Any Indian who has witnessed the rapid digitisation of the country in the last decade, including the unprecedented rate of mobile & internet penetration, would be well versed with what Reliance Jio is. Launched in 2016 by Reliance Industries Limited, the conglomerate owned by billionaire Mukesh Ambani, it was Jio that disrupted India’s telecom market by offering voice & data services at extremely low prices. Coupled with its aggressive investments in expanding infrastructure, Jio’s disruption enabled millions of Indians get access to the Internet. But while India’s digitisation has had far-reaching ramifications across industries, it is not my intention to discuss them here. What I aim to accomplish through this blog post is to shed some light on how Jio is trying to execute one of the most aggressive platform envelopment strategies in recent history.
Academic literature defines platform envelopment as ‘one platform provider entering another’s market by combining its functionality with the target’s in a multi-platform bundle’. Jio’s evolution from a mobile network operator to an all-encompassing digital ecosystem is a perfect encapsulation of this strategy. Over the last few years, Jio has leveraged its user base of 450 million + users to expand into e-commerce (JioMart), media & entertainment (JioCinema, JioSaavn), financial services (JioPay, JioMoney), and even cloud services (JioCloud). Exploiting the demand economies of scale in media and entertainment, it even acquired the Disney + Hotstar streaming platform. Bundling its telecom services with premium entertainment content, it has demonstrated a typical ‘Foreclosure’ attack towards standalone streaming platforms such as Netflix, HBO, etc. Its most recent move is the launch of Jio Financial Services (JFS), a comprehensive, full-stack financial services powerhouse. It now operates across lending, payments, insurance, wealth management, and broking (growing 10x faster than its legacy peers, if it succeeds, we might be witnessing birth of India’s first fintech SuperApp). What has appealed to me the most about Jio’s digital ecosystem strategy is that its expansion focused a lot on tier-2 & tier-3 cities in India, where digital literacy was on the rise but penetration remained relatively low. This enabled it to capture users early on in their digital journey.
But it is this pace and scale that has me worried as well! Even if one ignores Jio’s parent conglomerate’s presence in almost every sector in India, Jio’s own platform envelopment is not devoid of monopolizing elements. A platform’s growing dominance across multiple sectors has the potential to stifle innovation and make it tougher for regulators to establish competitive fairness. Jio has already faced predatory pricing-related lawsuits in the past. In a country with a per capita GDP of 2500 USD, a majority Jio’s user base just does not have enough bargaining power to safeguard itself against any anti-competitive measures that Jio might take in future. Experts also argue that in an emerging economy like India, bundling of services under one umbrella might not turn out to be the best idea for the digital ecosystem. It will hamper the innovation in this ecosystem and create a monopoly. While there are multiple companies competing with Jio in the race to design the ultimate Indian superapp, as someone who would like to see India climb the ladder of digital innovation rather than dig a well of copycat businesses, I sure hope this race never sees its end!
References:
Eisenmann, T., Parker, G., and Van Alstyne, M.W. 2006. Strategies for two-sided markets. Harvard Business Review 84(10) 92-101. https://hbr.org/2006/10/strategies-for-two-sided-markets
McCormick, P. (October, 2020). Reliance: Gateway of India, Part I: The History and Present of Reliance Industries, from Dhirubhai to Jio. https://www.notboring.co/p/reliance-gateway-of-india
Bhattacharya, A. (July, 2022). Investors in wannabe super apps must remember that India is not China. https://qz.com/india/1765349/why-paytm-ola-flipkart-jio-shouldnt-try-to-be-wechat-of-india
Singh, S. (n.d.). The Predatory Pricing case against Reliance Jio: Did CCI Miss an Opportunity to Rejuvenate Indian Telecom Sector? https://www.icle.in/resource/the-predatory-pricing-case-against-reliance-jio-did-cci-miss-an-opportunity-to-rejuvenate-indian-telecom-sector/
Great blog! You did a great job of illustrating how Jio is an example par excellence for telecom platform envelopment to e-commerce, media, finance, and more. I particularly enjoyed your observation on tier-2 and tier-3 towns. It illustrates how platform strategies build growth markets as well as inclusion.
At the same time, I also share your concern over monopolistic threats. When one player bundles so many services together, that can make it more effective but be a death blow for competition and innovation. Your arrival identifies that tension precisely: Jio can become an unstopable super app, but whether that will enrich or poison the digital landscape in India is up to the players and the regulators.
Thanks for taking the time to go through my blog. I agree with your inferences as well. It is going to be interesting to see this space evolve in the coming years.