(How the war between Google and Facebook will
kill the world wide web
a.k.a internet as we know it today!)
The Old Testament
Everyone knows Google. The fact is Google now is the synonym
for search! So how does a company make revenue from a search engine that
carries only a space to type your search and a Google doodle! What many (who
know Google) do not know about Google is that they run an ad server called
Double Click for Publishers (DFP), which serves ads to almost every major
publisher out there on the internet. Remember all those advertisements you see
while you browse sites? There is an extremely low chance that you are seeing
something not served to you by DFP! Another thing many people (who know Google)
don’t know about Google is that they run the world’s largest ad exchange (AdX).
Combine Google search engine, DFP and AdX and you’ve got a killer share of the
worlds personalized internet advertising revenue!
But good things don’t always last forever, do they? Enter the
mobile revolution, where smart
phones are fast replacing the desktop as the
connectivity device. Instead of having something like a Google Chrome as a
central gateway to the internet, we have various app eco systems that fragment
the user experience. Moreover the small screens leave advertisers with very
little real estate to display their ads as they do on desktops. The metrics
used here to gauge the effectiveness of ads is also different. Like the cost
per thousand impressions (CPM), a commonly used metric in online advertising,
is replaced by user time spent inside an app. And at this juncture you need to
be introduced to another biggie in the internet world. Meet Facebook, with close
to 1.5 billion monthly active users who spend an insane amount of time on their
mobile app!
We all love Facebook. And most of us hang out with Facebook
on a daily basis. But with its YouTube, Chrome, Google+, Google Maps, Google Search
and other products basket, Google still manages to make 5 times more ’ad
revenue per user’ than Facebook. That too from a very similar number of users
as Facebook! And that is quite a lot of money we are talking about. Fact be
said, Facebook has never been a products company. Thus the strategy to move out
its messenger as a separate app, and acquire companies like Instagram and Whatsapp
(which gives Facebook a huge advantage
while promoting its case with advertisers). And you thought they were crazy to
offer the kind of money that overnight made each employee of Whatsapp confused
about the choice of colour for their customized Ferrari!
Facebook badly needs to keep the revenues flowing in so as to
keep its share prices soaring at the current insanely high levels. But they
don’t have a product line nor do they have a DFP/AdX combo to do that in the
scale at which Google is doing it. The one and only option currently at hand is
to increase its user base. And for this it needs to tap unexplored markets
world-wide. It needs to connect with places where there are a vast number of
potential users who are still not connected to the internet. But there is a
catch here. For every new user added to the internet, while (at current rates) Facebook
makes around $8, its rival Google would make around $48! And though Mr.Zuckerberg
might still use Google for searching the net, this is just not something Facebook
would love to see happening.
So what do you do? You look around for options and see
someone called Apple. Apple built an entirely new ecosystem around its products
line up. All products in your apple store adhere to Apple’s strict guidelines
to ensure a good user experience (the way Apple feels right!). And that is an
experience you can get ‘only’ with an Apple device. User experiences like
itunes are an Apple only ecosystem that no other company has been able to
successfully replicate till date. Yes. Not even Sony! Apple customers work in a
very different ecosystem as compared to those on Androids open system. iOS 9
even has an ad blocker that keeps the Google ads out of its Safari browser!
BINGO! Why not create an internet within the internet and
keep players like Google away! By allowing people to connect to the mini
internet that you just created you could not only ensure that you get the money
in the long term but also ensure that Google does not get staggeringly higher revenues
from the same users! Meet Internet.org, Facebooks flagship programme to bring
internet access to the rural poor across the world for ‘free’. (But nothing
comes for free, does it? Well, let’s see!)
The New Testament
To cut the story short internet.org does not really take off
in India which is one of the biggest markets that Facebook is targeting due to
obvious reasons. So they do their research, they put in more and more of their
dollars and get to know that we are a society that falls for anything packaged
as ‘Free’ or ‘Extra’ or ‘More’. It’s only a matter of time before they
repackage internet.org (which is actually neither ‘internet’ nor a ‘[dot] org’
which is usually used by not-for-profit organizations) into what they now call
‘Free Basics’.
Free basics promises to give free internet access aimed at
the poor population in India. The mobile operators in association with Facebook
would create an eco system of apps and websites (that adhere to their terms and
conditions of course!) and anyone who gets their mobile connection would get to
use this so called internet eco system for free. Sounds like a brilliant idea
right! Why did we not think of this earlier!
