Facebook is unlikely to succeed in China, even if it compromises on free speech

Facebook may have laid some of the early groundwork to launch its social network in China, but the U.S. company’s chances of making a dent in the world’s most populous country remain remote.

A New York Times report that Facebook is developing a system that could censor information to appease the Chinese government is the talk of the tech industry right. The timing couldn’t be worse: domestically, Facebook is under pressure for failing to adequately manage the influence of fake news on the U.S. election, yet here it is seemingly prepared to quash legitimate information on user timelines to kowtow to the Chinese government and further its interests in a country of 1.3 billion people.

Facebook’s China conundrum hasn’t changed much since its IPO in 2012, when it admitted it may not ever find a way into the country.

Recently, however, CEO Mark Zuckerberg reportedly justified the development of censorship software, telling staff that “it’s better for Facebook to be a part of enabling conversation, even if it’s not yet the full conversation.” That triggered a number of departures, according to the New York Times, but the truth about China is that it would take a huge effort from Facebook to be relevant to the general conversation in the first place.

Even if Zuckerberg — who has made little effort to hide his interest in doing business in China — sold out and agreed to censorship in exchange for being unblocked, Facebook has a major challenge in finding a place to sit within the nation’s already-developed social media ecosystem.

Sticking to its roots won’t cut it because Facebook-style social networking has already failed in China.

Renren, the company widely labeled as ‘China’s Facebook,’ has long since pivoted. Initial promise saw Renren attract investment from SoftBank in its early days, and before its U.S. IPO in April 2011, the company claimed 160 million users.

That NYSE listing raised $743 million, but the share price has fallen from a first-day close of $18.01 to just $1.81 today. These days Renren’s service is barely used and the company is more notable for its investment deals, which include stakes in a mortgage lender and a delivery service. That investment business and its social video platform are being spun out of the company to give them room to breathe, such is the decline of the core service and ‘traditional’ social networks in China.

Renren and lesser rivals like Kaixin withered because they missed mobile, hugely popular messaging app WeChat didn’t and now it is king.

WeChat’s dominance has been clear for a long while — I wrote as much back in 2013 — and today it has 846 million monthly active users, the majority of whom are in China. It is also a critical part of parent firm Tencent’s mobile monetization strategy. More to the point, for Facebook, is that it occupies the space that Facebook is aiming for in China — and then some.

Messaging apps have taken a huge bite into social networks, no where more so than China where you frequently notice people out and about in public using WeChat groups, or holding their phone to their face to use the push-to-talk ‘walkie talkie’ feature to communicate.

But WeChat goes beyond messaging. It is the internet, and more.

It includes a Facebook-style timeline feed from friends — Moments — consumers can connect with branded accounts as they do with Facebook Pages, there’s a payment system, shopping, banking, appointments and now a new feature that enables developers to build their own apps for the messaging platform, thereby disintermediating official app stores.

WeChat is essentially the mobile portal for Chinese consumers, as A16z partner Connie Chan put it, while Twitter-like Weibo covers social with 297 million MAUs, so it is hard to see what new tricks Facebook can bring to the party

Then there’s the fact that, in China, your Western brand means very little.

Just ask Uber CEO Travis Kalanick, who agreed to sell his company’s China business to rival Didi. Facebook’s global appeal is muted in China. Apple and the iPhone are thriving in China as exceptions to the norm, but Facebook doesn’t have that same brand gravitas.

The average person in China has no immediate need for Facebook. Sure, you can connect with people who are overseas but, at this point, people who would find Facebook useful to connect with friends or family overseas almost certainly already use it via a VPN. Facebook’s ad buying service estimates that the social network has an audience of around 2.1 million users in China, a tiny portion of the country’s reported 710 million internet users.

Zuckerberg’s burning desire for China seems to be the catalyst for the development of the censorship tool, which the Times report stressed may not ever be deployed, but Facebook should tread very carefully here. Compromising on free speech can only lose it friends in the West, and the chances of any kind of success in China are very slim, which by extension could negatively impact its stock price.

