Advocate Dr Mahendra Limaye’s take on Reliance Gio’s stake purchase by Facebook.

The much notable news in Indian corporate circle in this gloomy situation of COVID19 is of Facebook’s $5.7 billion investment in Reliance Jio. The Indian stock market celebrated it with much fanfare and Reliance’s shares closing was almost 10% higher than the previous day closing.

It reminds me of one of the unusual incident of 12 July 2019, wherein when US Federal Trade Commission imposed a fine of roughly $5 Billion on Facebook, the stock of Facebook zoomed rather than sinking. It is normal trend in stock market that when a company is penalised, its share price slides.

But wherever there is involvement of this world tech giant known as Facebook, the unimaginable happens. Otherwise who would have thought that penalty of $5 Billion could be news for celebration? Obviously the market was expecting a more stringent penalty including criminal action, which was not imposed on Facebook by FTC.

Now what’s logic of the comparison of these two stock market incidents with our present discussion?

Indian corporate are believing that this stake sale will impose confidence in foreign corporate investors to invest in India and Indian stock market will witness huge foreign investment in other Indian Companies. Many have came to the conclusion that now Indian companies are commanding respect from global investors and this is first step in that direction.

I do not endorse these perceptions of the people for the views expressed hereafter;

The Jio-Facebook deal is the largest investment for a minority stake by a technology company, Facebook, anywhere in the world and the largest FDI in the technology sector in India. A somewhat distant second is Softbank’s $2.5 billion investment in online retailer Flipkart. This also marks Facebook’s third direct investment in India, after it backed social commerce firm Meesho and online learning firm Unacademy in the past year, although in much smaller deal sizes of between $20-30 million. The fate of both these investments in Meesho and Unacademy is not known yet since these are very initial days of both the investments.

Why Facebook has decided to invest in Reliance Gio and what could be strategic angle behind its investments in India and particularly in Gio needs careful scrutiny.

1)      Few years ago, Facebook was eager to roll out free internet service in India. Facebook pretended to be doing social work by providing a low-bandwidth connectivity to maximum population of India residing in even distant locations and the most popularised philosophy of Marc Zuckerberg being “ CONNECTING THE PEOPLE”. But many people and fortunately the Indian government read the intentions correctly and the proposal never received the nod by government. The so-called Free Basics service never seen a light of the day and this incident has taught Marc Zuckerberg a lot many things and one of which could be he needs a strong Indian helping hand if he wants to implement his projects in India.

Many of us still remember that Facebook has called on Indian people and government to allow free flow of data across borders to discover its true value, urging against “hoarding” it.

“There are many in India and around the world who thinks of data as the new oil, and that, like oil, having a great reserve of it held within your national boundaries will lead to sure fire prosperity. But this analogy is mistaken,” were the words of Nick Clegg, Facebook’s global head for public policy, at one of the event in India. “Data isn’t oil — a finite  ... Commodity — to be owned and traded, pumped from the ground and burned in cars and factories. Of course, no analogy is perfect, but a better liquid to liken it to is water, with the global internet like a great borderless ocean of currents and tides,” Clegg added.

His views were in contrast to those of Reliance Industries chairman Mukesh Ambani, who has repeatedly described data as the new oil and it should not flow out of National boundaries. What will happen now? Whose thoughts have changed? If Mr Ambani is convinced that Data is not new oil and it could flow out of National boundaries then it is more dangerous situation because for saving his empire from debt trap he must have agreed to compromise with his previous nationalist views of need of Data Localisation. A close scrutiny is needed.

2) Zuckerberg is additionally looking at the Indian market for his crypto-currency project called Libra which is to be unveiled by Facebook soon, but will not be available in India, as current Indian regulations do not permit use of the banking network for block chain currency transactions. The social network’s digital wallet, Calibra, also won’t be available in Indian markets where “crypto currencies are banned. It is also in public domain that Reliance Jio is planning crypto currency 'JioCoin' and also invested heavily in the project. So both the companies’ motive is to enter crypto currency market and for which both the companies have already made huge preparations and this move could be a win-win situation. But as per my understanding the Indian government has not framed its policy on crypto currency yet. Recently Apex court has delivered a landmark judgement wherein it was evident that Indian governments stand on allowing crypto currency in India has always remained shaky and government has not firmly decided on the fate of same. Crypto currency is still a grey area. Could the strategic investment in Reliance Gio be one of the angles for this Facebook’s move to introduce crypto currency in India? Can they together be able to give finality to India’s response to crypto currency? RBI has made it amply clear that it is not in favour of allowing crypto currency in India. Will RBI’s views honoured?

