Facebook, Google and the race to sign up India

With a tentative wobble, a young woman in a sari is trying out her new bicycle for the first time, cycling around a sandy courtyard in Ambaji, a small town in Gujarat, north-west India. The bicycle is blue and sturdy, with wide tyres to help it withstand bumpy terrain. On the back is a box that holds precious cargo: not pizza, or post, but the internet.

Google is sending thousands of these bicycles into rural India. Each carries two Android smartphones and two tablets, with mobile data connections funded by the US search giant. The women who receive the bikes are trained to use the internet themselves before cycling to more villages to train other women.

Gamar Nirama Bhambroo, a 22-year-old tailor from Chochar, sips from a cardboard cup of chai during a break in her one-and-a-half days of digital training, which is taking place in a rudimentary guest house that usually hosts religious pilgrims. She has just completed her first Google search, while her baby daughter gnawed at the corner of the Android phone’s packaging. “I can look for what are the new fashions, how to cut the material and how to design certain things that I don’t know,” she says, before adding that she is repeating what the trainer had told her.

Gujarat is Gandhi country, where the political leader was born and raised, and where, in 1930, he led a march against a salt tax imposed by British colonialists. Today, Silicon Valley companies, led by Google and Facebook, are arriving with the key to a vital resource of the 21st century: connectivity. Wary of some of their tactics and rhetoric, Indian critics have dubbed the US companies “digital colonialists”. The heightened tone of the debate reflects how much is at stake: with a population of 1.2 billion, India has the potential to be the largest open internet market in the world (China, the world’s most populous country, openly restricts access). As of 2014, the most recent year for which data from the International Telecommunication Union, a UN agency, are available, more than a billion people in India had no internet.

Executives from both Google and Facebook talk with missionary zeal about bringing internet access to India’s masses as a way of alleviating poverty, improving education and creating jobs. Yet their motives are complex. Internet companies have the power to shape lives, governments and economies in ways that purveyors of more straightforward consumer goods do not. They often operate in what economists call “winner-takes-all” markets, meaning that, once established, companies benefit from a network effect: the more people who use an app, the more attractive it becomes, leaving little room for local competition. The fate of Facebook’s “Free Basics” app, which was effectively banned by India’s regulator last month, offers a glimpse of the broader battles that could lie ahead, across the developing world, as companies tussle to win the loyalty of billions of future internet users.

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In 2013 Mark Zuckerberg, Facebook’s founder and chief executive, released a 10-page “white paper” entitled “Is Connectivity a Human Right?” The question mark was rhetorical: Zuckerberg argued that “by bringing everyone online, we’ll not only improve billions of lives but we’ll also improve our own as we benefit from the ideas and productivity they contribute to the world.” Today, the 31-year-old’s own Facebook page is filled with photographs from his two visits to India in the past two years, where his company is intent on making that vision a reality. Mark visits the Taj Mahal. Mark answers questions at a public meeting with students in New Delhi. Mark hosts a global summit for his “Internet.org” initiative to connect the world. And, from last September, Mark welcoming India’s prime minister Narendra Modi to Facebook’s Silicon Valley campus.

India is also core to Google’s ambition to connect “the next billion”, which focuses on India, Indonesia and Brazil. Rajan Anandan, Google’s 47-year-old head of India and Southeast Asia, shares Zuckerberg’s impassioned manner. “To deliver the promise of India to our citizens, we need to make sure they get connected,” he says.

The companies are echoing not only the view of the United Nations, which included universal internet access in its 2030 Agenda for Sustainable Development, but also the Indian government, which has its own longstanding — though frequently delayed — strategy to develop a “digital India”. Silicon Valley is determined to move faster. Google and Facebook, sitting on large cash piles and secure in their dominance of western markets, are investing in a variety of separate schemes. Google, with the help of the NGO Tata Trusts, aims to use its internet bikes to reach women in 100,000 villages by the end of the year (women are much less connected in rural areas than men). The company also hopes to launch a pilot of its ambitious “Project Loon” technology this year: sending balloons into the Indian sky to beam down the internet to remote areas. It has also partnered with the railway ministry to roll out high-speed wifi in a hundred train stations this year.

