Face­book tar­gets Moscow with aim to be more than so­cial net­work

The Pak Banker - - Company& -

MOSCOW: Face­book Inc. is the world's largest so­cial net­work site, with 500 mil­lion­plus mem­bers at last count. How­ever, there are plenty of big mar­kets where Mark Zucker­berg's cre­ation isn't dom­i­nant.

In Ja­pan, Face­book doesn't rank in the top three, and the site isn't much of a force in Brazil or China, two pop­u­lous coun­tries where In­ter­net us­age is off the charts.

The out­look for Face­book in Rus­sia may be more promis­ing, de­spite the pop­u­lar­ity of home­grown so­cial net­work sites, Bloomberg Busi­ness­week re­ports in its Jan. 3 is­sue. Face­book of­fi­cially launched its site in April and only ranks No. 5 so far, ac­cord­ing to In­ter­net tracker comS­core, but its growth has been im­pres­sive. From Jan­uary un­til Au­gust in 2010, its Rus­sian op­er­a­tion has racked up a 376 per­cent in­crease in users, to 4.5 mil­lion, ac­cord­ing to comS­core data.

The com­pany cut deals with Rus­sian wire­less car­ri­ers Bee­line and OAO Mo­bile TeleSys­tems, so that their sub­scribers could tap the mo­bile ver­sion of Face­book.

To over­come the lan­guage bar­rier, Face­book al­lowed users to sug­gest trans­la­tions for the name of fea­tures not eas­ily un­der­stood in Rus­sian such as "poke" (as in try­ing to get an­other Face­book user's at­ten­tion), and then let the site's mem­bers vote them up or down.

"Rus­sian is a very com­plex lan­guage, so we al­lowed the users to trans­late the in­ter­face them­selves so that it cap­tures the com­plex gram­mar," said Javier Oli­van, a London-based Spa­niard who is head of in­ter­na­tional growth at Face­book.

Its founder has made no se­cret of his am­bi­tions to thrive in Rus­sia, a mar­ket where other Western play­ers, in­clud­ing Google Inc., have strug­gled to get their foot­ing. Speak­ing at an Oct. 17 event at Stan­ford Uni­ver­sity in Palo Alto, Cal­i­for­nia, Zucker­berg said that if Face­book suc­ceeded in pen­e­trat­ing the Rus­sian mar­ket, it might have a shot at do­ing the same in China, the coun­try with the largest num­ber of Ne­ti­zens. Rus­sians' heavy use of so­cial net­work sites makes the coun­try an ideal test case. Rus­sians spend 9.8 hours per vis­i­tor on a monthly ba­sis on such sites-more than dou­ble the world av­er­age, ac­cord­ing to comS­core.

Why do Rus­sians while away so many hours on­line? For one thing, there's the cli­mate: Stay­ing in­doors and so­cial­iz­ing via the In­ter­net is much more at­trac­tive when win­ter lasts a good six months. Then there's the phys­i­cal iso­la­tion, com­pounded by poor in­fra­struc­ture, es­pe­cially in cities like Mur­mansk, which lies north of the Arc­tic Cir­cle. Most im­por­tantly, though, there is a tra­di­tion in Rus­sia of re­ly­ing on in­for­mal in­for­ma­tion net­works for sim­ple day-to-day sur­vival.

"In Rus­sia, there is no sense that you can rely on the pub­lic or the sys­tem, so you've tra­di­tion­ally had to rely on a net­work of friends," says Es­ther Dyson, a ven­ture cap­i­tal­ist who has been in­vest­ing in Rus­sia's technology sec­tor for over a decade. In a coun­try with weak in­sti­tu­tions, "it's very nat­u­ral for peo­ple to net­work for what they want."

Even in these less op­pres­sive, post-Soviet times, re­la­tion­ships are crit­i­cal to ev­ery­thing from land­ing a job to wrig­gling out of a prob­lem with au­thor­i­ties. It's no co­in­ci­dence that the Rus­sian love af­fair with the In­ter­net has blos­somed at a time when cit­i­zens are once again see­ing their po­lit­i­cal and me­dia free­doms dwin­dle. "[The Web] has be­come a place where you have ab­so­lute free­dom of speech, where you can say what­ever you want, good or bad," says Ilya Krasil­shchik, edi­tor-in-chief of Afisha, a Rus­sian life­style mag­a­zine and web­site.

Afisha was one of the first Rus­sian sites to in­cor­po­rate the Face­book "Like" fea­ture, which al­lows users to share con­tent with friends on the site. Krasil­shchik points out that Rus­sia is dif­fer­ent from China, where cen­sor­ship pre­vails on­line. "We have this strange para­dox where civil so­ci­ety is hemmed in, but its free­doms are lim­it­less on­line."

Not sur­pris­ingly, then, so­cial net­works have mul­ti­plied in Rus­sia. Odnok­lass­niki.ru, a site mod­eled on Class­mates.com with 17 mil­lion users, is the pre­ferred des­ti­na­tion for older, less tech-savvy users, along with be­ing a pop­u­lar dat­ing site for Rus­sians of all ages. Then there's Moi Mir, sim­i­lar to News Corp.'s MyS­pace, with 20 mil­lion mem­bers.

The leader of the so­cial net­work­ing pack is VKon­takte, which is ma­jor­ity owned by Mail.ru Group Ltd., a Rus­sian in­vest­ment fund spe­cial­iz­ing in In­ter­net com­pa­nies that also owns a small stake in Face­book. VKon­takte, which has 28 mil­lion users, is in­spired by Face­book. VKon­takte has been dogged by claims that it has al­lowed the unau­tho­rized post­ing of pi­rated mu­sic, movies, and other con­tent free on its site. Mail.ru de­clined to com­ment on al­le­ga­tions that VKon­takte has en­gaged in such prac­tices, though the com­pany did dis­close in a prospec­tus for a re­cent ini­tial pub­lic of­fer­ing in London that it is cur­rently de­fend­ing it­self against sev­eral law­suits. -Cour­tesy Bloomberg

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