Who benefits the most from Jio?

Don’t say we didn’t warn you, but the minute you read the next line, you’re going to say, “Of course! That’s obvious”.

So, the real winner in all the brouhaha over voice and data caused at the Reliance Industries annual general meeting, which launched the company’s long-promised telecom service, Jio, and saw telecom companies lose more than $2 billion (Rs 12,634 crore) in market capitalisation, is … Google. Yes, obvious, isn’t it? The biggest digital players will, of course, benefit from increased Internet penetration and usage.

Mukesh Ambani, chairman and managing director of Reliance Industries, in his announcement regarding Jio, said he aims to rope in 100 million customers. Some of these will shift from existing players, sure, but there will be a fair share of new entrants. According to a report by the Internet and Mobile Association of India, the Internet user base in India is over 400 million, which includes some 300 million mobile users. Jio, with its many carrots, including free voice calls and cheap data packs, promises to increase this.

“Not only will we see many more people [join], but also different demographics,” says Shubhranshu Choudhary, the digital activist and entrepreneur who won the 2014 Google Digital Activism Award for his project CGNet Swara, which connects tribals in central India with local content made and consumed by them using mobile phone networks. “We can hope to see a much wider network of people creating and uploading different and more diverse kind of content, which in turn always leads to newer audiences. These new kinds of content will more often than not be audio and video content because there is no language barrier there.”

When these millions of people begin to access the Internet, many of them for the first time, what are they likely to do? Search for things, of course, and log in to Facebook. Now, audience measurement company comScore’s data says 95% of Internet users in India use Google. Since Google so overwhelmingly dominates search, it will make more money as more and more service providers pay it to reach a larger number of people.

The bulk of Google’s revenue comes from AdWords, its advertising service that offers targeted advertising (in the form of recommended pages) based on search results. Advertisers who pay more move up the list. Google has integrated AdWords advertising with almost all its properties, so ads on Gmail, Maps, YouTube, etc. are all generated through AdWords. Since AdWords is based on keywords, and keywords are generated by users, the more number of users means more keywords, which means more revenue for Google. (That’s the simplest explanation. Google has a fairly technical breakdown of this on its site.)

Google India clocked around Rs 4,198 crore in 2015, and profits of about Rs 197 crore. Google already makes more money in India than most Indian news conglomerates. Its revenues are about twice the size, for instance, of HT Media, which brought in around Rs 2,500 crore in 2015, and half that of Bennett, Coleman and Company, the publisher of The Times of India, which had revenues of around Rs 8,800 crore last year.

Meanwhile, over at Facebook, a bigger population online and on the social media platform means more people to advertise to, and more targeted advertising, which means more money. Facebook has 142 million users in India and more than 50% of Internet users in India use Facebook and its social messaging app WhatsApp.

Jio’s free voice services are a lure to get people hooked to using data. The bet is, once someone starts using data on the phone, they will only use more and more data as time goes by—and that's where Jio will make money.

“It is too early to tell exactly how this new audience will be monetised but it certainly opens a lot of new opportunity for companies like Google or Facebook to absorb and monetise new target groups,” says London-based media and economics researcher Priya Virmani.