Why Facebook cares so much about India

October 29, 2015, 12:32 AM UTC
Mark Zuckerberg
Facebook’s CEO Mark Zuckerberg interacts with technology students in a town hall-style meeting in New Delhi, India, Wednesday, Oct. 28, 2015. Zuckerberg is his second visit to India this year alone. (Shirish Shete/Press Trust of India via AP)
Photograph by Shirish Shete — AP

Facebook CEO Mark Zuckerberg may have built his business in the U.S., but it’s India that has arguably become his most important focus.

Zuckerberg on Wednesday spent time at his latest trip to India holding a town hall meeting with students at the Indian Institute of Technology. During his hour-long conversation, students asked him all kinds of questions, ranging from why so many ads appear in online games to how he plans to get the one billion people in India who aren’t online onto the Internet. The first question, though, was arguably the one that most people want answered: “Why are you showing so much interest in India?”

“So our mission is to give everyone in the world the power to share what’s important with them and to connect every person in the world,” Zuckerberg told the students. “And India is the world’s largest democracy; it’s one of the biggest countries, where if you really have a mission of connecting every person in the world, you can’t do that without helping to connect everyone in India.”

Zuckerberg largely kept his comments off business, but acknowledged that “more than 130 million people in India use Facebook,” making it his company’s second-largest market behind the U.S. While Zuckerberg said his visit was designed to “talk to people and hear what they need from us and what we’re doing well and what we’re doing that we can improve or do better,” he added that his mission is also to get more Indians online.

“There are a billion people in India who do not have access to the Internet yet and if you care about connecting everyone in the world, you can’t do that if there are so many people who don’t even have access to basic connectivity,” he said.

His answers seemed genuine, eloquent, and altruistic. But market researchers and analysts believe Zuckerberg’s interest in India—and his desire to get those billion people online—is also driven by business.

“[There are] lots of people there, an emerging middle class, tons of cell phone users, and a relatively well-educated population,” Wedbush Securities analyst Michael Pachter says. “[Facebook] can grow by 200 to 300 million users in India over the next few years, making it pretty exciting. It could be their largest market.”

Debra Aho Williamson, principal analyst at eMarkter, says: “India represents an important market for Facebook, as evidenced by its efforts to bring Internet connectivity to the population via Internet.org, “Facebook’s initiative to get people in emerging markets Internet access. “As more people in India come online, Facebook is likely to be a popular activity and the ad revenues will follow, slowly but surely.”

Indeed, while India is Facebook’s second-largest market with over 134.5 million people as of July, according to eMarketer, it represents just a small piece of its revenue. According to Williamson, she expects Facebook to generate $16.3 billion in worldwide advertising revenue in 2015. Facebook’s ad revenue in India will top $122 million, making it “just a drop in the bucket,” she says.

The opportunities, however, are endless. The local Indian government has started to rapidly deregulate business-related activities that have hampered business growth. Meanwhile, as Facebook and others work to bring those billion people online, the social network’s users will only grow. By 2019, Facebook (FB) will have 269.5 million Indian users, up from 103.2 million last year, according to eMarketer. At that time, India will likely be its biggest market and growing in leaps and bounds.

Facebook’s revenue over that period is expected to grow in India, but it’s unclear by how much, due in large part to the market’s “immature” digital-advertising industry, Williamson says.

Still, it’s hard not to believe Zuckerberg when he says that it’s not all about business. He said during his talk that there’s a “moral responsibility” to bringing more people online in India. He noted that for every 10 people who get access to the Internet, “one person gets a new job and one person gets lifted out of poverty.” He added that exposing those people to the Internet could help the worldwide economy and entrepreneurial spirit.

“We really want to get the next billion people online and if we can play a role, then that’s something that I personally care a lot about,” he told the students.

But along the way, let’s face it: he wouldn’t mind seeing his company pocket some extra cash while it works towards that mission.

Facebook declined to comment beyond Zuckerberg’s talk with the students.

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