With Internet.org, Facebook Looks to Do Well While Doing Good

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1 With Internet.org, Facebook Looks to Do Well While Doing Good Chris Daniels, head of Facebook's Internet.org. Photo by Jane Goldman. By Eric P. Newcomer Jul. 25, :35 AM PDT A year ago, Facebook announced the formation of Internet.org, a global partnership aimed at spreading Internet connectivity in the developing world. The.org moniker and the lofty rhetoric suggested a philanthropic venture. Facebook CEO Mark Zuckerberg, in a February speech at the Mobile World Congress in Barcelona, referred to Internet.org this way: It s this industry coalition that s working together to build to make delivering the Internet and all the different parts of it more efficient and to make it so that everyone in the world can have access to some basic services on the Internet for either a really affordable price or free. The Information 1 7/25/14

2 Yet a look at Internet.org s management structure, its priorities and its ambitions make it clear that the effort sits squarely within Facebook s broader business development efforts. One of Internet.org s main activities is negotiating with wireless carriers in the developing world to make Facebook free or cheap for people who have never accessed the Internet before. That s something that Facebook, as well as rivals like Twitter, have pursued as part of their overseas growth strategies for years. Similarly, while the Internet.org partnership includes some big names Ericsson, MediaTek, Nokia, Opera, Qualcomm and Samsung their involvement is often linked to long-standing business relationships with Facebook. Critics say that Facebook is teaching people in developing countries that Facebook is equivalent to the Internet itself, a confusion that won t help those countries develop a strong Internet economy in the long run. None of that is to say that extending connectivity in the developing world isn t a worthy goal, or one that s incompatible with making money. And Facebook is hardly the first tech firm to blur the lines between doing good and doing good business development; Even the high-profile philanthropic effort One Laptop Per Child got caught up in arguments over whether corporate partners were putting their business interests first. But it s unclear why driving user growth in the developing world a key business priority for Facebook is wrapped in the language of charity. It s hard for me to read Internet.org as a particularly philanthropic venture, says Ethan Zuckerman, director of the Center for Civic Media at MIT. I think it s a pretty smart business venture. It s going to have a benefit, but it s going to have more of a benefit for a limited number of companies. The Cost Barrier Internet.org personnel are scattered around within Facebook. Chris Daniels, vice president of product for Internet.org, runs the entire effort as part of Facebook s growth and analytics team, headed by Javier Olivan. Chris Weasler, a former vice president at Sprint Nextel, manages Internet.org s partners and reports to the policy and communications team. Yael Maguire, Internet.org s point person for experimentation with drones and other methods of reaching the unconnected, reports into Facebook s infrastructure team. Unlike Google s anticipated satellite project and Project Loon, a long-shot effort to put The Information 2 7/25/14

3 high-tech balloons in the sky to serve areas with no Internet access, Internet.org is mainly focussed on the less-glamorous task of connecting people who are already in range of wireless networks. Mr. Daniels says his team came to a clear-eyed conclusion at the outset: most people who don t access the Internet live somewhere with Internet access, typically through mobile phones. One thing we knew and we had right was that 85% of the world s population is already covered by a data network, he says. From that we knew that the most successful strategy that we would have in terms of bringing the world s population online was to partner with the existing carriers. Wireless carriers often don t make it easy or cheap for the uninitiated to connect to the Internet. For one, they charge for data in ways that many people don t understand. What s a megabyte to someone who has never used the Internet before? Facebook tries to nudge wireless carriers into charging for periods of time, or charging a fixed feed for unlimited access to certain applications (like Facebook). An even bigger issue is that many people just don t have the money for a data plan. Internet.org s main means for addressing this is to try and negotiate so-called zero-rating deals with carriers, under which there is no charge for access to specific applications for a period of time. Zero-rating is a common way for app-makers of all stripes to promote their products but Facebook has far more leverage than most with the carriers. If zero-rating helps get a new customer onto Facebook, after all, they might get hooked and start paying for a data package. In many places Facebook is the reason someone gets a smartphone, it s a reason that someone gets a data plan, so operators are happy, Mr. Weasler says. As part of Internet.org, Facebook has negotiated zero rating deals for itself in the Philippines, Tanzania and Zambia. Outside of Internet.org, Facebook has also negotiated zero-rating deals in countries like India, which could have more Facebook users than anywhere else in the world in the next few years. In the Philippines, for instance, Facebook convinced the wireless carrier Globe to offer Facebook for free to its more than 38 million customers for three months. Globe has since doubled its mobile data user base, according to Globe. In Rwanda, the company is working with the educational non-profit edx in an effort that The Information 3 7/25/14

