How the Facebook-Reliance combine and the farm laws pave the way for digital colonisation

A farmer burns a pack of Jio SIM cards at a protest against the agricultural laws, at the Devi Dass Pura village, about 20 kilometeres from Amritsar, on 30 September 2020. Protestors believe that the laws could allow corporations such as Reliance to monopolise agriculture and retail, putting them at the mercy of big business. RAMINDER PAL SINGH / EPA
13 July, 2021

On 17 December 2020, a group of mostly Indian American protestors gathered outside Facebook’s headquarters in the United States. A pair of turban-clad men held up a banner telling the company to “STOP the suppression of freedom of speech.” Another protestor carried a poster exhorting passers to “honk for human rights.” Yet another waved a sign declaring, “We stand with farmers.” Three days later, demonstrators rallied outside Facebook’s Vancouver office, in Canada, with similar posters. “No Farmers No Food,” read several of the signs.

In recent years, protests in America against Facebook, one of the most controversial companies in the world, have become commonplace. But this was not a typical anti–Big Tech demonstration. The Indian Americans and Canadians gathered at the company’s gates were not there because of Facebook’s usual controversies—its surveillance of users or its role in spreading political misinformation. Instead, the immediate cause of their anger was that Facebook had suspended pages protesting the farm laws enacted in India, earlier in the year.

The new laws, hastily passed in September 2020, allowed farmers to sell outside government-regulated mandis, or markets, directly to corporate buyers. In theory, this change could help farmers by generating more competition for their products. But in practice, farmers and liberal economists believe that the laws, once fully implemented, will kill the mandi system altogether. Farmers will then have to sell directly to corporations. This, they warn, will not look like a utopia of competitive bidding. India’s biggest food companies have tremendous market power, which they could use to force farmers to accept even lower prices. This could push many independent farmers out of business. It’s a possibility that has driven more than two-and-a-half crore people around the world to strike, march, or otherwise demonstrate—making the movement, according to many observers, the largest protest in world history.

Facebook said that the December suspensions, which included the account of the Kisan Ekta Morcha—an umbrella organisation formed by the farmer unions for the protests—were enacted after automated software mistakenly found that the pages had violated community standards. The company reversed the takedowns after the outcry. But many protestors smell a deeper connection between the social-media giant and India’s new laws. In April 2020, Facebook purchased a 10-percent stake in Mukesh Ambani’s Reliance Jio, the telecommunications arm of the Reliance empire. In addition to dominating telecom, Reliance is the largest player in petrochemicals and in retail. When its latest acquisition is complete, the company will control 40 percent—a large plurality—of India’s organised groceries sector. That could make it the biggest buyer of farmers’ products and, therefore, the biggest beneficiary of the right to negotiate directly.

Farm-law opponents quickly wised up to this possibility. In India, protestors began burning Jio SIM cards to express their anger. In America, they directed their ire at Reliance’s social-media investor. In interviews with reporters, several demonstrators in California and Vancouver speculated that Facebook took down the protest pages as a favour to Ambani. At the Vancouver protest, one person held up a sign that declared: “Modi + Zuckerberg = Ambani’s puppets.”

Facebook, one of the world’s most powerful companies, is no one’s puppet. But through its partnership with Reliance, the social-media giant could substantially gain from the agricultural laws. Facebook owns WhatsApp, which has more than fifty crore users in India. It is currently rolling out WhatsApp Pay, a feature that will allow WhatsApp users to complete digital transactions without leaving the application. And it is integrating Reliance’s JioMart—an expanding, groceries-focused online marketplace—into its messaging service. It means that if farmers begin selling more food directly to Reliance, as the laws would allow, there is a good chance they will do so via WhatsApp.

For Facebook, that presents enormous financial opportunities. For every sale or purchase made over WhatsApp, the company will receive valuable data on people’s needs, retail preferences, and finances. On 15 May, Facebook updated WhatsApp’s privacy policy in a way that makes clear the broader Facebook empire can use this data as it sells microtargeted advertisements.

