Apparently, China Is Trying To Buy Facebook


Maybe it’s decided that Facebook is the lesser of two evils when it comes to Western social networks. Maybe it’s just Beijing buying itself a birthday present. Whatever the reason, it appears that China — or more specifically, one of China’s sovereign wealth funds — is trying to buy a significant stake in Facebook.

A Business Insider report cites “a source at a fund that buys stock from former Facebook employees” who was approached directly about helping to put together a stake big enough “to matter” and “a second source tells us there is a rumor going around the social network that Citibank is at this very moment trying to acquire as much as $1.2 billion worth of Facebook stock on behalf of two sovereign wealth funds – China’s and another from the Middle East.”

$1.2 billion isn’t going to be nearly enough of a stake to matter at a company whose value is pegged around $100 billion, but the news has caused some concern, given that the social network is a full of millions of people’s personal data and China is known for its sometimes draconian internet censorship policies, not to mention its alleged hacking practices — something Google, Facebook’s chief rival, knows more than a little about. Business Insider plays down the potential problems, saying:

For another, China would be buying non-voting stock and would have no say in Facebok’s operations. And finally, it’s not like shareholders in Facebook have some special privilege that allows them to see what users are doing or saying.

Importantly, sovereign wealth funds are pretty distinct from their governments.

But not everyone agrees. Over at Forbes, Gordon Chang — who is somewhat notorious for gloom-and-doom predictions when it comes to China — says that China’s sovereign wealth fund “is no more independent of the Communist Party than the Beijing municipal government.” According to Chang, Chinese leaders want a stake in Facebook because they “want to control social media” and “dominate the conversation about China.”

Although the “independence” of anything state-controlled in China is highly questionable, Chang doesn’t really have an answer for how China could control social media with a billion-dollar stake in Facebook, which would likely pan out to be about 1% of the company. If this is a power-grab, it is an incredibly ham-fisted one, and if it’s a soft-power initiative I fear it may be even more misguided than China’s plans to make Xinhua, its state-controlled wire service, a respected worldwide news brand.

Still, the attempted buy is interesting, especially in light of persistent rumors that Mark Zuckerberg is dedicated to bringing the social network to China. A significant state investment in the company might help get Facebook unblocked — many have argued the block on Western social sites exist as much for reasons of protectionism as censorship — and give Zuckerberg a foot in the door.

In any event, China watchers have likely already learned to treat Facebook/China rumors with some caution until they’re confirmed fact (remember back in the spring when everyone was so sure Facebook was signing a deal with Baidu?), and this is coming from two anonymous sources before the purchase even has happened. It’s probably not time to abandon Facebook for fears of Chinese data pirates yet (though it might be time to abandon Facebook for other reasons).




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