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Facebook (FB) Tests Instagram Reels on News Feed in India

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Facebook recently announced that it is testing whether Instagram creators can have their public Reels recommended on Facebook in India. This would enable Reels creators to share their Reels clips on Facebook News Feed and on Facebook Watch, facilitating a potentially huge expansion of Reels.

Selected creators in India including Pooja Dhingra, Ashish Chanchlani, Masterchef Pankaj Bhadouria and key public figures such as Suresh Raina, Sanjeev Kapoor and Harbhajan Singh among others would now see a prompt to also have their Reel recommended on Facebook, once those reels are shared on Instagram.

On allowing to do so, such Reels feed will show up on the Facebook timeline of the creators’ followers. It will also be shown as recommended content to anyone on Facebook based on what may be relevant to them.

These reels, typically 30-second long videos, will be shown with the creator’s Instagram username, not from their Facebook account if they have one.

As popularity of short videos keeps growing in India, Facebook continues to look for ways to push Instagram Reels (its short video offering) across its platforms to its 21 crore Instagram users, 53 crore WhatsApp users and 41 crore Facebook users in India.

Such initiatives are expected to boost performance of Facebook’s shares which have declined 6.6% in the year-to-date period against Zacks Internet - Services’ rally of 8.2% and S&P 500’s rise of 2.1%.

Year to Date Performance

Instagram’s Efforts for Reels to Fill for TikTok’s Absence in India

Instagram first launched Reels in India, less than a week after the country’s government announced a ban on TikTok due to its Chinese ownership.

At that time, TikTok had over 200 million users in India, and Facebook took the opportunity, through Reels, to snap up as many of those orphaned users as it could, before expanding Reels more broadly.

Facebook’s efforts to boost Instagram Reels exposure by expanding its presence in its News Feed and providing more opportunities for creators could help it to tap into the market left open by TikTok's absence.

Additionally, Instagram is making changes to its algorithm to get more original posts on its platform. With the help of algorithm, Reels that are mostly covered by text, are blurry, have a watermark or logo, or have a border around it would not be recommended as frequently.

Instagram user surveys demonstrated that people have a less satisfying Reels experience when content is recycled from other apps or is blurry. The platform will start deemphasizing that content in its recommendation software.

The company is also issuing new best practices on its creators’ account to give Instagram users tips on how to make content that is likely to be seen and promoted.

In February, Instagram introduced Recently Deleted feature that allows users to recover posts that they have inadvertently deleted, including Reels within 30 days.

Moreover, Instagram rolled out a new update for its Lite app whereby Lite users can now view reels within the app, which is expected to boost usage of Reels especially in rural India.

Facebook’s Increasing Interest in India

The Facebook-owned messaging platform has already launched WhatsApp Pay to enable small businesses and individuals in India to buy and sell things through the app. WhatsApp has had to struggle for over two years to get regulatory approval.

In April 2020, Facebook picked up a 9.99% stake in Reliance Industries’ Jio Platforms at $5.7 billion. The deal, which valued Jio at $65.95 billion, makes Facebook the largest minority shareholder in the India-based telecom network. Jio Platforms is a wholly-owned subsidiary of Reliance Industries Limited.

The plan to embed JioMart into WhatsApp could be crucial for a number of reasons including access to Jio Platforms’ more than 380 million userbase and to take on leading e-commerce platforms in India like Amazon (AMZN - Free Report) and Walmart (WMT - Free Report) backed Flipkart with Reliance owned online retail arm.

Moreover, this Zacks Rank #2 (Buy) company is looking at India for its crypto-currency project called Libra and to roll out tools that let users make payments and buy and sell products over the social network’s messaging services much like Tencent’s (TCEHY - Free Report) WeChat in China. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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