Info-tech

Facebook's new five-pronged growth strategy for India

Venkatesh Ganesh, ThomasK Thomas Mumbai | Updated on December 09, 2020

When Ajit Mohan took charge as the Managing Director of Facebook in 2018, the social media giant was reeling under a crisis. It had been headless for nearly a year after Umang Bedi quit in October 2017 after a short 15-month stint. Bedi had taken over from Kirthiga Reddy, at a time when Facebook was embroiled in a controversy around its Free Basic initiative.

Nearly two years later, Facebook is facing plenty of backlash over its policies on hate speech and content moderation. It has landed the company at the centre of India’s heated domestic politics. But despite these challenges, Mohan says he is trying to make Facebook’s operations in India stronger than ever before. “There is an absolute conviction that it is not in our economic interest to have hate speech on our platform. We don’t like it from our values point of view. Governments around the world don’t like it. Advertisers don’t like it. Whichever way we look at it, we are clear that we profit from the absence of hate speech,” Mohan told BusinessLine in a recent interview.

 

Facebook’s strategy for India rests on five pillars. One, push Facebook, WhatsApp and Instagram as the top platforms to enable users to connect and explore. Mohan terms it as “enabling the agenda of expression”. In 2019, there were 328 million people on Facebook and 400 million on WhatsApp and the numbers are going up.

Two, to engage new entrepreneurs with a focus on small businesses. “Small businesses account for a big share of GDP and a larger share of job creation. It is clear that innovation and economic growth will be fuelled by entrepreneurship. We want to make sure we can play a role in fuelling that agenda,” says Mohan. Facebook has announced a grant of ₹32 crore for more than 3,000 small businesses across Delhi, Gurgaon, Mumbai, Hyderabad, and Bangalore.

The third priority area is payments. WhatsApp has gone live with its UPI payments offering from November. Payments are available now in ten Indian regional language versions of WhatsApp. “WhatsApp pay will fuel the adoption of UPI even more resoundingly and it can be the platform for meeting financial inclusion goals,” says Mohan.

The fourth is Facebook’s quest to get more Indians online. Facebook has invested in a project called Express Wi-Fi where the company partners with telecom companies, internet service providers, and local entrepreneurs to help expand connectivity in under-served locations. Under this programme, internet access is provided for as little as ₹10 a day to users in remote parts of the country. The service is commercially available through hotspots across Gujarat, Uttar Pradesh, Rajasthan, Mumbai, Mizoram and Meghalaya. “In the last four years, something remarkable has happened as nearly 500 million people came online on the back of high quality and affordable broadband. You now have the possibility of playing a massive role in enabling the transformation of the economy. We believe we have a role to play here over the long term,” says Mohan.

Betting on India’s digital growth story, Facebook has invested ₹43,574 crore in Reliance Industries Ltd’s (RIL) wholly-owned subsidiary Jio Platforms. “An investment of this scale shows an extraordinary commitment to India. There is still an opportunity to bring the next 500-600 million online,” says Mohan.

The fifth prong of Facebook’s India blueprint is to use the country’s huge market as testbed for future products. “It’s a place where we learn and deploy the learnings in other countries around the world. If we can build something and scale it in India, we can scale it to the world,” explains Mohan. The company recently announced India as the test market for Reels on Instagram, a new format for creating and discovering short-form video content similar to TikTok. It is also experimenting with microlending and microinsurance through WhatsApp. Express Wi-Fi, which was first launched in India, is currently live in more than 20 countries.

At the centre of this strategy is the belief that growth in India’s Internet economy will lead to higher revenues for Facebook in the long term. “We do want to make sure that the economic models we are building are stable and sustainable. We are not applying a short-term transactional lens. The five pillars connect the dots between our platform agenda, our economic models and India’s economy,” says Mohan. “India as country over the next 5-20 years is on a growth trajectory so advertising as a percentage of GDP is all going to go up as well,” he adds.

One thing that has worked in Mohan’s favour is Facebook’s decision to create a new organisational structure for its India unit two years back. Under this structure, all functional heads report to Mohan instead of the regional heads. The move is in line with Facebook’s plan of delinking its India operations from the Asia-Pacific region. That change enabled more local accountability and faster decision making. This framework exists only for Facebook’s India operations. “This is a recognition that India has a special role to play over the next few years and decades. India has the biggest user base for Facebook and WhatsApp. More than just the numbers, these products, including Instagram, are deeply entrenched in the lives of Indians,” says Mohan.

But this deep engagement with users is also proving to be a problem for the social media company. “The user data with Facebook is a goldmine for advertisers, political parties and third-party entities. There have been multiple instances where this data has been misused. This is a big worry and wheels could come off Facebook’s grand vision for India if they do not address this quickly,” said an industry expert.

Facebook is also facing scrutiny for failing to apply its own content moderation rules every time. Mohan defended the company saying that in the last quarter of 2017 Facebook had pulled down 1.5 million pieces of hate speech content and, in the second quarter of 2020, pulled out 22 million pieces. “More than 90 per cent of hate speech are picked by an automated system even before a user reports it. The stark number tells you the extent of how seriously we are taking this. We have invested in systems and human resources to increase our content enforcement capabilities,” says Mohan.

Facebook India reported  Rs 1,277 crore revenue in 2019-20, a 43 per cent jump since the last financial year. The company  reported a net profit of Rs 136 crore during the same fiscal. This is 28  per cet increase from the last financial year, according to regulatory filings by the company

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Published on December 09, 2020
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