Sticking to its existing strategy of serving advertising customers in China that want to reach a global audience is a better bet but, even then, working with state-run publications — as Facebook does — throws up plenty of issues around media manipulation and fake news.

Featured Image: Marcio Jose Sanchez/AP

Facebook built censorship tool to get into China despite human rights risks

Facebook wants to be unbanned in China, so it’s built a censorship tool that could hide posts about prohibited topics from people in China, according to The New York Times‘ Mike Isaac. Rather than censor posts itself, Facebook would potentially provide the tool to a third-party in China such as a local partner company that could use it to prevent users in China from seeing content that breaks the government’s rules.

While China could unlock huge amounts of users and ad revenue for Facebook, the censorship tool could also be used to enact human rights abuse. If China could track which local users are trying to protest or bad-mouth the government, they could face persecution.

Perhaps that’s why The New York Times says several Facebook staffers who worked on the product have left the company. So far, there are no signs that Facebook has offered the tool to Chinese authorities. We don’t have details on the specifics of how it would work. It’s apparently only one of several ideas Facebook has explored for getting access to China, and they might never be launched.

But the existence of the tool brings up strong concerns about what’s best and safest for Chinese citizens.

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Mark Zuckerberg has held in the past that some Facebook access could benefit them. The New York Times reports that at an internal Q&A about its intentions in China, Zuckerberg said, “It’s better for Facebook to be a part of enabling conversation, even if it’s not yet the full conversation.”

That mirrors Facebook’s stance about internet access, where it’s pushed the idea that limited free access to the web is better than none at all for those who can’t afford it. Facebook already allows Chinese companies to buy ads that run in places where it isn’t banned.

In a statement to TechCrunch, a Facebook spokesperson wrote: “We have long said that we are interested in China, and are spending time understanding and learning more about the country. However, we have not made any decision on our approach to China. Our focus right now is on helping Chinese businesses and developers expand to new markets outside China by using our ad platform.”

Over time, the interpersonal connection via Facebook could strengthen communities who might be able to organize and protest the government outside of the app. Yet the censorship tool’s potential to be used to round up dissidents looms over any long-term benefit for citizens, or profit for Facebook.

Facebook downsizes small business sales in Europe, reportedly 30 jobs affected in Germany

As Facebook’s advertising business continues to grow globally, the social network is also streamlining operations in certain markets. TechCrunch has learned that Facebook is consolidating sales operations in Europe focused on small and medium businesses. In the process has cut 30 jobs including in Hamburg, according to a source among those cut.

The cuts are of “support” staff that were contracted from a third party.

30 is a small proportion of Facebook’s overall employee count of 15,724 (as of the end of September). It’s notable for a company that has not made regular practice of laying people off.

It’s not clear what the subtext might be for this latest cut, if any.

“Facebook’s support to Small and Medium Businesses in Germany remains unchanged. To the contrary, over the past year, we have been ramping up our SMB efforts across Germany. This included founding the industry initiative ‘Digital Durchstarten‘, which will continue in 2017. The next event in Münster will be taking place tomorrow.”

From what we understand, the company’s SMB director in Europe, Middle East and Africa, Stefanos Loukakos, who is based out of Facebook’s global headquarters in Dublin, made the cuts to consolidate SMB operations across fewer locations.

Our source said that the Hamburg office covered Facebook’s SMB business, selling ads in Facebook and Instagram in German-speaking markets (Germany, Austria and Switzerland); as well as Turkey and Israel — regions that will now be covered from SMB sales offices in Dublin and Lisbon.

There will still be SMB activity in Hamburg and across Germany, where Facebook does some marketing outreach to SMBs in the form of online content and events.

Other small rounds of layoffs this year have pointed to bigger thematic changes at the company. They included around 40 people going in the wake of Facebook restructuring parts of its ad-tech business, specifically at LiveRail, which has since been shut down.

