Facebook in China? Introduction Seventy percent of Facebook’s 500 million users were outside the…

Facebook in China? Introduction Seventy percent of Facebook’s 500 million users were outside the United States, and Facebook was available in 70 languages. Facebook had started a Chinese language version in 2008, but it functioned poorly because of government censorship.14 Access to Facebook was completely blocked by the Chinese government in 2009, which not only deprived the company of access to a market with as many Internet users as it had on its Web site, but it also provided an opportunity for competitors in China to grow and flourish. Facebook had not paid much attention to China as is managed its spectacular growth, but that changed in 2010. Facebook’s Perspective on China In a speech at Stanford University in the fall of 2010 CEO and founder Mark Zuckerberg said that Facebook was trying to decide on the “right partnerships that we would need to do in China to succeed on our own terms. Before we do anything there, I’m personally spending a lot of time studying it and figuring out what I think the right thing to do is. It’s such an important part of the world. I mean, how can you connect the whole world, if you leave out a-billion-six people?”15 He also said, “I don’t want Facebook to be an American Company— obviously, we are in America—but I don’t want it to be this company that just spreads American values all across the world…. For example, we have this notion of free speech that we really love and support at Facebook, and that’s one of the main things we’re trying to push with openness. But different countries have their different standards around that…. My view on this is that you want to be really culturally sensitive and understand the way that people actually think.”16 Zuckerberg revealed that he was studying Mandarin for an hour a day. Zuckerberg also said that Facebook would first enter Japan, South Korea, and Russia and then turn its attention to China. He said, “Our theory is that if we can show that we as a western company can succeed in a place where no other company has, then we can start to figure out the right partnerships we would need to succeed in China on our own terms.”17 The company had opened offices in Brazil, India, and Singapore, and opened one in Hong Kong in February 2011. In December 2010 Zuckerberg traveled to China and visited Baidu, the leading search company, Internet company Sina, and China Mobile, the largest telecommunications company and government owned. The Chinese Market The Chinese market had matured quickly with a set of highly successful companies which were formidable competition for new entrants. Renren.com was a close approximation to Facebook and the most popular social networking site. Sina offered a micro-blogging service Sina Weibo similar to Twitter, and Tencent offered Twitter-like services with its QQ instant messaging service being particularly popular. Other popular social networking sites were Kaixin001, 51.com, and Douban. Kai Lukoff, co-founder of ChinaMetrix in Shanghai, however, said, “Chinese developers love Facebook” because it is generous in its arrangements with developers.18 Blogger Zhang Wen wrote, “If you put your Facebook page on your name card, you’ll look cool and well-connected to a global community, not just stuck in China.”19 On the occasion of the opening of its Hong Kong office Blake Chandlee, Facebook vice-president for commercial development in Asia, Latin America, and emerging markets, said, “We’re growing all over the world and the Asian region is a big, big part of it.” He added, “Mobile is the future of our business, especially in markets like Asia and Latin America.” He also said, “We have nothing to announce about what we’re doing or not doing. There are a number of areas around the world where we have gaps. There are lots of reasons why I don’t want to talk about China. Today, Facebook is available in Chinese in a number of different dialects. We always want all users around the world to have access to Facebook. In some places they do, some places they don’t, whether it be temporarily or permanently.”20 Censorship The Chinese government had blocked Facebook, YouTube, and Twitter since the riots in Urumqi province in 2009. The government feared collective action that could impact social stability and government control, and social media provide a coordination mechanism for collective action, as was evident in the so-called “Arab Awakening” in 2011. When asked where the next uprising would occur, Egyptian activist Wael Ghonim, said, “Ask Facebook.” Facebook director of international communications Debbie Frost said, “We’ve witnessed brave people of all ages coming together to effect a profound change in their country. Certainly, technology was a vital tool in their efforts, but we believe their bravery and determination mattered most.”21 The Chinese social media Web sites had well-developed relations with the Chinese government and practiced self-censorship based on informal guidance from the government. Foreign companies operating in the country also practiced self-censorship or faced disruptions in their services. The Chinese government also required Internet companies to turn over to the government personal data on persons who register domain names in the country.22 This had caused GoDaddy.com to stop registering domain names in China. Robin Li, co-founder of Baidu, said, “Socialism with Chinese characteristics drives the development