Facebook Inc. (FB) hit a milestone this week when it announced more than 2 billion users post or trawl the social network at least once a month. But that impressive growth—it took it less than five years to grow from 1 billion monthly users to 2 billion—comes with a catch. Acquiring the next billion will mean it needs access to markets it is currently blocked from, namely China.
The social media company is the undisputed leader around the globe, particularly in the developed world, but there is still around 15% of people that have no access to it or the internet. What’s more, while 3 billion people are using the internet, around 700 million of them are located in China, a country Facebook has been shut out of since 2009. Add the fact that there are other countries and regions where the local social media platform is still leading, and it's hard to see how quickly it will reach the next billion. With its more than 2 billion monthly users, it is clearly dwarfing its rivals, including Twitter Inc. (TWTR) and Snap Inc. (SNAP). WeChat, the Chinese social network owned by Tencent Holdings, had 938 million monthly active users as of May. (See also: Facebook's New Mission Moves Focus to Groups.)
Beyond 2 Billion
"The first billion is easy. The second billion is somewhat harder. Getting past that is going to be even more of a challenge," said eMarketer analyst Debra Aho Williamson in an interview with USA Today. "Part of it is the law of large numbers and part of it is that there are still places in the world where Facebook is blocked or people don't have access to the Internet to get on Facebook." (See also: Facebook Using AI to Combat Terrorist Propaganda.)
Ever since 2009, the social media company has been banned from the Chinese market after the government blamed it for sparking riots in Xinjiang, a western Chinese province. The Chinese government controls internet content and restricts, deletes or bans anything it deems is not in the interest of the state. According to a government transcript released in the fall of 2014, Lu Wei, director of China’s State Internet Information Office, said that “foreign Internet companies entering China must at the base level accord to Chinese laws and regulations. First, you can’t damage the national interests of the country. Second is you cannot hurt the benefits of Chinese consumers. If China’s laws and regulations are respected, we welcome all of the world’s Internet companies to enter the Chinese market.”
These tight controls have resulted in the ban of foreign social media sites including Facebook. In order to get back into that market, it would have to agree to stringent government regulations, censorship and surveillance that will undoubtedly force it to undermine its values. Requiring users to register real names and censoring content are not the only obstacles facing the company in China. Pressure from the government may force it to set up a local server, opening the door for the government to establish more control over the network’s operations.