Facebook Breaks Into China

By | December 12, 2016

Facebook Breaks Into China

Facebook is all set in its efforts to re-enter the massive market of China. The New York Time reported that Facebook was internally working on a tool that would censor the contents in the News Feed. This would filter out all the banned/controversial contents from the Newsfeed.

These efforts display the willingness of the company to enter the China market. Mark Zuckerberg, CEO of Facebook says that the company ought not to become the “arbiter of truth” and censor fake news, employees were building tools to censor far more for China.

Facebook would not be the first tech company to make such changes for the Chinese Government in exchange for market access though it would be the most important one of all. Besides, even if Facebook wins its entry into China, it would be the social media giant. It would be a restricted version of Facebook depicting the idea of “open” internet for the Chinese Government.

Facebook’s desire to enter the Chinese market is understandable from the business perspective. These social media sites were blocked in China by the Great Firewall in 2009. If the users attempt to reach a certain blocked site, then they are redirected to bogus IP addresses.

Since that Facebook has gained an amount of 1.8 billion monthly active users from everywhere except China. For a company like Facebook, the growth in the number of new users is important, but now it has begun to slow down. China being a home to about 721 million internet users, most of which are unlikely to be registered on Facebook. The country has an untouched territory of potential users for the company.

Yet it is not easy to succeed in attaining a position in a country like China. The country has a number of social networking sites to compete with Facebook. Weibo, a social networking site with nearly 300 million monthly active users, substitutes Twitter as a source of real-time information.

WeChat, a chatting app with about 846 million monthly active users, is the choice of people there when it comes to chatting. Besides chatting, the app also acts as a news-reading app, a shopping portal and a digital Rolodex. The country has Zhihu as a replacement to Quora. Baidu Tieba replaces Reddit. Almost every major Internet service based in the US has one or the other counterpart in China.

Though most of the Chinese consumers are excited about the news for the release of Facebook in China. Some say that since most of their friends are not on Facebook, their chances of joining of Facebook is little. Entry into China to boost the number of users comes with a high share of risk as on the one hand, users are excited about joining Facebook while on the other hand, some are reluctant towards it. Entering China would introduce pressure from shareholders for Facebook to succeed there and there have been many examples of large tech companies failing in China.

Cab company Uber failed to establish in China. After losing $2 billion in China, Uber strike a deal with its competitor Didi Chuzing. Apple too faced its share of loses in China.

Investors would be likely to have a little tolerance while investing in China as it would be a different reception to Facebook in China as compared to the rest of the countries. Though it seems like a huge tempt to gain access to millions of potential new users but it would be a challenge too to win over those new users.

Although in all the efforts of getting new users, it appears that neither Facebook nor the Chinese customers stand to benefit too much. In case of the failure of Facebook, the major victory would be for the Chinese Government and the Communist Party of China (CCP).

China describes its internet as “open” internet but in practice, the case is far from this. The CCP has made it clear through the laws and practice that doing business inside China requires fulfilling its demands. A foreign company has to navigate through a web of regulations, licenses and political relationships to stay in business. While the domestic companies being more familiar with the norms, end up leading the market.

Due to all the rules by the Government, the foreign companies are losing their patience in the market. Google closed its consumer facing search engine in 2010 due to all the pressure to censor the search results by the authorities. Companies like IBM, Intel and Microsoft, are pushing for the US Government to put more pressure on Beijing which they claim is pressuring to hand over the data and source code.

Uber exited from the market because of the Chinese terms and conditions. Netflix took off from China one year after it first announced plans to arrive there.

Facebook would be subject to more political pressure than any other company. That is because it deals with information and not just search and discovery like Google. It is something that may result in a revolution or turn into an election.

For this, there must be compliance with the China’s censorship regime as it already exerts tremendous influence on its domestic social networks, being a prerequisite for getting into China.

If Facebook enters China by offering up censorship tools or some similar concessions, it would be like a trophy for Beijing and CCP. The Government would continue its facade of openness by allowing this powerful foreign company to enter its market while also seeing its vast censorship regime legitimised.

The entrance of Facebook in the Chinese market would also lead other foreign companies to conclude that the benefit of doing business in China outweighs the ethical costs. If not, then it would risk the company to fall behind their rivals. Most of all, it would be a proof by China’s internet authorities that the only way to enter their country is if they follow their terms and conditions.

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