Free Basics and the battle for digital hegemony
Free Basics’ user acquisition strategy and Instant Articles’ content acquisition strategy could ensure users are locked into Facebook’s walled gardens
I don’t have an RCom mobile connection and must therefore confess that I am not sure how you download the Free Basics app without incurring data charges. Unless you need to pay a one-time data charge for downloading the app, in order to make your remaining time on the app free forever. If that be the case, then that is where the argument against Free Basics begins.
There seems nothing free about it and nothing basic too, unless the basic content cravings of an impoverished Ganesh are BabyCentre, BBC News, AccuWeather, ESPN, Dictionary, Unicef and, of course, Facebook (Google Play Store summary of Free Basics list these content providers as part of it currently).
Ganesh, if you are not aware, is Mark Zuckerberg’s candidate for Free Basics, as it helps him to check weather updates on AccuWeather and tend to his crops accordingly.
What does Ganesh need to do if he wants to research crop types, soil types, irrigation methods, fertilizers, pesticides, etc.? How does he connect himself to an online marketplace for buying and selling goods to make his agriculture a more profitable exercise, removing hundreds of middlemen?
Zuckerberg hasn’t thought of it yet and hence, Free Basics is a limited menu of content/apps that have signed up with not enough variety. While it may serve the purpose of a limited few (though I don’t know who. I doubt even Ganesh), it is definitely not going to help the large part of the digital universe.
For many people, the doorway to the World Wide Web starts with a search for information and the Goliath Google towers over everyone in this space. Google clearly makes tonnes of advertising revenue because of this stranglehold. The battle for the advertising pie in the digital space is not fought harder between anyone else other than Google and the proponent of Free Basics, Facebook.
In an earlier column, I had referred to the dominance of a few players in the digital advertising pie. With a growing user base that is the fastest in terms of number of users as well as time spent, India, along with other developing nations, becomes crucial in the next crest of the growth journey.
While Google and Facebook do not disclose country-specific revenues, as per my estimates, Google annually makes about $3 per Google India user versus Facebook, which probably makes about $0.7 per Facebook India user. While these are grossly undervalued figures compared to the global average of $20-plus for Google and about $8 for Facebook, the critical issue is also to narrow the gap within the local markets.
With GDP growths stagnating across most developed markets, business models around advertising are also leaning towards the developing markets for growth. The increasing engagements (and I am not even talking of Zuckerberg’s Mandarin speeches or his New Year photograph of China memories) between leaders of Google, Microsoft, Facebook, etc., with policymakers of the developing world are evidence of how important these markets are going to be in the future.
While Facebook claims that they do not have plans to have advertising as part of Free Basics, they have not committed to never having them. In fact, Chris Daniels, vice-president for Internet.org (the original name of the Free Basics crusader), admitted recently that they may consider advertising as part of Free Basics at a future date.
For Facebook, with key global competitors definitely not being part of Free Basics, it is a clear strategy to dominate (monopolize?) the user share of mind and hence grow revenue (at a future date!) and narrow the gap between self and the market leader, at the same time hoping to also bridge the gap with global averages.
While the “Do no evil” proponent seems to be trying to grow the market through “Free Wi-Fi” and “Google Balloons”, the challenger to the throne seems to have launched a full-fledged, well-funded guerrilla warfare on a large unsuspecting population to capture and grow the market. The combination of Free Basics’ user acquisition strategy and Instant Articles’ content acquisition strategy, if it succeeds, can ensure users are locked into Facebook’s walled gardens.
Praseed Prasad is head of agency and partnerships at Flipkart. His monthly column will explore facets of digital media affecting consumers and marketers.