What would China deal mean to Facebook?

After Zuckerberg is seen meeting with head of Baidu, Internet abuzz with speculation

When a photo of Facebook CEO Mark Zuckerberg meeting with the head of China's largest search engine hit the Internet, speculation began to run wild.

Chinese censors have blocked Facebook from being used there since 2008, and Zuckerberg has made it clear that he would like to get a piece of that massive market. So with Zuckerberg seen with Robin Li , the co-founder and CEO of the | search engine Baidu | http://www.computerworld.com/s/article/9144478/Baidu_could_be_the_big_winner_in_Google_vs._China ), the Internet began to buzz with talk of Facebook trying to work its way into China.

"It's a big black hole for Facebook," said Zeus Kerravala, an analyst with the Yankee Group. "If it's going to be the world's premier social networking tool, they can't forget about a sixth of the world. The value of any network goes up when you have more people on it, and it does open the door for different sponsors and applications."

Facebook did not respond to a request for comment.

Zuckerberg reportedly has been learning Mandarin for this trip and is supposedly on a vacation with his girlfriend, but analysts say there seems to be a bigger purpose to his China visit.

Facebook in July announced that it had hit a major milestone. It had brought half a billion users onboard. Considering that last January China reported there were 384 million Internet users in the country, which has an overall population of more than 1.3 billion people, there are a lot of potential Facebook users to be tapped in that country.

"That would be a lot of good business, wouldn't it?" asked Ezra Gottheil, an analyst with the Technology Business Group. "Is it a matter of they've got to do it or be in trouble? No. But could this be very important for them? Oh, yes. The market there is enormous. It's astronomical."

Gottheil added that Baidu's Li might offer Zuckerberg a bit more than lunch and friendly advice.

Where China has concerns about Facebook and opening up its Great Firewall to the social network, government officials might be more willing to work with Facebook if there's some sort of supervision. And that's where Baidu might come in.

"If this is going to work, it's going to take people," said Gottheil. "If China is concerned about Facebook, they'll want some kind of oversight and then it becomes very people intensive. It might very well be that [Zuckerberg and Li] are talking about a licensing deal or a revenue-sharing arrangement."

Gottheil also noted that China might insist on Facebook's only working behind the Great Firewall for its own citizens.

"I can't imagine that China will be OK with making China part of the global Facebook," he added. "A Chinese-only Facebook. They would probably want to restrict some communication within China. And given their fears about agitation and things like that, I'm sure they don't want people on Facebook to read about things outside of China."

And while some people might take issue with Facebook's agreeing to limit Chinese users, others, according to Gottheil, will contend that it's not an issue. After all, Facebook, he said, isn't as much about the flow of information as it is to stay in touch with friends.

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Sharon Gaudin

Computerworld (US)
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