Should Facebook Friend or Poke China?: The Ticker
Facebook has a deceptively simple message for investors: How can 800 million-plus users be wrong? The soon-to-be-public social-networking company hopes it drives markets to hit the "like" button on its $5 billion initial public offering.
The real test, though, will be when CEO Mark Zuckerberg friends China -- and how. After all, how long can Facebook, whose success is predicated on ever-growing ranks of users, remain outside of the world's most populous nation and biggest Internet market? It's blocked in China and will play catch up to social-media offerings by Tencent Holdings (TCEHY) Ltd. and Sina Corp (SINA).
Even more important will be how Facebook proceeds. Zuckerberg must navigate China’s great firewall of censorship with considerable care. Communist Party officials are as paranoid as they've been in decades amid Arab Spring protests that were facilitated in part by Facebook and sites like Twitter.
The list of demands China will give Zuckerberg will be a long and perilous one. Just ask the folks at Google, which first aided Beijing in censoring the Web before reversing course and leaving China in 2010, realizing it was running afoul of its “Don’t Be Evil” motto. Zuckerberg's own manifesto espouses following “the hacker way” rather than just seeking profit. That means, according to a letter to potential investors, being "bold" and "open" to make Facebook as transformative a communications tool as the printing press or television. Facebook will look foolish if it follows Twitter's lead and censors information to make China, or other authoritarian nations, happy.
Trouble is, many investors will demand the opposite approach. Facebook needs to monetize its site, attract advertisers and maintain its share price. China has 513 million Internet users, and investors will push Facebook to connect with all of them. Resisting China's call in the face of such pressure will require strong will on Zuckerberg's part.
Yet if Facebook is going to be true to its stated mission and connect the world as seamlessly, comprehensively and transparently as it says, China can wait.
(William Pesek is a Bloomberg View columnist.)