Facebook à la chinoise?

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The rumours, if confirmed, could bring a significant change in the panorama of the Internet in China: Facebook and Baidu (the leading search engine in the Chinese web market) are to enter into a partnership.

Baidu executives visited Palo Alto in February but still is not known what exactly came out from the meeting. They sure have discussed a partnership. It’s convenient to affirm that a deal might come soon, or it even has happened already. However, despite the Chief Executive Officer Robin Li has publicly expressed interest in partnering with the U.S. social network, neither company has formally announced a partnership. According to Sina News, quoting Li: «I think that companies such as Facebook should consider the Chinese market, if they are in the proper way and have enough patience, you will have the opportunity. But time flies fast growing Internet market, and there are many challenges. If you do not wait and will lose the opportunity… We are already involved in China and Japan. The next 5 to 10 years, we may enter dozens of markets. The Chinese market has been large enough, we can make use of the funds available to carry out market expansion». As well Baidu’s director of international communications Kaiser Kuo called for Facebook investments in the Chinese market.

Now it’s convenient to make some considerations on this possible partnership.

Why should Baidu be interested in Facebook?

A partnership with Facebook sure makes sense for Baidu, considering that both Google and Microsoft embedded Facebook functionality in their search engines and toolbars. Furthermore, the partnership will gain Baidu a sensible growth of its income from advertising and from the stock market.

On the other side, why should Facebook be interested into entering the Chinese market? Fist, it would help the U.S. social network to substantially grow its membership at a time when the growth in the States is nearing a plateau. Second, it would officially legitimize Facebook, getting in this way a sort of governmental imprimatur and thus stopping the banishment out of censorship. In mainland China (therefore not in Hong Kong, where Facebook has around 700 thousand users) the government blocked Facebook access since July 2009, after riots in the Urumqi ethnic minority region of the country.

Furthermore, what will be the possible fallout of such a partnership on the Chinese Internet?

China has 400 million Internet users. According to the data released by Meihua Info, Baidu has roughly 120 million users, the 30% of the market for search in the country. Google has about 10% of the market, or 40 million users, while Sina has 8.5%, or 34 million users there. A partnership with Baidu will undoubtedly offer Facebook a portion of the Chinese market, but is has to be considered that the market is already served by local social networks as Renren (a real Facebook clone), Weibo, Douban (focused on books, music and motion pictures) or Kaixin001 (mainly focused on games), having benefit from the absence of foreign competitors. That means that Facebook will not fill a vacuum, Chinese users are already addicted to social networks and are fidelized to them: thus, why should they change their habits and choose Facebook? The risk of an economic disaster is quite high, as happen years ago to myspace.cn. Things could be a bit more different if the partnership will not consist on the mere entry of Facebook in the Chinese market via Baidu but on the creation of a brand new social network, totally independent from Facebook and run together by Palo Alto and Baidu.

Finally, we can not avoid considering also the fallout for Facebook itself. The partnership with Baidu will open the gates of the Chinese market, that’s for sure, but the things will not go that easy. The Chinese Internet market is characterized by the most sophisticated censorship in the world. Therefore, it’s impossible to think that Facebook, despite being partner of Baidu, will not be affected by censorship. Kaiser Kuo has affirmed quite clearly that Facebook shall abide the strict censorship requirements; according to Kuo, it’s better to have Facebook censured that to have no Facebook at all. It’s true that the Chinese government tends to be suspicious of Western companies, favoring domestic ones (in a sort of economic protectorate), but only if they do not comply with the censorship requirements. It’s not easy for Western companies to face the censorship issue, as for Google. Then, the question is: will Facebook decide to abide the censorship requirements in order to enter the Chinese market? In the case Facebook will decide to compromise with the Chinese government, what will be the reaction of its Western investors? It could be very harmful to Facebook public image and badly affect its income. It’s common knowledge that the Western public opinion and netizen are not in favour of any censorship of the net and thus they will surely take actions against Facebook and lobbying for it to quit the Chinese market. Despite the partnership is just a rumour and Kaiser Kuo has quelled several times these rumours, the same Kuo, besides having supposed the Facebook compliance to the Chinese censorship requirements, has even considered how this compliance can be realized. According to Kuo, the best way to censor is through the language. Chinese users will employ the simplified Chinese (the writing system used in mainland China but not in Hong Kong and Taiwan) interface and therefore the access to certain politically sensitive activities could be limited for people using the simplified Chinese interface. Quoting Kuo: «[Facebook] could prevent people from becoming fans of pages/groups/what have you based on the language interface you use, right? So that people using the Simplified Chinese interface couldn’t join, say, some pro-FLG [Falun Gong] or Tibetan independence group?». The problem for the government will not be only the access to multiple sources of information unwanted by the Chinese authorities, but also the possibility for the Chinese users to interact with the whole Facebook community.

For the time being, the partnership between Facebook and Baidu is just rumoured, but it will be gainful for both parties from an economical point of view. For sure, this will be another opportunity for the Chinese government to test new censorship devices, more and more sophisticated.

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