There were also reportedly around 15-18 contractors let go who had been working on Facebook’s Trending team, a group tasked with curating news for Facebook. News has been a problematic area for the social network for a while, but it’s come into the spotlight especially this year, as many have accused Facebook of being a haven for disseminating fake news. Facebook’s still trying to fix this.

Turning back to today’s news, in September, Facebook announced that it had hit 4 million advertisers on its platform, and while it does not break out specific numbers or the performance of specific regions, it’s been long understood that small and medium businesses form a large part of that base, both in the U.S. and internationally.

But over the years, there have been some tense moments between Facebook and SMBs, as Facebook has sought to build out more of its paid ad products over organic reach (that is, unpaid distribution) on the platform.

More generally, Facebook has been shuttering parts of its ad business that are seeing less activity. Just last week, it closed down the ad-serving part of its Atlas platform to focus on Atlas’s measurement tools.

In the German market, Facebook has not been a stranger to regulatory heat, specifically from the country’s data protection watchdog. In March, it became the subject of an antitrust privacy probe, and in September Germany was the first country in Europe to order Facebook to stop tapping into data from WhatsApp, the messaging app owned by Facebook. (That’s now extended to all of Europe.)

Story updated with quote from Facebook and further detail about nature of cuts — contractors versus full-time staff. 

Featured Image: Sean Gallup/Getty Images

Most students can’t tell fake news from real news, study shows

If you thought you heard the last on fake news, you were sadly mistaken.

A Stanford study found that the majority of middle school students can’t tell the difference between real news and fake news. In fact, 82 percent couldn’t distinguish between a real news story on a website and a “sponsored content” post.

Of the 8,704 students studied (ranging in age from middle school to college level), four in ten high-school students believed that the region near Japan’s Fukushima nuclear plant was toxic after seeing an unsourced photo of deformed daisies coupled with a headline about the Japanese area. The photo, keep in mind, had no source or location attribution. Meanwhile, two out of every three middle-schoolers were fooled by an article on financial preparedness penned by a bank executive.

It seems that those surveyed in the study were judging validity of news on Twitter based on the amount of detail in the tweet and whether or not a large photo was attached, rather than focusing on the source of the tweet.

The WSJ, which first reported on the study, says that a big part of solving this problem among young people comes down to education, both at school and at home.

But with 62 percent of U.S. adults getting the majority of their news from social media, the responsibility for this issue also lies with the social media organizations themselves, such as Facebook and Twitter.

Both Google and Facebook have made steps toward thwarting the fake news onslaught, including banning fake news organizations from their ad network. Facebook’s Mark Zuckerberg also posted a number of responses to the issue on Facebook, and gave actual steps toward stopping the spread of fake news on the platform.

That said, the fallout from fake news is not as minor as Zuck originally stated in his first response on Facebook, where he mentioned that less than 1 percent of news on Facebook is fake.

Even in minuscule amounts, fake news has a much greater ability to spread quickly and be consumed by many given the nature of the salacious headlines themselves. Paired with the fact that most adults get their news from social media, and most young people can’t tell the difference, you can see just how problematic this issue is.

Hopefully, steps toward stopping fake news come swiftly and effectively. But until then, it’s important for parents to be diligent in teaching their kids how to determine the difference between a sourced news report and a salacious headline with no evidence behind it.

Featured Image: Nationaal Archief/J.D. Noske/Flickr

The NTSB is investigating the ‘structural failure’ of Facebook’s Aquila internet drone

Say what you will about the merits of Facebook’s Internet.org and Free Basics — it’s pretty cool that they’re building a huge, solar-powered, laser-shooting drone to deliver it. But a “structural failure” that occurred on the Aquila’s first test flight may be more serious than Facebook made it out to be: The National Transportation Safety Board is conducting an investigation, Bloomberg reports. The NTSB confirmed this and provided further details.

Facebook wrote about its tests (which occurred on June 28) in July, listing several things they were looking at, learned and so on. Under the “Real-world conditions” bullet point, the blog post admits things weren’t entirely nominal:

We are still analyzing the results of the extended test, including a structural failure we experienced just before landing. We hope to share more details on this and other structural tests in the future.

