It is no secret that Facebook wants to get back into China. The site was banned there in 2009 after independence activists used the site to communicate with each other, panicking authorities. In recent years CEO Mark Zuckerberg has made it his aim to lift this block, employing a range of tactics:
He went jogging in smoggy Beijing, much to the amusement of locals.
He hosted the country’s internet czar at Facebook’s Menlo Park headquarters.
Now the New York Times reports that Facebook is building a tool to allow it to censor certain items and remove them from the newsfeeds of users in China. The article makes it clear that the tool is still very much an experiment and there are no concrete plans in place to roll it out. Crucially however, Facebook has not denied the existence of the tool.
The timing of this leak is not great for Facebook. It is currently facing significant criticism for failing to do more to filter out fake news on the site, particularly in the wake of the U.S. presidential election.
But Zuckerberg has one very big reason for getting the seven-year ban on Facebook overturned — growth.
In the time that Facebook has been banned in China it has gone from having 300 million users to 1.8 billion. Annual revenue has gone from $650 million to an estimated $25 billion in 2016. Its growth has been phenomenal but the company is now a public one, and that means shareholder pressure to continue to expand.
With almost 20 percent of the world’s population, China is a very attractive proposition. “Access to the Chinese market is the single most transformative possibility when it comes to Facebook’s growth prospects,” Ben Thompson, technology analyst, said on Wednesday.
The problem for Facebook is that censoring content will be just one of several concessions that it will need to make for the Chinese government to lift the ban. Eager to promote homegrown companies whenever possible, the Chinese government puts strict demands on foreign companies operating in China.
One of those demands is forcing companies to store Chinese user data in China. Apple started doing this in 2014 in a data center managed by China Mobile and Facebook will need to either build its own, or more likely lease some servers from a local company.
New online content rules forbid any foreign-owned media from publishing online in China without approval from the government, and that all content — ”text, maps, games, cartoons and audio files” — must be hosted on servers located inside China.
Facebook will also need to partner with a local Chinese company, a requirement the government places on many foreign companies operating in China, meaning it will have to share sensitive information about its products with another company. LinkedIn, for example, partnered with two Chinese venture capital firms, one of which was linked to the son of former Chinese president Jiang Zemin.
And yet, despite all these restrictions, Facebook is still considering launching a version of its social network in China — but even so, there is no guarantee that it will be a success.
Google is also blocked in China but, unlike Facebook, it is not making much of an effort to get back in. While the company may seek to play this up as a moral choice, the reality is that when it was operating in China, it was getting trounced by local rival Baidu.
Facebook will face similar competition from local social networking sites which know their audience much better than Facebook does. In the time that Facebook has been banned from China, services like QQ, WeChat and Weibo have become dominant in China and displacing them will be difficult.
Facebook is seen as hip in China because it is outside the Great Firewall, but by succumbing to the demands of the Chinese government it will lose a lot of that appeal, and as a result it could struggle to find an audience.
For all the appeal of the 700 million Chinese internet users, Facebook still gets 50 percent of its entire revenue from North America, and the reputational damage of being seen as a stooge of the Chinese government could hit its bottom line.