Analysis: Facebook's daunting Asian challenge

Thu Feb 2, 2012 2:11pm EST
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By Jeremy Wagstaff, Asia technology correspondent

(Reuters) - Facebook aims to connect all two billion Internet users. So far it has captured 845 million of them. Of the rest, nearly 60 percent live in Asia and hooking them is going to be a daunting challenge.

A block on access in China, court cases in India and rivalry from other services elsewhere in the region stand between Mark Zuckerberg's Facebook and more than 700 million users.

"The size of our user base and our users' level of engagement are critical to our success," Facebook said in its SEC filing for an initial public offering. Quoting industry data that there were two billion Internet users globally, it said: "We aim to connect all of them."

Growth is held back in the rest of the world, either because of limited Internet penetration, or because those who want a Facebook account already have one.

In markets such as the United States or Britain, where more than half of the population already have accounts, user accounts grew less than 2 percent in the past six months, data from Internet metrics service Socialbakers Ltd show.

Over the same period, Facebook gained a third of its users in India. Countries like India are where Facebook is looking for growth: even though India is now home to the second-largest Facebook community in the world, less than 4 percent of Indians have an account.

Social networks are not new to India: for several years Google dominated with its Orkut service, but since mid 2010 has been in retreat. Google's own estimates show traffic to fell from 3 million unique visitors per day to less than 1 million in the past year. Facebook, meanwhile, has risen from 6 million to 13 million over the same period.

Partly this was because Orkut failed to add new features to keep users engaged, said Amit Agarwal, a long-time Indian blogger and columnist. But there's also a generational shift taking place, he said.   Continued...

<p>Employees work in the international user operations area at the new headquarters of Facebook in Menlo Park, California January 11, 2012. REUTERS/Robert Galbraith</p>