Facebook and Google's Race To Zero

theodp (442580) writes "As Facebook and Google battle to bring the Internet to remote locations, Alicia Levine takes an interesting look at the dual strategy of Zero Rating and Consolidated Use employed by Google's FreeZone and Facebook's 0.facebook.com, websites which offer free access to certain Google and Facebook services via partnerships with mobile operators around the world. By reducing the cost to the user to zero, Levine explains, the tech giants not only get the chance to capture billions of new eyeballs to view ads in emerging markets, they also get the chance to effectively become "The Internet" in those markets. "If I told you that Facebook's strategy was to become the next Prodigy or AOL, you'd take me for crazy," writes Levine. "But, to a certain degree, that's exactly what they're trying to do. In places where zero-rating for Facebook or Google is the key to accessing the Internet, they are the Internet. And people have started to do every normal activity we would do on the Internet through those two portals because it costs them zero. This is consolidated use. If Facebook is my free pass to the Internet, I'm going to try to do every activity possible via Facebook so that it's free." The race to zero presents more than just a business opportunity, adds Levine — it also presents a chance for tech companies to improve lives. And if Google and Facebook fall short on that count, well, at least there's still Wikipedia Zero."

Comments

Right

[Anonymous Coward]

Royal

Re:Right

[Anonymous Coward]

a true race to zero between FB and goog. zero trust, zero privacy. who will win?

Zero?

[Whiteox]

It costs them zero? There is still a hidden data charge from the mobile operator as part of a plan. Nothing is free.

Re:Zero?

[Anonymous Coward]

Not if facebook/google has an agreement with the internet provider that all traffic to and from facebook/google is not billed to the end user but is payed by facebook/google.

Re:Zero?

[ShanghaiBill]

Not if facebook/google has an agreement with the internet provider that all traffic to and from facebook/google is not billed to the end user but is payed by facebook/google.

... which is a violation of Net Neutrality.

Re:Zero?

[zlogic]

DNS requests still count; and many operators are rounding traffic to 100KB intervals. Meaning if you open a free Facebook or Google page and thus results in a 0.5 KB of DNS requests, this counts as 100KB of traffic. Also, mobile pages consume much less traffic - especially ones for dumbphones and/or compressed by something like the Opera Mini proxy. So in the end using these "free" sites doesn't really save much - except for cases when you primarily view pictures.

Re:Zero?

[Frett2]

... which is a violation of Net Neutrality.

... which doesn't apply to countries outside the US

Re:Zero?

[ShanghaiBill]

... which is a violation of Net Neutrality.

... which doesn't apply to countries outside the US

Many other countries have far stronger protections for NN than the US does. Some US courts have blocked any enforcement of NN rules in the areas under their jurisdiction, and even in areas where it is mandated, enforcement is feeble and penalties are minimal.

Re:Zero?

[jmac_the_man]

... which is a violation of Net Neutrality.

... which doesn't apply to countries outside the US

It also doesn't apply to countries inside the US. The FCC doesn't have the necessary power to create net neutrality regulations, and Congress has decided that they aren't a good idea, so there are no Net Neutrality regulations in force in the US either.

Re:Zero?

[Shakrai]

DNS requests still count; and many operators are rounding traffic to 100KB intervals.

Which operators are doing that?

Re:Zero?

[Shakrai]

... which is a violation of Net Neutrality.

The theory of NN (at least before it was hijacked and made into a political cause celebre) was that network operators shouldn't be treating video traffic from Netflix any differently than video traffic from CBS, meaning that each got equal contention during times of congestion. NN was originally silent on the subject of usage based billing and exclusions therefrom.

The more NN proponents talk the more open I become to the arguments against it. The /. crowd usually makes reasonable arguments for it, but if you go to one of the less technically inclined websites (DSL Reports and Stop The Cap come to mind) you can now find people using NN to argue against everything from paid peering arrangements (a concept that hasn't changed much since the internet first went private) to QoS schemes that prioritize VoIP over bittorrent. I've started to think that NN is one of those ideas that sounds great on paper but will never be implemented fairly in the real world. Too many invested interests on both sides of the table, and the side with the most political clout at any given moment is going to be the side stacking the proverbial deck to the detriment of everybody else.

Maybe we should just remember that the internet became what it is today because it was largely free of burdensome regulations?

Re:Zero?

