Facebook’s latest competition — Lotus from Vietnam

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Published: September 29, 2019 3:46:38 PM

One day, perhaps one of Lotus’s successors will finally catch on—in Vietnam or some other authoritarian market that Facebook has hardly given any thought to.

In authoritarian countries that limit information flow, Facebook is also seen as a threat: a de facto alternative to the official narrative.

Governments around the world are exploring ways to break Facebook Inc.’s grip on their citizens. Some legislate. Some regulate. Some censor. And then there’s Vietnam, which has funded or otherwise supported more than 450 locally based social networks in recent years, almost all of which have failed. The most recent, called Lotus, launched this week, with $30 million in backing and a government promotion campaign.

Mark Zuckerberg probably isn’t losing sleep over this upstart. But perhaps he should be. If and when Lotus and its peers fail, Vietnam won’t simply concede the battle. Instead, like other authoritarian governments, it’ll look for alternative tools to blunt Facebook’s influence—which could one day have graver effects on its bottom line.

Facebook is as influential in developing regions as it in rich ones, perhaps more so. India is home to more Facebook users than any other country, largely thanks to WhatsApp, while authoritarian Vietnam is number seven, with 64 million users out of a population of 96 million. Users in these regions tend to be more avid than their counterparts in developed countries: In 2017, 41% of Vietnamese checked social media for news at least once a day and 55% said they preferred social networks to traditional e-commerce platforms when shopping.

But the downsides to this enthusiasm can be steep. In developing regions where Facebook is effectively the internet, its algorithmic newsfeed is often the sole source of information, and rumours and hate speech can quickly lead to real violence, as has occurred in recent years in Sri Lanka and Myanmar. In authoritarian countries that limit information flow, Facebook is also seen as a threat: a de facto alternative to the official narrative.

One tempting response for such regimes is to block Facebook entirely, while regulating local alternatives. China pioneered this approach in July 2009, and within a few years WeChat grew into a locally made giant. Vietnam, following China’s lead, imposed a more porous Facebook block in late 2009, while encouraging local upstarts. But its savvy social-media users weren’t about to jump to inferior platforms clearly designed to spread propaganda. By the time the government figured out that its approach wasn’t working, Facebook was already too important to the social and economic life of the country to shut down.

In recent years, Vietnam has tried a new tack: intimidating users and imposing costs and risks on the company itself. The government hasn’t been shy about jailing users who challenge its authority and is following the lead of China and Russia in deploying an army of moderators to counter and censor “wrongful views.” It has also passed a data-localisation law that requires global tech companies to store personal information on Vietnamese users in-country, thereby giving officials another way to keep tabs on what locals do and say online.

Lotus, Vietnam’s latest government-backed social network, would seem to be a sideshow in this clampdown. But the authorities are suggesting otherwise. In July, the information minister explicitly called for a “new social network to replace Facebook” and targeted a 60–70% market share for homegrown services by 2022. Lotus has some innovative features—for example, it replaces Facebook’s “likes” with tokens earned from consuming content—but these are unlikely to lure users away from communities of friends and family already on Facebook. Instead, in all likelihood, Lotus will eventually be unplugged like its predecessors and the government will be left looking for other ways to reduce Facebook’s influence.
That won’t be good for Facebook or its users.

Vietnam, an emerging economy keen to attract investment, probably won’t bring antitrust actions against Facebook, as regulators in Europe and the US are contemplating. But as an authoritarian government it can employ other, less subtle methods of influence. In June, the government asked companies to pull advertisements from YouTube videos thought to contain “anti-state propaganda.” A similar order directed at Facebook could degrade the site’s quality and damage its reputation locally, while clearing the way for the kind of competition Facebook has so ruthlessly fought off over the years.

One day, perhaps one of Lotus’s successors will finally catch on—in Vietnam or some other authoritarian market that Facebook has hardly given any thought to.

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