Jio was launched by Reliance in 2015, and it's become India's largest mobile network operator and the third-largest in the world with nearly 400 million subscribers. Reliance is an Indian conglomerate that is involved in various industries including energy, chemicals, textiles, retail, and natural resources. Its CEO, Mukesh Ambani, is currently the ninth richest person in the world with a net worth of $72 billion.

Last week, Google (GOOG  ) announced it would invest $4.5 billion in Jio for a 7.7% stake. It follows Facebook (FB  ) which invested $5.7 billion for a 9.9% stake. It's unusual to see Google and Facebook partner, but it's an indication of the potential that the company sees in Jio. Jio has raised $20.2 billion so far by selling a 33% stake in itself.

Jio is using the funds from Facebook and Google to invest in its 5G infrastructure. The company is betting that it can make money in the long-run by connecting Indians to the internet. Similar to how Facebook and Google were focused on growing its platform and getting a dominant position before they worried about making profits.

Before Jio's launch, there were two major mobile operators in India which led to high prices and poor service. The arrangement was frequently compared to a cartel. Jio has upended the market and is quickly becoming the dominant player with low prices and better service. It's on track to be the first 5G-compliant service in India sometime next year.

Google and Reliance will work on a customized version of an Android operating system for entry-level phones. Google, recently announced its" Google for India Digitization Fund," and this marks its first major investment in the country. For Google, the long-term plan is to get more Android devices in people's pockets and using their services.


There are two different political angles to this story. One is that Reliance and its CEO are very close to India's ruling party, the BJP. Many are interpreting Facebook and Google's moves as a way to gain influence and decrease its regulatory burden in the country.

Another angle is about China. Both the U.S. and India have been at increasing odds with the country. For India, there have been recent, border skirmishes, and it has banned many Chinese apps from the country. Jio has no Chinese investors and the investment from two American tech giants strengthens ties between the two countries. Jio has also banned Huawei from its networks like the U.S. and many other countries.