3) Personal Data Protection Bill 2019 is before Indian Parliament and is in its final stage of becoming a law. Facebook till recently contended that “Data isn’t oil — a finite  ... commodity — to be owned and traded, pumped from the ground and burned in cars and factories. Of course, no analogy is perfect, but a better liquid to liken it to is water, with the global internet like a great borderless ocean of currents and tides”. This proposed Personal Data Protection (PDP) Bill will mandate companies collecting data of Indian citizens to store certain ‘critical’ data only within the country. Foreign companies and more particularly Internet giants like Facebook and Google have opposed the move thinking that it would hurt their planned investments by raising costs related to setting up new local data centres on Indian lands. The present move will give Facebook much needed access to Gio’s infrastructure in India and will help in minimising its future costs. Facebook always believed that the true value of data comes from allowing it to flow freely and encouraging the innovation that stems from it which without any doubt gives more profit to Facebook. The global internet is built on this principle of cross-border data flows just as global economy relies on capital, human resources and technological innovation to cross borders in order to flourish, is what Facebook believes in. Can this strategic investment be one such small step by Facebook in controlling Indian user’s data in much authorative and legalised manner? Will the Personal Data Protection Bill 2019 be ever reality now? As Facebook has openly opposed to PDPB, whether joining hands with Gio will give much needed boost to that opposition? If this happens then the one of the fundamental right i.e. Right to Privacy will be in danger and this aspect also needs to be debated.

4) Facebook’s this partnership with Gio, India’s largest telecom operator will also be a key to Zuckerberg’s proposed business plans, particularly in domains of virtual reality and Internet of Things. All these future plans need access to 5G which Jio has, reportedly, developed. With Reliance Gio’s customer base of approximately 400 million Indian users and Facebook’s customer base of about 350 million and whatsapp’s customer base of approximately 400 million users, there will be absolute control over Data of maximum Indian population by this Gio-Fb combination and this is most frightening situation. What challenges could be posed by the absolute control over Data and also on financial markets through potential entry of crypto currency before Indian Citizen as well as Indian Government needs to be studied.

The answers for the above 4 questions are key to the fate of Indian digital users. Every Indian digital user has Fundamental Right to know How his Data is being handled and for which purpose it is used. When the social media Data Handler will also be your telecom service provider as well as your financial service provider, the scenario looks more worrisome. With weak regime of enforcement and investigation of Technology laws based crimes and absolutely non-functional judicial wing dealing in matters related to technology crimes, the situation is currently pathetic. This combined power of Gio-FB will make the privacy of digital users more vulnerable because FB survives wholly on Data Trading.

We need to find the ways for protection of millions of Digital Illiterates using digital mediums without knowing the inherent risks and future traps of crypto currency and AI being laid by this Gio-FB deal.

Immediate Passage of Personal Data Protection Bill 2019 and formation and functioning of DPAI mechanism seem to be the need of hour.

I am certain that many readers will find these views absurd and illogical. Let me remind them that it took India’s Apex Court almost 60 years to reverse the views on Right to Privacy previously held in matters of Kharak Singh and M.P.Sharma, in recently decided Puttaswamy’s case. I only hope that my above views should not remain in isolation for that long 60 years. The Internet technology is most dynamic thing which has happened in these recent years and our response to the activities in internet and their effects on fundamental rights of citizen should be equally dynamic. I conclude by some unknown writers’ words, “It’s not a sin to think ahead of time but its sin to remain silent about what perils you think of in future”.

About the author- Advocate Dr Mahendra Limaye is Cyber Legal Consultant and Cyber Law practitioner in India. He specifically practices in Information Technology Act based litigation before Civil as well as Criminal Courts in India. He has obtained his doctorate on topic Fundamental Rights and Cyberspace. He can be contacted on mahendralimaye@yahoo.com or + 919422109619.