Facebook Inc ’s Internet.org has been a grey area for a majority of investors following the social networking giant. The service is often viewed as charity work. Mark Zuckerberg’s passion for making the world a much more connected place might be the driving force. But there’s more to it than meets the eye. Internet.org might in fact make some business sense.
Facebook Wants to Connect the World
Internet.org’s first major initiative is what Facebook Inc calls “Free Basics.” It’s a service targeted to areas where the Internet is less affordable. Web access is offered through an app with the aim of persuading mobile users to upgrade to a data plan.
And apparently, Free Basics is working pretty well. “Free Basics brings new people onto mobile networks on average over 50% faster after launching the service,” Facebook wrote on its Internet.org website.
Free Basics has “brought more than 9 million people online that otherwise would not be and introduced them to the incredible value of the Internet. People now have access to basic Internet services including tools and resources for communication, health, education and local news.”
Critics however point out that Facebook does not provide the full breadth of internet services through Free Basics. But Zuckerberg is quick to retort that it isn’t Facebook’s goal at all. All it’s trying to do is communicate the value of the Internet to people who never had access to it.
And the results are showing. Facebook Inc revealed that “50% of people who use Free Basics are paying for data – and access the Internet outside of free basic services – within 30 days of coming online for the first time.
“Not having programs like Free Basics leaves more people offline and unable to realize the benefits of the Internet.”
Does Internet.org Have Any Business Value?
Obviously, in the near term, Facebook Inc doesn’t gain anything from its Internet.org investments. No firm has to pay the social network for using the Free Basics app. And, on top of that, Facebook won’t run any of its own ads.
However, longer term might be a different story. And Zuckerberg himself admits that.
“In the long term, I do think it could be good for our company, as well,” he said during a Bloomberg interview earlier in the year.
Over time, “a lot of these countries and economies will develop, and will be important.”
Facebook has already conquered the developed world, and is well on track to replicate that success in developing economies. China, India, and Brazil may fuel its growth in the near-term. But eventually those markets will also saturate.
Facebook realizes that under-developed parts of Africa and Asia are its final frontiers. But the problem is that most of those regions are so poor that there is absolutely no Internet awareness.
Facebook, through its Free Basics app, wants to create the demand. Once people realize the value of staying connected, they will ultimately upgrade to a full internet service.
And as penetration levels increase, Facebook Inc would be there to woo those users with its “hard to beat” bouquet of products.