Estefania Gonzalez Mona 14 April 2023

Global Business Environment

Case Report: Facebook’s Free Basics

The author who supports the arguments of this case report is: Reema

Khurana with her article Facebook’s Free Basics: Free in India? published in 2016

by Ivey School of Business Foundation.

Facebook is a social media platform created by Mark Zuckerberg in 2004.

They have offices in the United States, China, Japan, Europe, Australia, and India.

Nowadays, it has approximately 1.01 billion daily active users. In 2015 Facebook

became partners with Internet.org in order to launch a platform called “Facebook’s

Free Basics” in India. This partnership involved Facebook and other 6 mobile

services and device companies such as Samsung, Ericsson, MediaTek, Nokia,

Opera, and Qualcomm. The main objective of this platform is to deliver low-cost

internet connectivity and enable internet access on smartphones.

         Previously, Internet.org had successfully set up Free Basics for 8 million

people. Nevertheless, this was not the case of India. Some corporations like

Internet Mobile Association of India, the National Association of Software and

Services Companies, and Telecom Regulatory Authority of India (TRAI) did not

receive it positively. They argued Facebook’s Free Basics was trying to control the

internet services in India by creating unfavorable business opportunities with the

existing telecom service providers. Due to these concerns, there were discussions

about the possibility of banning the platform in India.

First of all, there has been continuous growth with the internet’s penetration

in the Indian market. By 2014, India had a share of 17.5% of the world’s internet

users and it had the second-largest internet surfer base in the planet, about

462,124, 989 users. In view of these huge figures and the accessibility of 3G

services, India became an attractive destination for e-businesses and venture

capitalists.

In addition, India’s government promoted internet use through its Digital

India program. The goal of the program was to transform the whole ecosystem of

the public services with the use of technology. However, not everything was

perfect. There were some places with lack of connection such as rural India. Nearly

20% of Indians were living below the poverty line and did not know the capabilities

of the internet; besides, they could not speak or understand English making it even

more difficult to acknowledge the internet services.

Secondly, Facebook’s Free Basics wanted to provide free internet access to

everyone, especially those who were looking for information about different topics

like travel, jobs, sports, health, news, and governance. Also, some other major

objectives were to provide internet access to unattended communities, make

affordable transmission of data with better networks and data-caching techniques.

One of the strongest arguments Facebook had for this program was that

connectivity is a human right.

On the other hand, it is important to mention the policy of net neutrality

which implies that the service providers should treat all services and apps on the

internet the same way, no matter the source or destination of the communicated

data. This means that no websites should be favorable over others. If the principle

is not respected, there would be a differential pricing result.

A clear example of the violation of the principle of net neutrality happened

with Airtel Zero. This initiative offers free mobile data use for those customers who

use the platform. Airtel decided which apps and websites the customers could

have access depending on the financial agreement the marketers and Airtel

arrange. If some app or website is not the deal, the users would need to pay to

access those sites and services. This implies that Airtel Zero would prioritize a

specific website and leave the option of extra purchase to the customers. The

Government of India confirmed that both initiatives, Airtel Zero and Internet.org,

were against the principles of net neutrality.

Furthermore, the operation of Free Basics consists in offering free internet

services and entrance to 38 websites at 0 data charges. Facebook had a

partnership with Reliance Communication (RCOM) in order to launch the program;

yet, Facebook was available to make more partnerships with any service provider

interested, since the motto was to create digital equality.

  

In spite of the benefits of the initiative, TRAI contacted RCOM because of

the issues referring to the differential prices. Zuckerberg argued that the Free

Basic’s objective matches the Government of India’s digital initiative since both

wanted to provide more digital exposure to all the population and it is better to have

some access than none. Despite the intervention of the TRAI, Free Basics by

Facebook was supported by 86% of Indians according to the survey poll.

Finally, I think that Facebook's Free Basics brings more benefits than costs

to India. One of the greatest challenges for this generation is giving connectivity to

the whole world. There may be some regulations from India’s government to the

initiative, but even the program has been successful in 9 countries across Asia,

Africa, South America, and more. Also, taking into account that India has a high

index in poverty this program could help reduce those figures and create millions of

opportunities for education and jobs among their population.

Bibliography

Khurana, R. (2016). Facebook’s Free Basics: Free in India?. Ivey School of

Business Foundation.