[zlogic]

I only have data on Russian operators (which also operate in other countries such as India, Vietnam and Eastern Europe):
MTS: default rounding is 100 KB
Beeline (partially owned by Telenor): default rounding is 150 KB
Megafon (partially owned by TeliaSonera): default rounding is 100 KB
Tele2: default rounding is 100 KB

If you choose a "data" tariff, rounding is usually 1 KB, but calls are much more expensive.
Also, most operators provide reasonably priced ($5-$15/month) mobile data packages which have a daily/monthly quota and lower your speed to 64KB/s when the quota is exceeded.

All three operators have access to the "free" Facebook and also local social networks. But because of the rounding, it's not free at all and only suitable for occasional use, otherwise it's much easier to just get a proper data package.

Re:Zero?

[wonkey_monkey]

Yes, it does cost them zero. There is no charge from the mobile operator.

free access to certain Google and Facebook services via partnerships with mobile operators around the world.

It's not a new thing, either; my Kindle Paperwhite gives me access to the Amazon store, for free, practically all over the world (possibly also Wikipedia). My previous Kindle allowed me browser access to the whole internet, at least when I tried it. Unfortunately my little island was, at that time, one of the few places around the world where the service wasn't available, but by going to the right part of the coast I could connect to French mobile networks.

Re:Zero?

[xvan]

Why QoS should prioritize VoIP over bittorrent? If both customers are paying equally, the bottleneck should apply to them equally.

Re:Zero?

[l_bratch]

It gets even worse than 100 kB.

JT Global charge in 1 MB increments [1]
Airtel Vodafone charge in 1 MB increments (they say 1 Mb, but I am assuming this to be a typo) [2]
Sure charge in 200 kB increments [3]

[1] http://www.jtglobal.com/Jersey...
[2] http://www.airtel-vodafone.je/...
[3] http://shop.sure.com/jersey/su...

Re:Zero?

[bbsalem]

But of course deregulation or no regulation contains a conundrum. The ISPs and others can selectively throttle connections, making net neutrality moot anyway. The issue here is that unregulated monopolies can abuse access of their customers with no regulation, and that groups of companies in a cartel can abuse access of their customers with regulation. This becomes a problem of defeating those who manipulate access, either by taking away their market or by attacking their relationship with regulators. People are people. The worst urges of people in business and those in government are somewhat the same, the main difference being that what government power mongers do is a bit easier to uncover than what goes on in most businesses. It may be easier to look for alternative networking technology that does not have static single points of control, like having the backbone of the Internet passing through NSA HQ, then to fix a system that has attracted the attention of power and greed.

Next AOL?

[nurb432]

Umm you still paid for service.. Thru the nose too since it was in effect 'metered' since you pay for X minutes a month.

Re:Next AOL?

[Travis Mansbridge]

But the first 10 minutes are free!

Not crazy, but obvious

[rasmusbr]

"If I told you that Facebook's strategy was to become the next Prodigy or AOL, you'd take me for crazy,"

That's not crazy, that's obvious. You're approximately the millionth pundit on the ball with regards to Facebook's strategy.

Hmm

[Anonymous Coward]

What are extra ad views form people who can't afford internet access supposed to accomplish exactly?

Re:Hmm

[tomhath]

They'll make it up in volume

AOL

[ganjadude]

"If I told you that Facebook's strategy was to become the next Prodigy or AOL, you'd take me for crazy,"

No, That is pretty much what every startup has been trying to become when it grows since AOL, There are still people out there I know (my father for instance) who goes to www.aol.com before they go anywhere else because aol is what they know, he still equates aol with the internet and im sure there are others out there that do the same (hell i bet some people are still paying aol for "access") Everyone would LOVE to be in the position AOL was in 96-2003

Re:AOL

[VortexCortex]

No, That is pretty much what every startup has been trying to become when it grows since AOL,

And then there are those like me... A non-startup who is trying to grow the absolute least possible, in fact, the goal is to become the inverse of Prodigy or AOL. By working to knit together distributed technologies to leverage the machines you already have and a network that isn't owned by anyone can thus profit everyone. Unfortunately, some sophomoric attempts have failed and left a bad taste in folks mouths, and the "web" of data silos is caustic to the distributed notion that everyone is a peer and there is no gate-keeping server or client at the packet level, even though that is the very notion that gave the Internet the democratizing and self healing properties such data silos exploit for profit.

Realize the truth: Through these centralized services no one can truly using the Internet to its fullest. There need be no middle-men besides our ISPs for grandma to remotely comment on the photos in my vacation folder. It is the crappy state of pre-Internet operating systems that is to blame for the sad state of affairs, IMO.