They didn’t, possibly because of the NTSB investigation, but Facebook did issue a statement today emphasizing the positive outcomes of the test:

We were happy with the successful first test flight and were able to verify several performance models and components including aerodynamics, batteries, control systems and crew training, with no major unexpected results.

Really, it was too much to hope that nothing would go wrong on the first full-scale test of an enormous, experimental aircraft design. A source close to the project told TechCrunch that some damage was expected, since the Aquila isn’t actually designed for repeat takeoffs and landings (it has skids, not landing gear), and also because the day was windier than expected. The failure occurred just a few seconds before landing from the craft’s 90-minute flight, the source said.

It’s the NTSB’s prerogative to investigate any airborne troubles like this, and clearly it decided to so in this case, perhaps because of the high-profile nature of the test and aircraft. But the NTSB wouldn’t get involved if a screw dropped off: a representative explained that it investigates when aircraft weighing 300 pounds or more cause death or serious injury, or incur “substantial damage” — defined as damage that “compromises the airworthiness of the aircraft.”

That said, if the Aquila had nose-dived into the ground, caught fire or sustained some other high-profile damage, that likely would have come out by now. A full report is expected in a month or two, at which point we’ll have more details — but considering the scope of the project and pride evinced by Facebook in the Aquila’s development, it seemed reasonable to, well, clip its wings a little bit.

(This article has been substantially updated from its original form.)

Why now, more than ever, we need a Twitter that works

We just witnessed, to paraphrase John Oliver, the 2016 U.S. Presidential Election Dumpster Fire F**ktacular. Much of it took place on social media, and much is being written of late about how Facebook and Twitter have changed virtually everything that we’ve come to see as a normal part of an election cycle: the consumption of daily news and facts (or non-facts).

Remember 2012, when we called it the “Twitter Election” due to Obama’s skill in exploiting the fledgling platform? It seems almost quaint now. 2016 will be remembered as the election where the power of Twitter was revealed in full as a platform that can enable an individual with little formal organization to bypass media institutions and speak directly to a populace all the way to the presidency.

On Sunday’s 60 Minutes interview, Trump could hardly contain his self-satisfaction regarding how well Twitter and Facebook had served him.

Why was exploiting Twitter such an advantage for Trump? Because Twitter is an unusually powerful media platform, providing an unprecedented ability to reach anyone in the world, with far less friction than ever before.

That ability points to a deep responsibility for Twitter and Facebook, among others, to acknowledge their roles as arbiters of information that can have historical implications. And it’s possible Twitter and Facebook aren’t up to the task — there is a need for a responsible social network, and if they can’t do it, someone else has to.

twitter-eats-newspaper2

The power of smush

Consider how much has changed in nine short years. Until 2007, if you wanted to build an audience and sell your ideas to millions of viewers, you needed to raise money to build a cable network or a printing office, hire a sales force to sell ads or hire a bunch of Columbia journalism or USC film grads to produce content. You needed to buy cameras and pay business affairs people and all manner of other things.

Not anymore.

Twitter has given anyone and everyone a direct voice to the world by smushing together three things that in traditional media have been mostly separate: distribution, or a platform to connect the world (formerly Comcast or Dish; today the completely commoditized mobile phone and internet); application (formerly the 30-minute video-on-a-screen-plus-ads model; today the pixels that comprise an app like Twitter or Facebook); and content (formerly Rachel Maddow’s show; today tweets and Facebook posts).

The implications of this are profound. First, Twitter owns its own distribution. Because it’s a network, every new user makes the platform that much more essential, whether you’re one of the Monthly Active Users that Twitter is so often maligned for not adding fast enough — or whether you’re one of the hundreds of millions of people who are consuming news elsewhere about what’s happening on Twitter. Traditional media amplification of Twitter content doesn’t get Wall Street excited, but it nonetheless solidifies Twitter’s place in the world. Prior purveyors of the pipes to consumers (like cable companies) had neither the leverage nor the capabilities to play the role of content arbiter with subscribers.

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