Mark Zuckerberg is pulling off a feat bigger than becoming the world’s richest 20-something: thriving in the cyber age even before “friending” the most populous nation and biggest Internet market.
Facebook’s founder will soon have to “like” China, where his website is banned. A post-initial-public-offering Facebook will have shareholders demanding that it tap China’s 1.3 billion people, and now. Such is life when your business model is predicated on ever-growing ranks of users updating, sharing and poking to make advertisers and investors rich.
Zuckerberg will certainly face difficulties. Facebook’s role in the Arab Spring movement caused many sleepless nights for Communist Party bigwigs. Yet more focus should be on the things China and Facebook have in common — things that may not jibe with Zuckerberg’s claims of making the world a better place.
China’s leaders will expect Facebook to bow to their censorship demands the way Google, Yahoo, Microsoft and Cisco Systems have. Twitter recently made an about-face, announcing it will block posts on behalf of governments. And Facebook will look forward to mining what it can from China’s masses, just as it does America’s.
That’s probably not the Faustian bargain Time magazine envisioned in 2010 when it dubbed Zuckerberg “Person of the Year.” For all the hype about Facebook as a force for democracy, its profit model is predicated on something very different, and its side effects are still being counted.
Wall Street views Facebook as an unstoppable, limitless force, much like economists thinking China can grow 10 percent forever. Facebook views our privacy as a commodity to be bought, sold and monetized, much as China’s government benefits from keeping close tabs on the masses. China’s vast supply of low-wage workers comes from the nation’s hinterlands; Zuckerberg’s cheap-labor source is Facebook users.
Just like financiers wary of China, many Facebook users have too much invested in the social-media juggernaut to walk away. Those miffed by Facebook mining their lives for profit think it’s too big of a phenomenon to blow off. It’s one thing for socially responsible investors to steer clear of tobacco and oil stocks; China is quite something else.
Facebook’s governance structure resembles a dictatorship by requiring investors to surrender rights to Zuckerberg. He now controls 56.9 percent of voting power and has the right to appoint his successor, a “disquieting factor,” says Gamco Investors’s Larry Haverty in Rye, N.Y. Yet, asked earlier this month whether a growth-stock investor like him wants to own Facebook, he said, “Absolutely.”
The bulls are so enthusiastic about China and Facebook that they have no time for questions about whether either has peaked.
Facebook faces as existential a question as any Internet company does: Is it a virtual part of our lives or a real one? Even if it’s true that some people are on Facebook for eight hours a day or more, does that ensure they will reach for their credit cards? What if users become irate at the lack of opportunities to opt out of Facebook’s efforts to monetize them?
In a pre-IPO pledge not to sell out, Zuckerberg said he wants “to change how people relate to their governments.” Will such sophomoric idealism survive the Beijing challenge? Facebook’s own China-like ways suggests that’s highly doubtful.