Re:AOL

[ganjadude]

I personally agree with everything you just said, however as noted, the majority dont think things through and only carer about the bottom line

Re:AOL

[rasmusbr]

It is the crappy state of pre-Internet operating systems that is to blame for the sad state of affairs, IMO.

What specifically about Windows/Unix/Linux is holding back decentralization? Power management? Slow wake-up from low power modes?

I always thought the basic problem is that there isn't an always-on (or always ready to wake up) box in most people's homes that developers can target.

Re:AOL

[Kjella]

There need be no middle-men besides our ISPs for grandma to remotely comment on the photos in my vacation folder.

Nothing except that 99% of the population:
a) Don't have a 24x7 connected box
b) Even if they do, it doesn't run the application stack you need and they don't want it to
c) Don't have the skills to run a server and keep it patched/backed up/punch through firewalls etc.
d) Don't have the time or interest to fiddle with it

How many people do you know that operate their own email server as opposed to some webmail provider? Run their own web server for their WordPress blog? Use their own photo/video sharing server instead of Instagram and YouTube? People don't want what you're selling, they want to log in on some website and have a working service. Most people I know would have to have such a system hosted at a co-lo with a support contract, which negates the whole "no third parties" advantage. Alternatively it'd have to be an "appliance" box to plug into the router, but then you're into selling consumer gear which needs some kind of corporation to build these boxes. And it still means that when you shut down your box, "you" fall off the social network unless you use replication but then you also have all sorts of issues with revocation because it's not just on your server anymore.

I guess it's tough to hear, but most people don't want to be the hub of their own data. They won't want to fiddle with PGP keys to make sure that messages sent from them to someone else on email or Facebook are really private. I can sort of understand too, the communication isn't more secure than the account info and tons of accounts get hacked/stolen everyday so even if you removed one weak link it's still only moderately secure not NSA and black hat-proof anyway. Not that we need to make it easy on them, but the inconvenience doesn't really outweigh the gain in security. (Yes, yes, cue the Franklin quote)

Re:AOL

[Reziac]

Indeed... even tho I'm rather more "I'd rather do it myself" than most folks, I see no reason why I should dink around with my own mail server and FTP (I keep a mirror of a large FTP site) when I can pay $6/mo. for unlimited space/mailboxes, with automatic backups and probably better security than I could reasonably manage, via my 1&1 hosting account.

Laugh

[koan]

I can't be anything but cynical when Facebook is the only access, in fact it's a crime IMO.

Re:Laugh

[bbsalem]

Aside from the idea of an extranet, non-IP, more dynamically routed mesh network as an answer to non NN and snooping, there are other reasons to doubt that Facebook or Google will really take over the Internet. People make the mistake of thinking in terms of current technology and they assume wrongly that technology that might be new here in the U.S. in five years might not get adopted faster in new markets than here. So the assumption has to be that the plans of Facebook and Google to bring the Internet to most of the rest of humanity and to do it in the captive market way they are infamous for is based on the assumption that the tool of choice is going to be the cheap ubiquitous smart phone, or even a cell-phone with 10X40 character display. How can I doubt this? Just today I posted a comment on Facebook's developer page suggesting that changes be allowed to their textarea widget rules, that they allow for Markdown and not be so ruthless about compressing out white space. The same issue applies to all of Google. Both companies are built around the Javascript textarea Widget and both companies are committed to keeping the mode of communication in that impoverished and frustrating form. What would really hurt both companies is for desktop screen resolutions to be made available from cell-phone form factored devices that use projected keyboards, these already exist, and projected full sized virtual displays that could be rendered by a laser or projected onto a flat surface. The restrictions FB and Google impose on Social Media use of the testarea widget would no longer be relavent, except for the simple data mining application, and the opportunity would exist for a third party to steal away their market share by offering a full editing interface, return to the desktop way of using the Internet. One of the smartphone makers could easily make this innovation and we would be free of artificial restrictions.

How do you make money out of "zero"?

[petes_PoV]

And people have started to do every normal activity we would do on the Internet through those two portals because it costs them zero

If there are billions of people who are prevented, by cost contraints, from accessing the internet I have to wonder whether FB and Google are executing their strategies for purely altruistic reasons, as part of a long-term (decades?) strategy, as a means of making a fast buck, or simply because the other guy is doing it - and they don't want to be left behind?.

Altruism I can understand. But making FB the home page of a continent or two ... is tht really a benefit of the people receiving free internet?

If people have no money, would there be any profit to be made by pushing advertisements to them. Would there even be retailers or wholesalers with products they could buy - given the lack of delivery infrastructure.