The opportunities for Facebook extend beyond just ads. To make money in India, WhatsApp is trying to break down one of the most critical barriers found in healthy and equitable economies—the line between regular businesses and banks. In a filing with Indian regulators for WhatsApp Pay, the company said that selling loans and offering credit would be one of the “main objects to be pursued by it in the country.”

It is a troubling prospect. Banks already offer deeply extractive loans calculated to match what they know about an individual’s finances. When big communications companies enter banking, they can use their tremendous stores of other personal data to peddle even more exploitative arrangements. If banks double as retailers, they can use their lending power to help keep competitors, suppliers, and buyers weak or servile. In the case of WhatsApp, this could mean ensuring that any small business or farmer using its payment services remains financially subservient to its retail partner: Reliance.

For Reliance, piggybacking on WhatsApp comes with additional benefits. Given the app’s popularity, it could help make the company even more dominant in India’s food supply chain. It would also help Reliance acquire its own data set on farmer finances. Both would help the company procure goods from agricultural workers at the lowest possible cost. Reliance could likewise use this data to make sure that the agricultural inputs it helps manufacture, like tractors, sell at the highest possible price. WhatsApp Pay could meanwhile hand out high-interest loans to help farmers cover the gaps.

“It’s 360-degree control,” Parminder Jeet Singh, the executive director of IT for Change, a human-rights-focused non-profit in Bengaluru, told me. He compared the possible arrangement to driving for Uber. Farmers, like drivers, would sell as much product—in the former case, food; in the latter, rides—as the corporations allow. They would be paid what the corporations dictate. And, much as Uber lends drivers money to purchase vehicles, these corporations could lend farmers money to buy raw inputs at highly unfavourable terms.

This system is still a hypothetical. Reliance does not yet wholly control India’s food and retail economy, and WhatsApp Pay is still in its nascent stages. But India’s other largest retailers, Amazon and Walmart, loom in the wings. Each could establish similarly totalising ecosystems. Walmart already owns the payments application PhonePe, one of the two biggest players in India’s digital transactions market. And Reliance is willing to partner with these United States giants when convenient. The company, for example, works with PhonePe. And PhonePe is already operating as a financial-services business, though it does not offer loans.

Whether the farmers can prevent a corporate takeover by integrated tech-banking-retail platforms has consequences that extend beyond just agriculture. Activists I spoke to were worried that as these companies grow in size, they could also turn millions of kirana shops—or neighbourhood stores—and small merchants into gig workers, wholly dependent on the whims of commerce giants. In fact, the conflict has global implications. The kinds of consolidation happening in India are already under way in many other parts of the world, including the United States. Businesses like the communications giant Comcast control multiple parts of a supply chain in the US, from television studios to stations to the cable lines that send programming to homes. Retail companies, such as Amazon, both make products and own the marketplaces in which competitors must sell their own goods. The United States has businesses that double as banks. And it has plenty of tech companies that harvest data from individuals and sell it for ads, manipulating users in the process.

This combination has pushed thousands of small businesses in the United States out of existence. It has left many localities without affordable access to capital. And the dominance of Facebook and Google over the ad market, in particular, has helped misinformation spread just as it has accelerated the decline of local journalism.

Governments have been slow to act. It is only within the last half decade that US policymakers began to really grasp the consequences of concentrated corporate power. Even in countries more progressive than the United States, such as Germany, campaigns against monopolies have remained mostly an elite phenomenon. Unlike many other causes, antitrust—the battle against corporate expansion, mergers, and takeovers—has inspired limited grassroots activism.

Until consolidation came for Indian farmers. A largely dispersed and already struggling lot, these workers—most of whom are effectively small-business owners—understand the risks posed by monopolies. Their protests are among the first modern efforts by everyday people to stop corporations from seizing an industry on unfair terms. They are one of a handful of grassroots campaigns in recent memory to challenge corporate power across multiple continents, all at once.

It is too early to say if the farmers and their allies will succeed. But if they do, it will send a potent message. It will show that it is possible for potential victims of consolidation, powerless as they may seem, to fend off economic giants. It will prove that it is possible to make states safeguard even very small players.