By doing so Facebook claims it would give poor people free access
to basic internet services, which of course includes the ability to poke others
into playing candy crush! Which I personally don’t think is a bad thing at all.
After all they are adding value to the lives of the poor and by doing so they
are improving the economy too. It is a proven fact that better and faster
internet access increases the quality of life and economic status of the poor
across the world. So allowing them to send candy crush pokes at their leisure
is not at all a big compromise!
The mobile operators
would be even happier since they would have ‘their own’ internet space which no
other operator can claim to have. Moreover some of those who get used to the Free
Basics stuff would in short term itself subscribe to the larger present open
internet. For the country, the mobile phone / internet penetration would grow
at phenomenal levels thereby increasing the access to services in extremely
rural areas. And with the statistics that better connectivity is directly
proportional to economic growth, what else could you really ask for! And even
better, as far as the apps / sites that sign up with free basics (as per Facebook/operator
terms of reference) are concerned, they would also see relatively higher
traffic at lower costs since you are competing within a far smaller space and
you could thereby have better visibility at far lesser costs. For example,
within the Free Basics environment my ‘pucho jaano’ search engine would not
have to compete with someone like Google! What more would I want as a start-up
entrepreneur!
So whatever way you look at it we have a win-win situation
for all! And Facebook certainly looks like the saviour we all were waiting for
ever since Jesus Christ was sent back!
Revelations
The father of the www (a.k.a internet) Berners-Lee says that
consumers should just say no to branded internets like Free Basics. He says
that deliberately giving people data connectivity to part of the network is a
step backwards. Paytm founder Vijay Shekhar also expressed views against such a
move and Paytm came out with a blog savetheinternet.in. Nandan Nilekani, the
architect of India's unique identity programme Aadhaar, has called Free Basics
a "walled garden" that is against the spirit of openness on the
Internet.
There are always better ways to connect the poor to the
whole internet than give them access to a part of it. As Nilekani suggests, Facebook
could provide funds to a government run ‘Universal Service Obligation Fund’,
which can do a direct benefit transfer of free data packets to those who don't
have access to the Internet. That would allow citizens to freely access the
real internet rather than constrain them to a limited basket of offerings. A worrying
question is why Facebook would want to spend 100 crores on advertising the Free
Basics strategy rather than invest that in something like what Nilekani says,
which is surely more beneficial to the masses they are trying to connect to.
Alternatively they could use a part of this money (which is very small compared
to what it would be spending to build the eco system) to subsidize the operator
costs and provide limited access (by time or data) to the whole internet. What
is even stranger is that Facebook talks in favour of net neutrality in the US
and does not attempt to connect the almost 50 million unconnected people in their
country through Free Basics! But then, it’s their money and it’s their call
right. I might as well start my own Facebook and run it my way than want
Mr.Zuckerberg run his company my way!
The real issue is that free basics acts against the basic
concept of net neutrality - The
principle that Internet service providers should enable access to all content
and applications regardless of the source, and without favouring or blocking
particular products or websites. This is what made the ‘World Wide Web’, the ‘Internet’
as we know it today. By allowing someone bring in something like Free Basics is
like taking away this basic essence of the internet. And when you analyse the
future of such an idea, you really don’t get a positive picture.
A study by savetheinternet to understand the ‘bottom pyramid’
telecom users in Indonesia showed that people responded that they don’t use
Internet but when asked about Facebook, they said that yes, they use Facebook!
The same trend was found in Africa as well.
What would result is the slow death of the internet as we
know it today. Once the huge chunk of money starts flowing into building and
maintaining the closed internet ecosystems owned and controlled by various
corporate giants, the open internet would end up being choked and it is just a
matter of time before it turns into a niche like the open source software ecosystem
we know now. The big money would always flow into the Facebooks, the Googles, the
baidus, the amazons, the airtels, the reliances, the ideas and the whatsoever ecosystems,
thereby fragmenting the internet into small colonies that may or may not
co-operate with each other.
And if you thought that anyways the open internet would still
be there for us, you might just be mistaken. Neither Facebook nor Google or for
that matter any internet company is obliged to stay on the open internet
system. They do so today because they don’t have a better choice to reap in
revenues.
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