Facebook in China: A Dead End?

NEWS ANALYSIS

Facebook, the world’s largest social network, is preparing to enter China, according to reports—and its entry may take the form of a joint venture with China’s largest search engine, Baidu.

Baidu did not get to be the largest search engine in the country without close cooperation with the Chinese Communist Party, however. The question for Facebook if it enters China is how it will avoid being dragged into this matrix of active censorship and information management.

Can a company founded on principles of openness and connectivity thrive in a market characterized by top-down propaganda and ubiquitous control?

Facebook founder Mark Zuckerberg visited China on Dec. 24, 2010 and met with executives of four major Chinese IT corporations, namely Baidu, China Mobile, Sina and Alibaba. Soon after he left Goldman Sachs invested $450 million in Facebook at a $50 billion valuation, the New York Times’ Dealbook reported.

The unavoidable problem Facebook faces as it considers entering China is this: should it comply with the Chinese communist regime’s Internet censorship?

The regime is an implacable enemy of freedom of expression. Though Facebook may be trying to enter the market with good intentions, it may end up like another Google: compromising first, refusing next, and in the end pulling out, battered and bruised.

If Facebook makes censorship concessions (for example, not allowing users to nominate their belief in certain creeds—such as Falun Gong) it will be betraying its own ideology. But the Party-state does not allow Chinese citizens to say whatever they like anywhere on the Chinese Internet—so how is Facebook to avoid censoring?

So far no single company has been able to monopolize China’s social networking market. Renren, China’s biggest social networking website, known as China’s Facebook, launched its initial public offering on the New York Stock Exchange on May 4. Its shares soared 50 percent on the first day, but dropped 30 percent the next day, and were below its issue price on May 11.

This volatility has also been seen in China’s internet stocks recently, including Youku, Dangdang, and Qihoo 360. It is questionable whether Facebook will be more desirable in the eyes of investors after it enters China.

Privacy protection is another area of enormous concern. One of Facebook’s most treasured assets is the fact that hundreds of millions of people trust it with their private information. But operating in China may force it to disclose user information to the Chinese authorities—and this could lead its public image to plummet.

The large amount of information collected by Facebook could also make it another tool in the already advanced arsenal of Chinese public security forces to monitor and track dissenters.

Google decided not to partner with a local company when it entered China. This meant it lacked a protective shield against the Communist Party’s bureaucracy, but it also meant it was more independent.

If Facebook partners with Baidu, users may cancel their accounts in protest, given the latter’s history of close cooperation with the authorities.

The largest question for the company, from a business perspective, is how it will possibly gain significant market share given the years that indigenous Chinese companies—often in reluctant alliance with the regime’s information controls—have had to capture users. Facebook also has pro-Western political associations. Can it succeed?

Facing such a battery of commercial, ethical, and PR hazards in entering China, Facebook may want to think twice.

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Read the original Chinese article.