India is Facebook’s fuel for growth
Thoughts on the Facebook push for SMEs and how TikTok's ban is favoring Instagram in India
In US Facebook is battling the antitrust motion. A week ago The Federal Trade Commission sued Facebook, alleging that the company is illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct.
“Following a lengthy investigation in cooperation with a coalition of the attorneys general of 46 states, the District of Columbia, and Guam, the complaint alleges that Facebook has engaged in a systematic strategy—including its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of the mobile messaging app WhatsApp, and the imposition of anti-competitive conditions on software developers—to eliminate threats to its monopoly. This course of conduct harms competition leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition.”
In India Facebook right now is conducting a two-day online event Facebook Fuel for India.
Speaking virtually at the event CEO Mark Zuckerberg said, “What happens in India is important for the whole world. India's building local capabilities and tech capacity to power innovative new business models and provide the citizens access to digital financial inclusion. So, decisions that are made here shape the global discussion about how technology can drive more economic opportunity and better outcomes for people.”
The only line I am interested in is:
“What happens in India is important for the whole world.” In reality, it should be, “What happens in India is important to Facebook.”
From 2021 the US political environment won’t be comfortable for Facebook. Facebook had a visible soft corner for the Trump administration. Even the new president is a politician first and everything else later. Even though there is a newfound optimism that big tech is finally being questioned. Media is writing that the Facebook empire will be broken to reduce monopolistic behaviors. But can we prove it in court? It won’t be an easy task.
However, Facebook is worried about Europe. During the Q3 2020 earnings, Facebook mentioned that 2021 will bring a “significant amount of uncertainty.” A potential hurdle of Facebook will be the regulatory environment in Europe, and the viability of transatlantic data transfers. Facebook says that its “closely monitoring the potential impact on our European operations as these developments progress.”
On the product and usability side, TikTok has taken over Facebook to become the most downloaded app globally in 2020, as per the annual report on mobile trends by data analytics platform App Annie.
“As content-hungry consumers flocked to the app to create, socialize and stay entertained — even increasing its cross-app usage with major video streaming players like Netflix, indicating that TikTok is not only blurring the lines between social and streaming but is a force to be reckoned with in the streaming world in its own right.”
Teens don’t prefer Facebook. Even Instagram has been replaced by TikTok as U.S. teenagers’ second-favorite social media app, according to a report. Snapchat remains the most favourite app for teens.
All this happened at a time when the Trump administration passed an executive order to ban TikTok. Obviously, Facebook was happy. But the wind has slightly changed, the sale talks are getting delayed. The ex-president is spending his last few days filing election-related litigations.
The focus has to be India. Why?
The favourable political environment, TikTok completely banned, Indians spending time-consuming content like never before and businesses forced to go digital due to the pandemic.
India is the playing ground for Facebook. Not just from a usage perspective but also from a revenue point of view. Latest reports suggest that Facebook India’s net profits more than doubled to Rs 136 crore for the year ending March 31, 2020, compared to the same period last year.
Supporting small business in India
What do you do when you have to sell a product or service in the market?
Create the need for it and then say how you solve the need. Today brands first release reports partnering with the big consulting firms stating about a growing trend. Subsequently, they will release an advertising campaign to make you believe that the brand’s product or service is the answer that the universe has been waiting for.
Facebook is a master in this.
India is witnessing a recession after 1966. According to ET: India’s economy shrank 7.5 percent in the three months that ended in September compared with a year earlier. “The new figures firmly ensconced India’s position among the world’s worst-performing major economies, despite expansive government spending designed to rescue the thousands of small businesses severely battered by its long, hastily imposed lockdown.”
Earlier this year Facebook published a report: Global State of Small Business in partnership with the OECD and the World Bank. Facebook surveyed more than 30,000 small business leaders across more than 50 countries. “More than a quarter said they closed between January and May this year – but that figure rose to more than 50% in some countries.”
“It also exposes a stark gender disparity. Female-led businesses are more likely (7 percentage points higher) to be closely compared to male-led ones, and are significantly more likely to be concentrated in the sectors most affected by restrictions on business.”
Alongside Facebook announced a global $100 million grant program to support up to 30,000 small and midsize businesses (SMBs) in more than 30 countries. As a part of that initiative, the social media giant recently announced a grant of USD 4.3 million for more than 3,000 small businesses in India.
Genuine question - Can we file an RTI to find out how many SMEs received monetary support from Facebook?
Okay back to the subject. By Diwali when Facebook was facing the heat in India on how it has implemented its hate speech policy, the social networking giant released an ad showing support towards the SMEs impacted by COVID-19.
The seven-minute-long film lauded by the advertising experts highlights the power of connections. It says that people can do ‘More Together’ than alone, for Diwali this year.
Facebook has taken the campaign forward and released launched ‘Nayi Shuruaat’ - a new campaign to celebrate the small businesses of India, and the resilience they’ve shown to pivot and make a new start or a nayi shuruaat amidst the deepest crisis the world has seen in recent times.
Launched at the ongoing event the campaign is about real-life stories focusing on three unique small businesses - The Moms Co that sells toxin-free mom and baby products, coffee brewing small business Sleepy Owl, and Doodlage, a sustainable fashion brand. In a nutshell, the film tells you how Facebook helped the businesses changed their fate during the ongoing pandemic.
I love how advertising agencies glorify entrepreneurship.
On the product side, Facebook has already launched WhatsApp Payments. It goes without saying that Mark would be interested in how it pans out with Jio Mart. Earlier this year Jio Platforms, the digital arm of Mukesh Ambani-led Reliance Industries, said that it has received a subscription amount of Rs 43,574 crore from Facebook for a 9.99% stake.
"WhatsApp Pay brings in payments and the ability to close transactions, while JioMart offers an unmatched offline and online retail experience to tens of millions of small shopkeepers who are the bedrock of the Indian economy," Mukesh revealed during the ongoing virtual event.
Mark who was also present at the event informed that 15 million out of the 50 million merchants using WhatsApp for Business globally are in India, and the Facebook-Jio partnership will further "impact this segment".
In other words, it is the next big revenue opportunity for Facebook and Jio.
TikTok’s ban favours Instagram
Last year I had shared my thoughts on why I felt “Born on Instagram” was a strategy to compete with TikTok in India. The campaign was launched right after TikTok launched #EduTok offline by forging collaboration with leading social enterprises such as Josh Talks and The/Nudge Foundation.
TikTok was skyrocketing in India. But right after a year, TikTok is banned in India and Facebook has breathing space. Some reports suggest that ByteDance TikTok’s parent company is working on a comeback in India but I doubt. It won’t happen unless it is bought by an Indian player.
All this is good news for Facebook because TikTok was the most downloaded app before getting banned. Additionally, it was hugely popular in India and Bharat(T2-3 cities).
Facebook grabbed the moment and in fact changed the design of Instagram. Stories are no more the focus of Instagram; Reels are. It is a rip of TikTok.
Globally, Reels has struggled but in India with no TikTok and the other copy cats struggling it still is a decent bet. During the recently concluded IPL it ran a campaign ‘Do Your Thing’ - a set of four films showcasing AR, music, and editing features that allow users to create content.
Facebook says India is now the testing ground for most of its major product launches whether it be Instagram Reels or WhatsApp. But if you are still with me then more than India it is for its own growth.
Facebook is only interested in making money and it is getting rich by ripping off the users says an extensive investigation by BuzzFeed.
Hence, “Facebook Fuel for India” should be called “India fuels Facebook’s growth.”