IN LATE 2014, Mark Zuckerberg visited India to plot the rollout of Free Basics, his company’s plan to provide free, limited internet access to anyone with a cell phone. Zuckerberg was greeted by leading politicians, but his product quickly drew controversy. Free Basics restricted users to just 36 pre-selected websites, and the only available social media platform was Facebook. To many activists, this looked less like an act of charity and more like an attempt at dominance. “They wanted the whole internet to be Facebook,” says Osama Manzar, the founder of the Digital Empowerment Foundation, a Delhi-based nonprofit focused on providing information access to India’s poor.

Advocates of an open internet launched an extensive public-relations campaign against Free Basics, one that ignited a fierce debate about net neutrality. Facebook pushed back with its own public-relations crusade, reportedly spending $40 million on advertising. In billboards, the company pictured a farmer named Ganesh. Free Basics, they claimed, helped Ganesh learn “new farming techniques that doubled his crop yield.” In an op-ed for the Times of India, Zuckerberg declared that “everything we’re doing is about serving people like Ganesh.”

In the end, the critics won out. On 8 February 2016, Indian regulators prohibited telecommunications providers from restricting access to certain websites, rendering Free Basics illegal. Digital-rights activists celebrated. In a toe-to-toe fight with one of the planet’s strongest companies, they were victorious.

Facebook, however, was hardly vanquished. At the time Free Basics was banned, WhatsApp had more than 15 crore users across India. Over the next year, that number grew rapidly, to 20 crore. Especially among the elite and middle class, it was the most popular messaging system in the country.

But WhatsApp, with its end-to-end encryption, offered very few opportunities for Facebook to make a profit. To change that, in April 2017, Facebook announced that it would roll out WhatsApp Pay. It was a ripe time for such an endeavour. Five months earlier, the government abruptly announced demonetisation, pushing many Indians to use digital transactions as a substitute for cash. If successful, WhatsApp Pay could become a major player in India’s entire retail economy. But just like Free Basics, the e-payment enterprise ran into headwinds. In 2018, regulators froze the project over concerns that it would give a foreign company too much information about Indians.

Then, in April 2020, Facebook purchased its stake in Reliance Jio. In doing so, it made a powerful friend. Jio, which launched cellular services at the end of 2015, had already come to lead the Indian telecom market. That was thanks to both its parent company’s deep existing pockets and a series of fortuitous—or suspicious—regulatory changes that hurt Jio’s main competitors.

Seven months after Facebook announced its investment, the government signed off on WhatsApp Pay. One month later, Zuckerberg and Ambani held a virtual, videotaped conversation to celebrate their partnership and explain how WhatsApp Pay would transform Indian retail. “WhatsApp, now with WhatsApp Pay, brings digital interactivity and the ability to move to close transactions and create value,” Ambani declared. JioMart, he said, would give small shops “a chance to digitise and be at par with anybody else in the world.”

The partnership represents a concentration of resources and power that has concerned even some advocates who are ambivalent about the farm laws. Ajay Jakhar, the chairman of Farmers’ Forum India, and a farmer himself, told me he believed that the government meant well with the laws, and he was clear that he supports private markets. But he worried that the consolidation could breed economic disaster. “Without regulation,” Jakhar said, “I think millions of jobs could be lost in every street corner.”

FARMING is the most common profession in India. Estimates vary widely, but some studies put the number close to 15 crore—more than 10 percent of the entire population.

For many, it is a brutal economic existence. Even with the minimum support price for crops, India’s small farmers generally earn barely enough money to survive. Over the past several decades, thousands of financially distressed farmers have taken their own lives by drinking pesticides. In 2019 alone, 10,000 agricultural workers killed themselves. In Punjab, farmer suicides increased tenfold over the past five years.

There are many forces behind the suicide crisis, and they can vary widely by place and time. But a common theme is debt. Research suggests that roughly 90 percent of India’s farmers cannot cover the costs of fertiliser, seeds, pesticides, and other equipment. To cope, many turn to moneylenders, who can front the cash needed to plant and harvest.

