Internet.org Causing Controversy for Facebook Stock

Following the birth of their daughter, Facebook’s (NASDAQ:FB) Mark Zuckerberg and Priscilla Chan pledged their commitment to “do [their] part to make [a better future] happen … because [they] have a moral responsibility to all children in the next generation.”
In a letter, Zuckerberg identified the internet as a core element in building this brighter future: “the internet is so important that for every 10 people who gain internet access, about one person is lifted out of poverty and about one new job is created. Yet still more than half of the world’s population — more than 4 billion people — don’t have access to the internet.”
Facebook’s Internet.org project appears to be a direct continuation of this charitable reasoning. However, the initiative has landed Zuckerberg deep in controversy as activists protest its perceived drawbacks.

What is Internet.org?

Internet.org is a Facebook-led initiative that strives to bring the internet to regions that don’t have access to it. According to its website, 85 percent of the world’s population lives in areas with existing cell coverage. However, the prohibitive cost of mobile data often deters people from accessing the internet.
Enter Facebook’s Free Basics. The service provides individuals with access to selected apps and websites. These are offered free, without data charges, and cover topics as diverse as news, health, education and employment. According to Internet.org, this introduction to the internet will improve people’s lives and ultimately lead to them becoming full, paying internet users.

What are its drawbacks?

Quartz states that Internet.org is drawing widespread criticism in India as net neutrality activists protest this free, but limited, internet. Net neutrality refers to the belief that internet service providers should allow access to all content and applications, without favoring or censoring specific websites. In this light, Internet.org is a “walled garden” experience, as users can only access content that Facebook and its telecom partners deem appropriate.
There is also a socioeconomic dimension to criticism of Internet.org. By allowing Facebook and its corporate partners to decide what content is available, Internet.org is essentially becoming a gatekeeper of the internet for the economically disadvantaged. Some critics believe that this amounts to economic racism.
According to Indian politician Naveen Patnaik of Odisha, “while the underpriviledged deserve much more than what is available, nobody should decide what exactly are their requirements. If you dictate what the poor should get, you take away their rights to choose what they think is best for them.” In an article on TechCrunch, author Karl Mehta reiterates this opinion: “let India’s poor choose what they want to use.”

How is Facebook stock affected?

Of course, there is a business dimension to this situation as well: Internet.org creates the misleading impression that Facebook is the entirety of the internet. In a press release, India’s Aam Aadmi Party takes a strong stand against the service, commenting, “the Aam Aadmi Party believes that the innovative youth of this country will give us the next Google, Facebook or Whatsapp … However, if some websites or applications or services are offered free or at faster speeds, the balance tips towards established players with deeper pockets which kills the innovative young startups that will emanate from this ecosystem.”
Internet.org will no doubt have a strong impact on India’s app and social media economy, and investors need to be aware of its influence within emerging markets. Facebook is once again asserting its social media dominance and, through Internet.org, it has the power to shape the future of the internet in almost two-thirds of the world.
 
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.