If the plan is, that with internet access, the people in these poor areas will become rich and will then start buying stuff they see in advertisements - would that necessarily be to their benefit? Or would the companies providing these services be more like the East India Company in the 18th century - and be indulging in a bit of commercial imperialism?

Re:How do you make money out of "zero"?

[Anonymous Coward]

If there are billions of people who are prevented, by cost contraints, from accessing the internet I have to wonder whether FB and Google are executing their strategies for purely altruistic reasons, as part of a long-term (decades?) strategy, as a means of making a fast buck, or simply because the other guy is doing it - and they don't want to be left behind?

Posting AC to avoid burning mod points.

I'd expect the real reason is that many of these poor people are in areas that might become politically unstable, that the basic desire to give them internet access is to keep track of their activities.

Re:How do you make money out of "zero"?

[Anonymous Coward]

They'll be the next H1B's ... living on a spoonful of rice a day until some nice FB/Google person shows up and offers then another half-spoonful a day in return for a chance to 'make something of themselves' and maybe eventually 'earn' two spoonfuls per day (a 100% increase in their standard of living).

Re:How do you make money out of "zero"?

[Reziac]

I don't think it's about selling merchandise. I think it's more likely about becoming the one-low-monthly-payment access to an internet of micropayments... basically they'd be a reseller for such websites, same as Prodigy did in the olden days. Meanwhile, they still can sell your eyeballs to advertisers for a little over-and-above the guaranteed monthly rent paid by subscribers.

Think on that when someone promotes the notion of micropayments... who will it really benefit?

"Every normal activity"

[Mateo_LeFou]

"people have started to do every normal activity we would do on the Internet through those two portals because it costs them zero"

Typical reductive garbage. The internet is important for 5 billion reasons. Sharing photos is just on of those.

This is like saying "people watch every normal TV show through those three channels (ABC,NBC,CBS)

Am I crazy?

[PopeRatzo]

I don't understand. Am I the only person left who really doesn't want anything for free?

I don't play F2P games because they suck. I don't want to run my internet activity through the portal at Starbucks or watch "ad-supported" television. No, I don't want that t-shirt with your company's logo on it, even if you're handing it out for free at the event.

I'm really OK with paying for stuff. I'll even pay extra for really good stuff. I don't even like getting stuff for free. I donate to The Document Foundation when I download Libreoffice because I want to pay my way.

On the other hand, I understand perfectly the notion of using filesharing to get better service or for political purposes. If Ubisoft doesn't want to release a demo for its latest game, I'm happy to use the one the Internet makes for me because I've been burned before by Ubisoft (or EA, or whoever). And if the torrent works better than the buggy mess you released, I'll download it in a second. But even then, I'll donate to the party providing the service. It's not a moral issue, it's strictly based on my own best interest.

Re:Am I crazy?

[Anonymous Coward]

I am the opposite. I want everything to be free. Then I won't have to be a slave to corporate America anymore.

Reducing the cost of living means that unemployment isn't nearly as anxiety provoking as it otherwise would be if you didn't have lots of money saved up and still didn't need to spend much to maintain the cheapskate lifestyle.

The problem is that the opposition that is in the business of making money, has a lot more power. Since they are paying customers and can buy political officials or land to do stuff on.

Re:Am I crazy?

[wonkey_monkey]

I don't understand. Am I the only person left who really doesn't want anything for free?

No, but plenty of people do. Understanding that other people are not you will probably make the world seem a little less crazy.

Re:Am I crazy?

[PopeRatzo]

The flip side of that is a rule I hold to: I am not exceptional.

Re:Am I crazy?

[PopeRatzo]

I am the opposite. I want everything to be free. Then I won't have to be a slave to corporate America anymore.

I think you have very interesting definitions of "free" and "slave".

Nothing is free except love. And love won't get you broadband.

Re:Am I crazy?

[silentcoder]

>And love won't get you broadband.

Obviously you've been "loving" the wrong people...

Re:Am I crazy?

[Anonymous Coward]

I don't understand. Am I the only person left who really doesn't want anything for free?

I don't play F2P games because they suck. I don't want to run my internet activity through the portal at Starbucks or watch "ad-supported" television. No, I don't want that t-shirt with your company's logo on it, even if you're handing it out for free at the event.

I'm really OK with paying for stuff. I'll even pay extra for really good stuff. I don't even like getting stuff for free. I donate to The Document Foundation when I download Libreoffice because I want to pay my way.