“The lenders impose conditions, or they create an environment, where farmers are forced to buy pesticides and seeds and other stuff from dealers which are associated with the moneylender,” Jakhar explained. “They lock them into a closed loop where they buy pesticides from the same circle of people, and they pay interest to the same circle of people.”

Virtually no one thinks the status quo is working, including the millions of farmers now outraged about the new laws. But the protesters fear that opening the sector to corporate giants will lead to something even more exploitative: existing lenders operate with imperfect knowledge about their clients’ earnings. This creates room for farmers to haggle and hunt for better deals. Grocery giants like Reliance and Walmart, working with tech outfits like WhatsApp and PhonePe, would possess far more financial information. As a result, they could dominate farmworkers in ways that today’s moneylenders can only dream of doing. 

“Control over loans would completely be in the hands of these companies who would have microdata about all their transactions, about their livelihoods, and the harvests,” Jeet Singh, of IT for Change, said. Because of the information at their disposal, he continued, they could calculate the most extractive loan that individuals will still take.

And that is before the monopoly power kicks in. Should one or a handful of India’s grocery giants succeed in conquering the food supply chain, they could milk farmers from both ends, dictating how much they pay for inputs and how much they make off sales. They could also tell farmers what kinds of crops they should grow, precisely when they should plant, and exactly when to harvest. Reliance has already created an app, JioKrishi, that uses data analytics to instruct farmers on when they should sow, irrigate, and fertilise their fields.

For many small landowners, farming provides a sense of professional identity and a degree of autonomy. Becoming corporate cogs would threaten both. “Work is what gives dignity,” says Arun Kumar, the Malcolm Adiseshiah Chair Professor at the Institute of Social Sciences, a Delhi think tank, and a critic of the farm laws. “If people don’t have dignity, it creates social and political issues.”

Facebook did not respond to multiple interview requests. Reliance declined to speak. In a public statement, the latter company has denied that it will create any kind of gig-worker farming system. “Reliance Retail Limited (RRL), Reliance Jio Infocomm Limited (RJIL), or any other affiliate of our parent company, i.e., Reliance Industries Limited have not done any ‘corporate’ or ‘contract’ farming in the past, and have absolutely no plans to enter this business,” the company said on 4 January 2021. “Reliance has nothing whatsoever to do with the three farm laws currently debated in the country, and in no way benefits from them.” 

But six days later, and right after the laws took effect in Karnataka, Reliance purchased nearly 1,00,000 kilograms of rice from a group of farmers in the state. In other public statements, the company has been clear that agriculture plays a major role in its overarching commerce plans. “Our focus will be India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector,” Reliance said in April 2020, as it announced its partnership with Facebook.

What Reliance aims to do with these other merchants is also of critical importance. That is particularly true for the kiranas, which account for 75 to 78 percent of India’s consumer goods market. Reliance wants to bring them not just into its own orbit, but into Facebook’s as well. “India has more than 60 million small businesses, and millions of people around the country rely on them for jobs, and that’s a big part of what I hope that our partnership can serve here,” Zuckerberg said in his videotaped conversation with Ambani. “I couldn’t agree more,” Ambani replied.

Reliance and Facebook are not the only corporations who see potential in the corner-store economy. “Kiranas is where the real challenge is and where the real opportunity is,” Priya Patankar, the head of communications for Walmart’s PhonePe, said. “Payments is going to be the underlying drug which gets the user through the app.” The company would then find multiple ways of monetising its base. Google Pay, another popular e-payment platform, is also trying to reach these small businesses. It is partnering with financial institutions to offer them loans.

