Facebook is unlikely to succeed in China, even if it compromises on free speech

Facebook is unlikely to succeed in China, even if it compromises on free speech

Facebook may have laid some of the early groundwork to launch its social network in China, but the U.S. company’s chances of making a dent in the world’s most populous country remain remote.

A New York Times report that Facebook is developing a system that could censor information to appease the Chinese government is the talk of the tech industry right. The timing couldn’t be worse: domestically, Facebook is under pressure for failing to adequately manage the influence of fake news on the U.S. election, yet here it is seemingly prepared to quash legitimate information on user timelines to kowtow to the Chinese government and further its interests in a country of 1.3 billion people.

Facebook’s China conundrum hasn’t changed much since its IPO in 2012, when it admitted it may not ever find a way into the country.

Recently, however, CEO Mark Zuckerberg reportedly justified the development of censorship software, telling staff that “it’s better for Facebook to be a part of enabling conversation, even if it’s not yet the full conversation.” That triggered a number of departures, according to the New York Times, but the truth about China is that it would take a huge effort from Facebook to be relevant to the general conversation in the first place.

Even if Zuckerberg — who has made little effort to hide his interest in doing business in China — sold out and agreed to censorship in exchange for being unblocked, Facebook has a major challenge in finding a place to sit within the nation’s already-developed social media ecosystem.

Sticking to its roots won’t cut it because Facebook-style social networking has already failed in China.

Renren, the company widely labeled as ‘China’s Facebook,’ has long since pivoted. Initial promise saw Renren attract investment from SoftBank in its early days, and before its U.S. IPO in April 2011, the company claimed 160 million users.

That NYSE listing raised $743 million, but the share price has fallen from a first-day close of $18.01 to just $1.81 today. These days Renren’s service is barely used and the company is more notable for its investment deals, which include stakes in a mortgage lender and a delivery service. That investment business and its social video platform are being spun out of the company to give them room to breathe, such is the decline of the core service and ‘traditional’ social networks in China.

Renren and lesser rivals like Kaixin withered because they missed mobile, hugely popular messaging app WeChat didn’t and now it is king.

WeChat’s dominance has been clear for a long while — I wrote as much back in 2013 — and today it has 846 million monthly active users, the majority of whom are in China. It is also a critical part of parent firm Tencent’s mobile monetization strategy. More to the point, for Facebook, is that it occupies the space that Facebook is aiming for in China — and then some.

Messaging apps have taken a huge bite into social networks, no where more so than China where you frequently notice people out and about in public using WeChat groups, or holding their phone to their face to use the push-to-talk ‘walkie talkie’ feature to communicate.

But WeChat goes beyond messaging. It is the internet, and more.

It includes a Facebook-style timeline feed from friends — Moments — consumers can connect with branded accounts as they do with Facebook Pages, there’s a payment system, shopping, banking, appointments and now a new feature that enables developers to build their own apps for the messaging platform, thereby disintermediating official app stores.

WeChat is essentially the mobile portal for Chinese consumers, as A16z partner Connie Chan put it, while Twitter-like Weibo covers social with 297 million MAUs, so it is hard to see what new tricks Facebook can bring to the party

Then there’s the fact that, in China, your Western brand means very little.

Just ask Uber CEO Travis Kalanick, who agreed to sell his company’s China business to rival Didi. Facebook’s global appeal is muted in China. Apple and the iPhone are thriving in China as exceptions to the norm, but Facebook doesn’t have that same brand gravitas.

The average person in China has no immediate need for Facebook. Sure, you can connect with people who are overseas but, at this point, people who would find Facebook useful to connect with friends or family overseas almost certainly already use it via a VPN. Facebook’s ad buying service estimates that the social network has an audience of around 2.1 million users in China, a tiny portion of the country’s reported 710 million internet users.

Zuckerberg’s burning desire for China seems to be the catalyst for the development of the censorship tool, which the Times report stressed may not ever be deployed, but Facebook should tread very carefully here. Compromising on free speech can only lose it friends in the West, and the chances of any kind of success in China are very slim, which by extension could negatively impact its stock price.

Sticking to its existing strategy of serving advertising customers in China that want to reach a global audience is a better bet but, even then, working with state-run publications — as Facebook does — throws up plenty of issues around media manipulation and fake news.


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