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Much like LinkedIn (NYSE: LNKD) before it, Facebook (NASDAQ: FB) is considering playing by China's censorship rules in order to get access to the Middle Kingdom.
The professional network expectedly hit this exact same hurdle over two years ago when it officially started expanding into China, even though LinkedIn "fundamentally disagrees with government censorship." But that was simply the price of admission if it wanted to be able to reach the roughly 140 million professionals in China at the time, a figure that has likely increased in the years since. LinkedIn has grown its China membership base by over fivefold to 20 million members.
The New York Times recently reported that Facebook is working on software that could censor posts in News Feeds based on geographical location. Facebook would not be making censorship decisions itself, but would abdicate that responsibility to a third-party Chinese company once it builds the tools. To be clear, this is just an idea that Facebook is working on, and the company has not finalized any decisions and the censorship tool may never be released. Facebook has been banned in China since 2009.
Facebook already has some users in China that bypass the Great Firewall using various methods. It's not clear exactly how many China-based users there currently are -- third-party estimates range from 50 million to 60 million -- but with a population of nearly 1.4 billion, you can bet that Facebook wants in. As of last quarter, Facebook had 1.79 billion monthly active users worldwide.
Zuck Dawg speaks out
The debate around Facebook censorship is particularly relevant right now amid concerns that the social network inadvertently facilitated the widespread dissemination of fake news in the weeks heading into the U.S. presidential election. The controversy has highlighted the immense power that Facebook wields, for better or for worse, by using an algorithmically curated News Feed instead of displaying unfiltered posts.
CEO Mark Zuckerberg recently responded directly to the situation that Facebook now finds itself in, saying that the company has been trying to address the problem of misinformation for quite some time, and that "we take this responsibility seriously." Here's part of Zuckerberg's post that seems particularly relevant in the context of potential Chinese censorship:
But what happens if allowing a "trusted" third party to effectively become the arbiter of truth directly results in taking away people's voices?
Potentially influencing tens of millions of voters' opinions is one thing, but influencing how a billion or more people (if Facebook were to grow its China user base longer-term) perceive the world is an even greater responsibility. This is the dilemma that Facebook faces.
One of these days?
Another consideration is how Facebook would appeal to the Chinese government. In the case of LinkedIn, the professional network offers China a clear value proposition -- greater economic opportunities for Chinese professionals, particularly for multilingual users seeking international opportunities. China has no shortage of social media platforms, but these companies store user data within the country's borders and have no compunction in implementing censorship.
Even if it provides censorship tools, it's not clear how Facebook would pitch itself to the Chinese government. The Times notes that some government officials are open to the idea, as allowing Facebook to enter China could legitimize the country's policies around internet usage. For now, Facebook in China remains a hopeful pipe dream as the social network continues searching for its next billion users.
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Evan Niu, CFA owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool owns shares of LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.