Is Facebook Buying the Developing World?


MENLO PARK, California- Facebook CEO Mark Zuckerberg has publicly stated that the developing world may not be the most profitable market for the social networking giant — at least, not in the short-term.

However, one of the company’s recent purchases does little to suggest that it will not move forward with immediate efforts to grow there.

Facebook spent between $100 billion to $200 billion on Israel-based Onavo, a company that helps customers reduce their mobile phone bills by using compression that minimizes usage.

The acquisition of Onavo represents Facebook’s first Israeli satellite office as much as it is also the second step in the company’s move into an untapped market.

The first being its initiative, Zuckerberg’s plan to provide internet access to 60 percent of the world’s population.

Facebook users in the developing world currently generate just one-seventh of the revenue generated by users in the developed world. Even as that may be, statistics suggest that the sheer volume of developing countries make them the most attractive and viable place of business for the company to grow.

In the second quarter of 2013, emerging markets accounted for 88 percent of revenue growth, which compares to 43 percent in the United States. Monthly users increased by 32 percent in Asia, 29 percent in Africa and South America and just six percent in the U.S.

These numbers may explain why Facebook has recently introduced a text-messaging interface and a feature-phone version to create access for users with lower incomes.

Jonathan Zittrain, co-founder of Harvard University’s Berkman Center for Internet & Society, suggests that Facebook’s desire to become the “online portal” for mobile users in the developing world should be met with competition and a more interactive approach.

Zittrain believes that the social networking tool should not be the only way for people to access the Internet and companies should focus on providing tools that encourage the younger generation to create their own apps and websites.  The concept of “open Internet” should be employed according to Zittrain, creating access to all — including both users and providers.

– Zoë Dean

Source: Wired, Marketplace
Photo: Shalom Life


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