4 also involves the wireless carrier Airtel, the phone manufacturer Nokia and the government of Rwanda. The project, called SocialEDU, will provide a group of students with free access to edx s educational software and free phones to go with it and some of Facebook s social tools will be built into the package. Students will be able to watch courses on their new mobile phones and swap notes with fellow students using Facebook features like groups. Facebook argues that if it gives people a reason to use the Internet, that's a good thing. Expecting the developing world to adopt education and health tools before social networks might be naive or even patronizing, judging from how the Western world uses the Internet. EdX says it s always careful to make sure its for-profit partners goals are in line with its own. To Facebook s credit they also recognized it and worked very closely with us to make sure that anything we may be concerned about [got resolved], says Lou Wang, director of product for edx. We don t feel uncomfortable about dealing with for-profit companies. As part of Internet.org, expect Facebook to roll out a more comprehensive suite of applications that Internet.org will urge carriers to offer for free or at a discount. Those applications could include educational tools like free courses or Wikipedia pages, weather information, health advice or even farming data. Later this year, we expect to launch a broader set of free basic Internet services in a number of other countries as well, Mr. Zuckerberg said about Internet.org during the company s quarterly earnings call this week. He also said that Internet.org had helped around 3 million people connect to the Internet who had no access before, though he offered no specifics about how Facebook tallied that figure. Facebook argues that asserting itself in the developing world is a no-lose proposition: if it gives people a reason to use the Internet, that s a good thing for everyone. After all, expecting the developing world to adopt education and health tools before social networks might be naive or even patronizing, judging from how the Western world uses the Internet. Ed Kozel, CEO of the low-cost wireless infrastructure company Range Networks, supports Internet.org and says he believes it can help lower costs in the developing world. But, Mr. Kozel says, for wireless carriers it s a business negotiation. It s kind of a greed versus fear discussion with operators, he says. They stand to make money if Facebook The Information 4 7/25/14

5 helps drive people to paid data plans in the long run and face a threat of losing business if they don t want to go along with a Facebook zero-rating but a competing carrier decides to do so. And not everyone is convinced that Facebook as the gateway to the Internet is a healthy thing for developing countries. Mr. Zuckerman says he recently visited Myanmar, where Facebook has taken over. When you ask people to search, they search on Facebook, he says. When there are URLs written up for businesses, they are written up for Facebook. Since companies can t sell their own ads on Facebook, he says, When the Internet is Facebook, it s actually hard to know how do you get some of these original content businesses off the ground. Working with Partners Many of the Internet.org partners, including Ericsson and Opera, were already Facebook allies before Internet.org launched. The way that we work with Facebook historically is we drive traffic to popular services building Facebook integration, having Facebook available as a simple click, says Jan Standal, vice president for product partnerships at Opera Software. [Internet.org] drives great monetization and business for the brands and operators and us. But it also happens to grow the size of the Internet population in the market. There aren t any Internet.org projects in which Facebook is not a participant. Ericsson is helping to build an Innovation Lab to let app developers test their applications with a simulation of foreign Internet connections, but that project will sit on Facebook s campus. The lab is expected to launch this year. The goal is to allow applications developers to see if their application is functioning properly, says Dwight Witherspoon, Ericsson s vice president of communications. The most futuristic aspect of Internet.org revolves around Facebook s acquisition of Ascenta, a United Kingdom-based unmanned aircraft company. Mr. Maguire, who is an engineering director for Facebook s own Connectivity Lab, spends his time thinking about planes, drones, satellites, laser communications, peer- to-peer networks and other hardware solutions to get data to the last sliver of the world s population. Our primary focus and what we think is going to yield the lowest hanging fruit is The Information 5 7/25/14

6 working with operators who are connecting 85-95% of the world s population already, says Mr. Maguire. The big question that we face is what about those other 15% that s still a pretty significant population. Mr. Maguire hopes that one day Facebook will share its hardware innovations and perhaps spin Internet.org out as genuinely independent non-profit venture, as the company did with the Open Compute Project for low-cost servers. What happens down the road is anyone s guess, says Mr. Weasler. There certainly is a chance that it could get more independent there is precedent for this within Facebook. The Information 6 7/25/14

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