ago that Mukesh Ambani was warning the country about global corporations engaging in “data colonisation”. Now that Ambani has been co-opted by the very corporations he was warning against, it is crucial that Indian authorities keep a close eye on the path that Jio takes and its effect on the Indian market.
While it may be a sign of confidence in Indian industry that the world’s largest companies are willing to put money into an Indian company, it is incumbent on the authorities to ensure that these massive deals do not take place at the cost of competition and choice for Indian consumers. If Jio’s success in spreading the internet across India ends with it turning into a price-gouging data-grabbing monopolist, will that really be in the country’s best interests?