Google’s $10 billion investment in India analysed, including the Jio investment


Increasingly, it seems that China is being isolated globally which is also forcing global giants to double down on India. This is what triggered Facebook’s massive $5.7 billion investment in Reliance Jio, which followed up investments with massive Silicon Valley giants like Qualcomm, Intel and a number of VCs. Now, it seems like it is Google’s turn. The very company that’s known to define the Silicon Valley ethos.  On Monday, at its Google for India yearly conference, Sundar Pichai, its CEO, announced a massive digitisation fund for India that includes an investment of $10 billion which the company will spend over the course of the next 5-7 years. There is an increasing shift towards India and this Google investment is part of a huge focus towards what now is the world’s largest open market. 

  1. Google’s investment in India has to be also viewed from the lens of the Indian government doubling down on homegrown digital enterprises. Prime Minister Modi’s rallying cry of Atamanirbhar has definitely taken India inc by storm and Google wants to have a say in it by hook or crook — by way of equity investments, or creation of India specific products or infrastructural investments and partnerships. A good example of what Google has done in the infrastructural space is the Railtel Google Wi-Fi programme that helped India’s railway stations provide free internet which in turn pulled more and more users towards Google’s own services like search and YouTube. A made for India initiative like Google Tez transformed into Google Pay globally while investments in platforms like KaiOS have brought down mainstream computing even further as it is used on devices like the JioPhone. 
  2. Google has closed a $4.5 billion round of investment in Reliance Jio platforms which could make up for a major chunk of this $10 billion bet on India. This is for a 7.7% stake. This wouldn’t be surprising considering Google’s arch-rival Facebook spent $5.7 billion to get a minority 9.99% stake in the Indian giant alongside other Silicon Valley luminaries like Intel and Qualcomm aside from PE and VC giants from the valley and apart from a number of private wealth funds. Google and Jio are developing an Android based operating system for affordable smartphones. India has 350 million feature phone users and this is an effort to bring these feature phone users to smarter devices. This also outlines Jio’s intent to enter the smartphone space in a whole hearted way. Jio is a mixture of everything Google is interested in. 
  3. For Google, Reliance’s content play with live TV and Cinema plus news and hooks into media with Network 18 make it delicious. It also helps that Jio is the largest telco in India with estimates of upwards of 400 million monthly active users. It also is the largest player in offline retail which could help it pull in Google Pay but that may conflict with the Facebook and WhatsApp deal for JioMart. Regardless, there is a bit of everything here — apart from getting in the good books of the Modi government. 
  4. One of the core focuses for Google in India has been to get much smaller and offline business online. It hasn’t made bets on start-ups that are relatively established in the news cycle. But it seems that is now changing. In 2019, Google back hyperlocal delivery service Dunzo raised $45 million. Now, an ET report states that Dunzo will get more integration with Google Search which could help it enter the food delivery space taking on established players like Zomato and Swiggy. This comes at a time when Amazon makes overtures towards entering the food delivery space. This makes space for Google as platforms like Zomato and Swiggy already use Google Maps to handle navigation and location apart from using services like Google Pay for payments. Google could provide respite to restaurateurs who have been revolting against Zomato and Swiggy as they can provide an alternative avenue for discovery on the world’s largest search platform which is also the gateway to the internet for many. 
  5. YouTube has been working on a TikTok rival for a while. Now that TikTok has been banned in India, Google could be preparing for an onslaught on the short-form video category especially now that Facebook-owned Instagram has launched Reels in India. YouTube already dominates user-created long-form video in India, but YouTube is a platform that was created for the desktop. Google has yet to display competence in mobile-first video tech, but it is well placed to provide a TikTok alternative considering it had become a big cash cow for many creators. It has the ad-tech platform, it has the technology and the tools and the mind space to capture the imagination of India creators. 
  6. Apart from launching its own products in India, one can imagine Google partnering more with Indian startups. It will try to own equity in them and propel them so that it can keep the Indian government happy as it faces some antitrust issues in India. Google also has faced a lot of flak for the dissemination of misinformation in India so this could be the time it can set things straight. More importantly, even after Google invests $4.5 billion in Jio, there will be $5.5 billion left in the fund which is a huge amount. In fact, Google said, it plans on investing this money in 5-7 years which still means an investment run rate of around $1 billion a year.