On the other hand, I understand perfectly the notion of using filesharing to get better service or for political purposes. If Ubisoft doesn't want to release a demo for its latest game, I'm happy to use the one the Internet makes for me because I've been burned before by Ubisoft (or EA, or whoever). And if the torrent works better than the buggy mess you released, I'll download it in a second. But even then, I'll donate to the party providing the service. It's not a moral issue, it's strictly based on my own best interest.

You're definitely not the only person, it's just that to the people with money, if you're trying to save up and not buying things, you're useless.

Internet ads

[Anonymous Coward]

Do people actually buy things based on clicking on ads? I understand Google and Facebook get rich off these ads, but I think any business buying internet ads is a big sucker. This is the scam of the century, and soon will crash like the housing market/dot com bubble.

Most people either A) use adblock/something with the same functionality, B) click ads out of curiosity but never buy (costs businesses money lol), ignore ads out of principle (either are creeped out by "personalized" ads or pissed off about the ones that make noise or crash their browser), D) ignore them. Once businesses pull their heads out of their asses and stop paying for these ads, Google and Facebook will be fucked. And that's not to say businesses won't market online. They will, in much more effective ways (viral content, product placement, grassroots movements, astroturfing lol)

Re:Internet ads

[tomhath]

Marketers will tell you that even if that ad doesn't generate a sale, the potential customer remembers the brand and will recognize it when they are ready to make a purchase. Your point about adblock is a good one though.

Photos Result in Charges on Facebook Zero?

[theodp]

Perhaps things have since changed, but Facebook explained in the linked (2010) article, "Rather than making photos viewable on 0.facebook.com, we put the photos one click away so they don't slow down the experience. You can still view any photos on Facebook if you want but your regular data fees will apply."

Already there for Facebook.

[WiiVault]

I think Facebook won the race to zero long ago. Zero long term viability, zero morality, zero innovation strategy = zero chance of being around in 20 years. They have no depth of innovation or base of loyalty beyond people waiting for the next thing and their friends to migrate. They know they are MySpace, which is why they are spending billions buying up everything in sight in the hopes to finding the innovation and depth that define long term tech company survival. But like most companies without a culture of ingenuity all they can do is buy the current cool thing and run it into the ground. Jokes about this era will be the the way people fixated on the worth of something with so little value. At least the 2000 bubble was about many new ideas being tested and failing. Facebook's value is entirely hinging on the insane concept that somebody can't MySpace them just as quickly. It will be interesting when the market wakes up to that reality.

Goooo AOL!

[Anonymous Coward]

And AOL gave you access to the information superhiway you would not otherwise have had. Gooooooo AOL! The internet would not exist as you know it now if not for AOL! Gooooo AOL! It was the leader in software distribution as well. Gooooo AOL! It offers you free access RIGHT NOW to The Huffington Post, which has more content than all similar sites combined. Gooooo AOL!

People tend to forget these things because of neck beards picking out toe jam for lunch.

walled garden

[globaljustin]

I see this as a way to become a "walled garden" for anyone using their free service eventually....

This is for the stuff facebook and Google are doing to bring internet access to places that have none at present...

Once the full system is up they invent scarcity somehow to justify charging extra to visit non-google sites

Re:walled garden

[Reziac]

Sort of like AOL and Prodigy in the olden days, where they were also walled gardens... try this on for size:

Say we have an internet of logins and micropayments. Access via a paid account with FB or Google gives you 'free' access to all these login and micropayment sites (as FB and G buy bulk accounts).

I think this is not at all implausible as their eventual goal. Makes you rethink the notion of logins and micropayments, don't it??

 

fbook=aol

[minstrelmike]

I think Facebook now actually _is_ the new AOL. And that portends a significant downfall in future profits.
Grandma loved AOL because it was easy. Then her son created a site on Geocities. Then her grandkid's band had a MySpace site.
Then finally it got easy enough to post baby pictures on the fBook and that site collected a boatload of users--all of whom specifically chose that site consciously and many of whom don't use it anymore. Sure, Zuckerberg can force newbies to use his site pretty much exactly the way AOL did by plastering everybody with installation CDs
The fBook has probably got all the sticking power of popularity that AOL has. It's still around apparently, but it ain't big business and it ain't the internet and it ain't even on anybody's minds anymore.

Facebook used to be the new AOL. Now it is turning into the current AOL. Technology, like life, moves on.

all they have to do

[Osgeld]

is get more new eyes on their ad's than people on the planet

simple!

fuckkoffbeta

[Anonymous Coward]

yes you are no good