Google files for Competition Commission of India approval for stake buy in Jio Platform

Mumbai: US internet giant Google has moved the Competition Commission of India (CCI) to get an all-clear for its Rs 33,737 crore investment in Jio Platforms for a 7.73% stake and manufacture a new smartphone in India.

As per the CCI filing on Thursday, Google will be making the investment into the digital arm of Reliance Industries through wholly-owned subsidiary Google International LLC (GIL).

“The notification is being filed in relation to GIL’s proposed acquisition of a minority non -controlling shareholding of around 7.73 of equity share capital in JPL (Proposed Investment),” the US major said in its filing.

“The Proposed Transaction comprises the acquisition by GIL of a minority non-controlling stake in JPL under Section 5(a) of the Competition Act, 2002. Simultaneously, certain affiliates of GIL executed a separate commercial agreement with JPL to collaborate on the development of a new low-cost smartphone (the Foundational Commercial Agreement/ FCA, or the Collaboration),” the filing said. “The Proposed Investment and the Collaboration are together referred to as the “Transaction”.

ET was the first to report in its July 22 edition that Google will need CCI approval for its investment. ET on Thursday was also the first to break the CCI filing news on its online platforms.

On July 15, search giant Google became the 13th investor to announce that it would buy a 7.73% stake in Jio Platforms for Rs 33,737 crore. This investment was a part of Jio Platforms over Rs1.52 lakh crore fund raising exercise by divesting minority stakes to multiple technology companies such as Qualcomm and Intel besides Facebook and Google, technology focussed private equity players and sovereign wealth funds.

Besides the funding, Google and Jio also entered a commercial agreement to jointly develop an entry-level affordable smartphone with optimizations to the Android operating system and the Play Store. The smartphone that could even support 5G at a later stage is targeted at the 350 million feature phone users in India.

Under the header ‘The respective markets in which the Parties to the Transaction operate’, Google said that the deal enables Google and Jio Platforms to develop and launch a new smartphone in India.

“The Parties, thus, consider that the only relevant market for assessing the horizontal competitive effects of the Transaction is the market for the supply of mobile phones in India. Outside this Transaction, Google and JPL will continue to conduct their business activities independently,” the filing said. Currently, top players in the Indian mobile phone market include Xiaomi, Samsung, Apple, Vivo, Oppo and Realme.

The investment will be from Google’s recently announced $10 billion India digitisation fund and will make it the second largest minority investor in Jio Platforms after arch rival Facebook. Google will also get a board seat, like Facebook.

“GIL (acquiror) is a wholly owned subsidiary of Google, LLC, collectively with all Google, LLC subsidiaries, (“Google”), Google LLC is a Delaware limited liability Company, and the wholly owned subsidiary of Alphabet Inc,. The Acquirer is a holding company and does not own/ operate any of Google’s products/services,” said Google in its filing in the CCI.

Jio Platforms, along with its subsidiaries, “primarily offers/will offer digital products/services, including wireless, home broadband and enterprise broadband services, telecommunication services, mobile applications, various digital platforms, back-end technology services for ecommerce entities and other miscellaneous software and technology related services,” the filing added.

Legal experts say the companies need the anti-trust body’s approval since both of them have access to large amounts of customer data through their presence in the mobility segment, in addition to having large assets and turnover. The US search giant dominates search, video, maps and email in India. Nine out of 10 smartphones sold in India come with Google’s Android OS. Jio Platforms, in turn, is the parent of Reliance Jio, India’s largest telecom company with nearly 400 million users.

Both also have similar services such as payments. Google Pay in India runs on the Unified Payments Interface (UPI), and is widely regarded as the market leader in this mode of digital payments market in India, processing an estimated 50% of the transaction volume every month, followed by Walmart-owned PhonePe and Paytm. NPCI doesn’t disclose platform specific data on monthly transactions.

Google files for Competition Commission of India approval for stake buy in Jio Platform Google files for Competition Commission of India approval for stake buy in Jio Platform Reviewed by TechCO on 9/24/2020 Rating: 5

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