Opinion | Game Theory in Indian E-commerce

The seeds were sown early this year. On 15 January, the world’s richest man and Amazon founder Jeff Bezos said the online retailer would invest $1 billion in India over 5 years, bringing 10 million small and mid-size local businesses online. While US companies are known to be tight-lipped about their investment plans, there is a reason why Amazon keeps announcing them. In it, there always is an inherent message for its competitors. This time, it was for Reliance Industries which had, just a month back in December, rolled out an early version of JioMart — its much-anticipated online retail service, saying it will use its technology platform to tap into India’s vast network of small neighbourhood stores known as kiranas. Bezos’ appeal then to woo such businesses could be understood.

Game theory is about how you make moves in competitive situations where the outcome depends critically on your competitor’s moves. Here, signaling is just as critical as the actual action. That was Bezos’ turn. Now Reliance has come back with a $5.7 billion deal with Facebook that gives the Mark Zuckerberg company a 9.9% stake in RIL subsidiary Jio Platforms.