In the abstract, there is nothing wrong with digitising the operations of kiranas and farmers. If Reliance, Walmart, or Amazon were operating truly neutral platforms, making no use of small merchants’ data, and not offering their own competing products, the systems they are developing would not be especially threatening. But that is not what is happening. These companies do make their own products; indeed, many kiranas already sell their goods. They will likely monetise data small businesses provide. As a result, rising digital commerce in India could lead to a repeat of what Amazon is doing to small retailers across the United States. As Amazon has grown into America’s dominant online marketplace, the company has pushed onerous, tax-like financial agreements on the many merchants who became dependent on its platform, forcing them to hand over large shares of their revenues. Amazon has also used its privileged look at these merchants’ sales data to manufacture copycats of their most popular products, which it then sells for lower prices. The result of this process has been small business closures and the steady draining of wealth from communities across America. 

AS SOME OF imperialism’s foremost victims, Indians are quite attuned to the dangers of what academics and activists call “digital colonialism”: when foreign tech companies flood a market with their services, extract people’s data, and then profit off the information to the detriment of the local population. Concern about digital colonisation was critical in killing Facebook’s Free Basics. The concept helped hold up approval of WhatsApp Pay. And many of India’s business leaders have, at various times, invoked it to advocate for restrictions on foreign companies. That includes Mukesh Ambani. In a December 2018 speech, Reliance’s CEO demanded that the Indian government prevent “corporates, especially global corporations,” from owning Indian data. “Data colonisation is as bad as the previous forms of colonisation,” he said. “Data freedom is as precious as the freedom we won in 1947.”

What Facebook is planning to do, with the help of Reliance, neatly fits the definition of digital colonisation. It is a foreign company that controls India’s most popular messaging service. It is leveraging this service to shape and monitor Indian commerce. Selling microtargeted loans could easily become highly extractive. And its junior status in the relationship with Reliance could eventually change. When the British East India Company first began its missions to India, the subcontinent’s Mughal rulers were far wealthier and more formidable than any European state. Over time, the company became dominant anyway.

But thinking of Facebook purely as a foreign conqueror, akin to past colonial regimes, obscures the grander dynamics at play. The East India Company’s scope was geographically limited. If you lived in Britain in the mid-nineteenth century, you had relatively little to fear from the company. Indeed, its actions likely compounded your benefit by bringing ill-gotten wealth into your state. That is not true for Facebook. It may be headquartered in Silicon Valley, but it is not extracting raw materials from India for the benefit of Americans. On the contrary, both Indians and Americans—specifically their data and their attention—are the company’s raw materials. 

To a certain extent, the onus for stopping this exploitation rests with US regulators. It was, after all, America’s weak competition policies that allowed many tech and retail behemoths to emerge in the first place. But the cat is already out of the bag. The Biden administration could force Facebook to sell off WhatsApp, make Amazon stop manufacturing products for its US marketplace, and shut down the domestic fintech company that Walmart just created. An independent WhatsApp could still enter banking and e-commerce in India. Amazon could still make goods for Indians. Walmart could still own PhonePe. As policymakers in a bigger market, Indian regulators may actually have more power to stop these businesses than do their American counterparts. Unfortunately, so far, Indian politicians seem mostly interested in using their digital power to make tech companies silence criticism—including suspending handles of farmer protestors and media houses—and bend to the government’s regulatory whims. But ultimately, the problem is now larger than any one state. It will take international action to stop the endless consolidation.

That is part of why the agricultural protests are so significant. It is the largest transnational, grassroots movement against monopolisation, and the tens of millions of people demonstrating around the world grasp the global stakes. There is a reason why protesters are outside Facebook offices thousands of miles from India, carrying posters that link Zuckerberg to Ambani. There is a reason why they have slowed traffic in and out of major global cities, like London and San Francisco. And there is a reason why—rather than sticking to tractor parades in Delhi—farmers are burning Jio SIM cards, destroying Jio telecommunications towers, and shuttering Walmart stores in Punjab. They can see that the exploitation extends beyond just their workplace.

“What has shocked the nation is they normally believe farmers are illiterate, and that farmers are people who don’t understand all these things,” says Devinder Sharma, a leading agricultural analyst and a columnist. “But they know the nitty-gritty now. They understand the implications.” 

A version of this article first appeared in the Washington Monthly.