of the Chinese Internet.”23 Arvind Ganesan of Human Rights Watch provided his interpretation of censorship in China, “The underlying intent is, if you’re engaging in political speech, we want to know who’s engaging in it and what Web site is behind it. This is a way the Chinese government can send a chilling message to people that they shouldn’t speak freely online. It is forcing us companies to be both the censor and the spy on behalf of the Chinese government.”24 Rebecca MacKinnon, an expert on Chinese censorship, commented, “This is part of the Chinese conundrum. The government requires companies to police and censor most of the Internet for it. I find it hard to see exactly how [Facebook] would organize their business in China in such a way that would insulate them from these problems that nobody else has managed to avoid.”25 Chinese activists had written to Facebook complaining that the company had taken down their page “Never Forget June Fourth,” the day the Tiananmen Square protest began. Facebook said the group had set up the wrong kind of page.26 Facebook lobbyist Adam Conner commented on Facebook’s challenges in countries, “Maybe we will block content in some countries, but not in others. We are occasionally held in uncomfortable positions because now we’re allowing too much, maybe, free speech in countries that haven’t experienced it before.” Facebook refused to elaborate on Conner’s comments, but Frost said, “Right now we are studying and learning about China but have made no decisions about if, or how, we will approach it.”27 Conner’s comment sparked a reaction both among NGOs and in Congress. Kenneth Roth, executive director of Human Rights Watch, wrote to Zuckerberg urging “that, as you work to define the terms of your entry, you do not collude with Chinese authorities in censoring political speech or helping them retaliate against Facebook users who want to benefit from the openness and connectivity Facebook provides.”28 Roth expressed particular concern over Facebook’s requirement that users register their real names where “authorities have a history of identifying and jailing internet users for political speech,…. ” He asked Facebook to give users in China “some form of online anonymity.” He also asked how Facebook would operate if it formed a partnership with Baidu and how it would deal with Chinese government attempts to censor “domestic and global content.” The Committee to Protect Journalists also criticized Facebook for requiring users to register with their real name. Michael Anti, an independent journalist in China, had his Facebook account deactivated in 2011 because he had used another name to establish the account.29 The Global Network Initiative, which includes as members NGOs, university schools and centers, and financial and consulting companies, had been founded in 2008 by three Internet companies, Google, Microsoft, and Yahoo, and provided principles and implementation guidelines for firms operating in countries that restrict speech and expression.30 No other Internet companies had joined, and Google withdrew from China in 2010, moving its servers to Hong Kong.31 A Facebook spokesperson Andrew Noyes, commented, “As Facebook grows, we’ll continue to expand our outreach and participation, but it is important to remember that our global operations are still small, with offices in only a handful of countries.”32 Bill Bishop, a media entrepreneur in Beijing, said, “It is inevitable that to comply with Chinese laws they or their partner are going to have to turn over data. The day that happens they should expect a call from Congress.”33 Facebook was already under fire from Congress on privacy issues, and Representatives Joe Barton (R-TX) and Edward Markey (D-MA) had written to Facebook demanding an explanation for allowing outside Web sites to obtain personal information from users with their permission.34 In an editorial the Washington Post warned that Facebook could “become another bearer of the double standard of Western companies in China such as Yahoo and Microsoft.”35 The Challenge Facebook wanted to enter the Chinese market, but the question was how. It could enter on its own, acquire a Chinese Internet company, or partner with a company such as Baidu that did not have its own social networking service. An important part of its market strategy, would be how to deal with the nonmarket challenges it would face in China, including censorship and demands to provide information on users to the Chinese government. In addition to choosing its market and nonmarket strategies for entering China, the company had to prepare for the inevitable criticism and pressure it would face from the U.S. government and NGOs.

■ Preparation Questions

1. Should Facebook enter the Chinese market on its own and develop its own relations with the Chinese government?

2. Should Facebook join with Baidu in a joint venture that would be managed by Baidu? Might the government make demands on Facebook regarding its Web sites outside China?

3. Other countries also censor Internet services, although not as broadly or continuously as China. Should Facebook develop a global policy governing how it deals with censorship before it enters the Chinese market?

4. If it enters China, should it allow users to be anonymous? Should it join the Global Network Initiative? 5. What strategy should Facebook use to deal with the pressure it will face in the United States?


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