Meta Eyes India: Breaking Down Its Quest for Reliance Partnership
Interesting reports recently surfaced around Magnificent Seven stock Meta Platforms (NASDAQ: META). As first reported by The Information, Meta is in talks with one of India's most powerful firms to expand its presence in the country.
That company is Reliance Industries, and it plans to build the world’s largest data center in Jamnagar, India.
So, what advantages does Meta see in trying to establish a larger presence in the Asian subcontinent? Below is an analysis of what Meta may be looking to achieve. It could be another huge AI player seeking power in India.
Meta and OpenAI Seek Vital Indian Partnership
Meta isn’t the only company looking to gain influence in India. Microsoft (NASDAQ: MSFT)-supported OpenAI is also looking to strike a deal with Reliance.
Reliance is India’s largest private sector company and has a presence in many industries, including energy, technology, retail, and telecom. OpenAI is reportedly looking to partner with Reliance to help sell and increase the adoption of platforms like ChatGPT. It could use Reliance’s subsidiary Jio, India’s largest provider of mobile phone coverage, to do this.
Although specific details related to Meta are less clear, the company is likely trying to do something similar with Meta AI and its LLaMa 3 model. Hosting its computing power locally in India at Reliance’s data center would be key to doing this. The Indian government has a big emphasis on data sovereignty.
Meta Has a Huge Opportunity to Expand and Potentially Mend Relations in India
So, why would Meta want to do this? For starters, India is the world’s most populous country, with nearly 1.5 billion people. Due to this large population, Meta already has a big presence in India. It has 350 million Facebook users and 500 million WhatsApp users.
Still, evidence suggests that the company has even more room to expand into the country. Pew Research survey data from 2023 shows that Meta’s apps were relatively under-penetrated among eight other middle-income countries.
Partnering with Reliance would provide Meta with a key path toward increasing its penetration in India. Reliance is one of the most well-known companies in India and has significant ties with the government. The firm’s Chairman and Managing Director, Mukesh Ambani, is considered a close ally of India’s Prime Minister Narendra Modi.
The Indian government recently issued a five-year ban on Meta sharing WhatsApp user data with its other platforms. This ban could hurt Meta’s advertising business in the country. If a partnership manifests, Ambani could help smooth relations between the two parties.
Overall, partnering with Reliance could be a great way for Meta to grow its user base and get its AI model into the hands of more Indians. This could help bolster Meta’s advertising business and make it the worldwide leader in AI model usage.
Meta Could Have a Leg Up on OpenAI
There is reason to believe that Meta striking a deal with Reliance is well within the realm of possibility. In Oct. 2024, Ambani sat down with NVIDIA (NASDAQ: NVDA) Chief Executive Officer (CEO) Jensen Huang. Ambani spoke highly of Meta's CEO, saying, “I have great respect for my friend Mark Zuckerberg."
He said that Meta’s open-source AI model, LLaMa 3, gives everyone the opportunity to participate in the AI revolution. Due to this, he said that Zuckerberg’s decision to make LLaMa open source “will be written in history when we look at it one hundred years from now." This highlights the revolutionary impact he sees LLaMa having on society.
It is unclear whether Reliance will choose to work only with OpenAI or Meta. However, Ambani’s praise of open-source AI models suggests that Meta may have an advantage over OpenAI if the two are mutually exclusive. ChatGPT is a proprietary, non-open-source model. Additionally, Meta invested $5.7 billion in Jio back in 2020, giving it significant inroads with Reliance.
All in all, it makes a lot of sense for Meta to strike a deal with Reliance. This could help the company expand further into the massive Indian market and potentially get on better terms with the government. Although some evidence suggests Meta could have an advantage over OpenAI in this pursuit, the details are sparse at this point. It will be very interesting to see which U.S. tech firm cracks the AI nut in India.
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