[Viewpoint] Facebook and China: Too much alike

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[Viewpoint] Facebook and China: Too much alike

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 Web site 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.

Let’s imagine a conversation between Zuckerberg and Chinese President Hu Jintao. Zuckerberg might greet Hu as the supreme leader of world’s biggest marketplace; Hu might refer to the hoodie-clad American as the supreme leader of the Internet world.

“Contrary to what you might think, it will be great to have Facebook in China,” Hu might say. “My billion-plus people are used to having no privacy and relish losing even more of it thanks to your blue and white pages. That pleases me.”

Zuckerberg might retort: “Yes, Mr. President, you will be happy to know that my people, just under a billion users mind you, also look forward to sharing what’s left of their privacy with you and me.” (Maniacal laughs all around.)

“See, Mr. Zuckerberg, we are not so different,” Hu adds. “We both exert complete power over populations more eager to surrender it than they realize.” Adds Zuckerberg: “And you have to admit there’s a silver lining here - this will really stick it to Google. Neither of us likes them very much.”

Moments after their meeting, Hu turns to his staff and says: “He is the perfect foil for our designs on ruling cyberspace.” Zuckerman, tells his own: “He is the perfect foil for our designs on ruling cyberspace.”

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 at a rate of 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 Investor’s Larry Haverty in Rye, New York. Yet when asked in a Feb. 8 Bloomberg interview 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. China proved it can grow for three years without U.S. and European consumers. Doing so for two or three more years is another story.

Critics question how many Facebook accounts are genuinely active and how many are duplicates. I know loads of people who have more than one account - one for work, one for play. And what if China goes the way of Japan and Korea, where social networkers prefer local offerings?

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 it’s highly doubtful.

*The author is a Bloomberg View columnist.

by William Pesek
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