Is Facebook At Work, Facebook's Visa Into The Chinese Market?

  • After months of beta testing, Facebook is planning to launch Facebook at Work in 2016.
  • Facebook at Work seems to be an optimal compromise between Facebook and the Chinese government.
  • This article presents some of Facebook's advantages, opportunities and challenges as it rolls-out Facebook at Work.

On December 22, 2015, the Wall Street Journal ran an article, "Facebook Plans to Shape Up Social Software for Work in 2016,"detailing how Facebook (NASDAQ:FB) plans to launch the business version of its social networking service. After months of work and beta testing, the social networking site plans to launch the service in 2016. According to the aforementioned article, about 60,000 companies applied to participate and for the past six months, Facebook has been working with 300 companies including Royal Bank of Scotland (NYSE:RBS), Club Med and Heineken (OTC:HEINY) to learn what they need and to refine the service.

" RBS has committed to rolling out Facebook at Work more broadly. Eight weeks ago RBS had about 500 of its 100,000 employees in the pilot, but today more than 5,000 participate. It plans to add over 30,000 to the service by the end of the first quarter of 2016 and 50,000 by mid-year, said Kevin Hanley, director of design at RBS. Mr. Hanley works closely with RBS CIO Patrick Eltridge who manages employee onboarding." - Rachael King, WSJ.

If the initial success with RBS could be replicated to other firms, Facebook at Work could open new doors and new opportunities for the social networking site.

Why it Facebook's visa into China

China's government blocked Facebook in 2009 following the riots in Xinjiang because Xinjiang independence activists were using Facebook as part of their communications network. Imagine how many more active users Facebook could accumulate if it was allowed back in China? Facebook has 1.01 billion daily active users on average for September of 2015 and 1.55 billion monthly active users as of September 30, 2015.

Reuters reported that a top Chinese government official said that Facebook could enter China but it must be at the base level accord to Chinese laws and regulations. Meaning that Facebook is not banned in China but blocked until it can agree to follow the rules of the country. This option of following the local rules would restrict freedom of information as Facebook would need to continuously monitor and restrict comments that could be damaging to the mainland. Facebook has not taken this option for more than five years. This could be because of many reasons, some are:

  • The option is not cost effective. Having people monitor comments, photos and updates of 1.55 billion users could be extremely costly for the social network.
  • The less costly option would involve giving the Chinese government a back-door to the site so that they can monitor the site. This could rise privacy concerns of the safety of information of Facebook users all over the world.
  • It could damage the Facebook brand as free access to information could no longer mean anything.

This is why Facebook at Work is essential. It is a compromise between Facebook and the Chinese government. Facebook at Work will allow Facebook to effectively enter the Chinese market and abide by the rules and regulations of the country without it negatively affecting Facebook's brand name.

Facebook at Work is supposed to be a company's internal communication system. Meaning people from all over China cannot be using it to arrange riots and repeat the 2009 incident. Because of its inability to effectively distribute propaganda against the government, Facebook at Work is more acceptable in China.

This is an important milestone for Facebook because now it has a platform whose revenue stream is not restricted in the world's most populous country.

Facebook's Advantages

  • Seamless integration as ~ 1 in every 7 people in the world used Facebook in September of 2015 alone. According to Facebook, it had ~1.01 billion daily active users on average for September of 2015. While Worldometers reports that the current world population is ~7.389 billion. This global reach means that the company is deeply engraved in people's life. This is advantageous for Facebook because it makes it easier and effective for companies to introduce a familiar product that has a high chance of resonating with new and current employees.
  • Real time employee interaction. Most companies have or are planning to expand to different states, countries or continents. This global reach requires employees to stay connected in real time. Facebook already offers that connectivity on a social level and it could be easier for the company to do the same at the corporate level.

Facebook's New Opportunities

  • A new growth area for Facebook:New potential revenue stream that can drive Facebook's stock up. It is an exciting development in an area whose last successful invention was emails about 45 years ago.
  • A gateway to enter the data storage business. If employees communicate about essential work related data, Facebook would need to be able to store and secure that information. A simple step that could enable the social networking giant to enter into corporate data storage and cyber security and compete with Box Inc., Dropbox Inc., Google Drive, Microsoft OneDrive etc
  • Increased user engagement will help with advertising. Integrating people's social and work life will be able to make people stay on Facebook for longer. This increased user engagement could be a good metric to sell to advertisers.
  • A new revenue stream to diversify away from advertising. Although Facebook at Work is currently free, companies that will want more customer support, integration with enterprise software or more analytics will have to pay.

Conclusion

Email will be Facebook's major competitor. It is open, universal, free and has been in use for decades. People rarely embrace change. More so, companies will need to ascertain the correlation between Facebook at Work and productivity. Nonetheless, Facebook at Work will be the best way for Facebook to enter the worlds second largest consumer market. Facebook at Work, if successful, might become one of Facebook's high growth businesses and diversify the social network's revenue stream.

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