Facebook Sees Big Growth In Asia Despite Free Basics Controversy

The Wall Street Journal

Facebook Inc. is adding users in Asia at a much faster rate than other parts of the world, an executive said, showing the recent controversy over the firm’s free Internet service in India is not deterring the social networking giant’s expansion in this part of the world.

Dan Neary, Facebook’s vice president for Asia Pacific, told The Wall Street Journal in an interview Tuesday that some 540 million of Facebook’s 1.59 billion monthly active users were in Asia as of the end of December, up from 449 million a year earlier.

Facebook is adding users in Asia at a rate of about 20% annually compared to 14% globally, he said.

“The potential is greater in Asia-Pacific than it is in any other region because we’ve got two thirds of the world’s population, and it’s all mobile,” Mr. Neary said.

In February, less than two weeks after posting more than $1 billion in quarterly profit for the first time, Facebook was slapped with a ruling by India’s telecommunications regulator effectively banning its controversial Free Basics service, which was designed to get unconnected users online.

The service, available in dozens of countries around the world, allows users to browse some sites and apps without paying for mobile data. The data access is subsidized in India by telecom operators such as Reliance Communications Ltd.. But the regulator said the initiative violated the principles of net neutrality, which call for equal treatment of all traffic on the Internet.

Chief Executive Mark Zuckerberg said in October that India is home to more than 130 million Facebook users, making it the second largest population after the U.S.  Twitter says it has 142 million monthly active users in India.

“It was disappointing that Free Basics didn’t get the ruling that we had hoped,” Mr. Neary said. He noted that the company’s various efforts to provide connectivity continue globally.

The company said this month it has 3 million active advertisers globally, a 50% yearly increase, with Southeast Asia the fastest growing region.

But increasing the monetization of users in populous Asia may be a challenge. As of the fourth quarter, Facebook said it earned $13.54 in average revenue per person in the U.S. and Canada, far outstripping the $1.59 average in Asia-Pacific.

Mr. Neary said that the revenue figures in Asia have been rising at a rate of 25% as brands and businesses learn the value of using the platform, but that Facebook is taking a long term view, focusing now on growing connectivity as more people get online for the first time.

Simon Kemp, regional managing partner for Asia at We Are Social, said that even though Facebook makes less per user in Asia than in the U.S., the region is so populous that it has the ability to tap many more users here, with the numbers continuing to grow as user growth levels off in developed economies.

“They may charge advertisers a couple dollars a click on Facebook in the U.S., but they may get 15 or 20 cents in these markets” in Asia, he said. “But it’s at a huge scale. If you can do it as a scale thing, then it makes sense,” he said.

Mr. Neary said in Southeast Asia 94% of monthly active users are accessing the platform on mobile devices, compared to about 90% globally.

Thailand now has more than 37 million monthly active Facebook users, he said. The number in Indonesia now stands at more than 82 million. As of the end of December, Facebook had 21 million daily mobile users in Vietnam and 24 million daily mobile users in the Philippines.

Mr. Neary pointed out that the company’s image-sharing platform, Instagram, is popular in many parts of Asia, as is its WhatsApp messaging app. Instagram is making particularly big gains in Indonesia, Mr. Neary said, which is a key global market due to its population of 250 million.

The service now has some 22 million monthly active users, up from 11 million a year earlier, making it one of Instagram’s fastest growing markets. Instagram has not previously broken out its user base by country, though it said in September that more than 75% of its community is outside the U.S.

Correction & Amplification: As of the end of December, Facebook had 21 million daily mobile users in Vietnam and 24 million daily mobile users in the Philippines. An earlier post incorrectly referred to these numbers as  users.

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