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Justice Srikrishna red flags Reliance Jio-Facebook deal on data privacy, lack of regulator

Srikrishna says such a data deal happened 'precisely because there is no law', raising concern over the long-term strategy

Rukmini Rao   New Delhi     Last Updated: May 12, 2020  | 16:17 IST
Justice Srikrishna red flags Reliance Jio-Facebook deal on data privacy, lack of regulator
Facebook made an equity investment of approximately $5.7 billion in Jio Platforms for a 9.99 percent stake

KEY HIGHLIGHTS

  • Justice  BN Srikrishna raises concern over absence of a data regulator to oversee deal
  • Relies on two respective companies being good citizens and not violating privacy
  • Says lack of regulation of data deals a big issue without a law in place
  • Strategic investment intended to further business interest of investee as well as investor
  • Facebook invested $5.7 billion in Jio Platforms for a 9.99 per cent stake
  • Facebook says has independent view (from Reliance) on topics, data localisation one of them

Chief architect of India's data privacy law Justice BN Srikrishna has raised a red flag over the lack of a data regulator to oversee privacy concerns emanating from Reliance Jio-Facebook deal. Srikrishna says such a data deal happened 'precisely because there is no law'. Raising concern over the long-term strategy of the deal, Justice B N Srikrishna says, "It is a strategic investment. A strategic investment by definition means it is an investment intended to further the business interest of the investee as well as the investor".

Also read: BT BUZZ: Don't be naive! Reliance Jio-Facebook deal is a partnership of unequals

The concern being raised around privacy also emanates from the current policy stand point of the company. Though on Jio's website the privacy policy states "We do not sell or rent personal information to any third party entities", it also states certain exceptions. The policy says it limits the disclosure of personal information such as name, phone number, address, photographs and proof of identity documents such as PAN Card, Passport etc., in certain circumstances which includes scenario such as a mergers or acquisitions that affects the company and also to its partners. According to the policy, exceptions to sharing with 'Partners' include vendors, consultants, contractors and companies or affiliates who provide a host of services including contact information verification, payment processing, customer service, website hosting, data analysis, infrastructure provision, IT services, and other similar services.

Also read: Mukesh Ambani's Jio Platforms scores hat-trick; bags Rs 11,367 cr investment from Vista after FB, Silver Lake

The Jio-Facebook deal could place Facebook in the category of 'Partner'. A questionnaire to Reliance Jio is yet to elicit a response. The article will be updated once a response is received.

Justice Srikrishna also pointed out that Jio-FB deal raises two important issues. One around competition law, the other around data.  Pointing out that existence of Competition Law in India ensures that a regulator is in place who, upon a compliant being made will investigate facts, will look into various aspects of the deal following due process of law and finally come out with a conclusion.  However, with data, he says, "Without the Personal Data Protection (PDP) Act coming into force, where is the regulator?"

"Data regulation becomes a big issue there, because of absence of regulator. And the regulator is not there because there is no law in place," he says. He was speaking at a webinar hosted by Daksha fellowship on Data Governance and Democratic Ethos.

Concurring with Justice Srikrishna's view, Rahul Matthan, Partner, Trilegal says that though privacy concerns around the deal have still not been flagged, this is perhaps one of the reasons why the country desperately needs privacy laws. Stressing on the need for supervision around data deals, Mathan says, "These deals will happen and without a regulator, we are relying on the two respective companies being good citizens and not violating the terms of their own privacy policy".

Also read:  Silver Lake to invest Rs 5,655 cr in Jio Platforms at higher valuation than Facebook deal

Earlier in April this year, Facebook made an equity investment of approximately $5.7 billion in Jio Platforms for a 9.99 percent stake with an early focus on leveraging the latter's e-commerce platform JioMart. In an interview to Business Today, Ajit Mohan, VP and Managing Director, Facebook India had said that the company continues to have an independent view (from Reliance) on a number of topics and data localisation is one of them. "But we also believe that unrestricted free flow of data is the bedrock of an open market, which has greatly contributed to India's technology boom so far. We hope the future data protection regime protects consumers and also boosts the ease of doing business in India," Mohan told BusinessToday.In.

Also read: BT Buzz: Mukesh Ambani, Mark Zuckerberg and the $700 billion kirana puzzle

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