Facebook’s most high-profile project has been “Free Basics”, a mobile app that is part of the social network’s Internet.org initiative. Facebook uses the app to offer the customers of partner telecoms networks free access to Facebook and a basic selection of other sites such as Wikipedia, BBC News, AccuWeather and health sites. Since its launch in Zambia in 2014, Free Basics has been introduced to 38 countries including India (with Reliance Communications), Kenya (with Bharti Airtel) and Indonesia (with Indosat). The company is also working with telecoms groups to connect more villages to wifi, selling time online through neighbourhood entrepreneurs. It, too, has an aerial project: building solar-powered drones to connect remote areas.

“There is this need to provide connectivity to millions of Indians, which has simply not happened in the past 10 years through public sector intervention,” says Arun Mohan Sukumar, head of the cyber initiative at the Observer Research Foundation, a Delhi-based think-tank. “It is inevitable that the companies that will provide these kind of services will be the major corporations of the time: the Googles, the Facebooks.”

While Silicon Valley executives are prone to talk about universal internet access in evangelical, almost philanthropic language, Google and Facebook are not financing their connectivity initiatives with money put aside for corporate social responsibility — they are using their core budgets. That reflects the solid business logic of investing in connectivity in India and other developing markets. Most importantly, it offers an opportunity to grab hundreds of millions of new smartphone users in the early stages of their adoption, while they are still cementing their habits. Facebook would suffer in a world where Google controls access to consumers through its market-dominating Android operating system, just as Google would struggle to amass data from its users if they spent all their time on the Facebook-owned WhatsApp. And, though the digital advertising market in India is tiny at present — hitting just $940m last year according to research firm eMarketer — Facebook already talks excitedly of multinationals such as Coca-Cola and Nestlé adopting its mobile ads to target rural Indians.

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Kiran Jonnalagadda dollops butter in his black coffee in the fashion of Silicon Valley dieters. The 37-year-old software engineer “by hobby”, tech conference organiser by trade and internet activist by reputation is sitting in a breezy upstairs café in Bangalore, India’s technology capital in southern India. Wearing a blue short-sleeved shirt with earphones peeking out of the collar, a Fitbit on one wrist and a smartwatch on the other, he explains how he concluded that Facebook deserved to be dubbed a “digital colonialist”.

“Colonialism from an economic perspective is the extraction of raw resources and sale to the consumer without creating a capitalist class in between,” he says. “This is exactly that: they want raw data from a consumer, extracting personal information, and they want to sell their service. But they don’t want the people in between.”

The capitalist class that Jonnalagadda feels is missing from Facebook’s plan is, in his view, being built in Bangalore, a town that is evolving in status from a favourite outsourcing location for western businesses to a buzzing hub for homegrown start-ups. Jonnalagadda was one of the four original members of Save the Internet, a group of about 100 activists that fought and, in February, won a battle against Facebook’s Free Basics app.

The activists argued that telecoms companies should not be able to provide some sites or apps for free while charging for all other internet use, because by doing so they would create a two-tier system of access to the internet. Armed with a viral comedy video, the group lobbied for “net neutrality”, a broad principle that says all internet traffic should be treated the same, and that has been adopted as law in countries from the US to the Netherlands.

Facebook completely mispitched it. I know some employees are super embarrassed about it

Vijay Shekhar Sharma was another critic of Free Basics. In his office on the outskirts of Delhi, the 37-year-old founder and chief executive of PayTM, a payments start-up, argues that the app was offering a “baby internet” but trying to pass it off to consumers as the real thing. “Let’s not call a car ride a flight. Flights are when you are sitting in a jet airplane,” he says.

Facebook never intended to fight against net neutrality. In fact, in the US, the company lobbied for net neutrality; globally, it could lose money if the principle was compromised, allowing, say, telecoms operators to charge extra for WhatsApp because they were annoyed at losing SMS revenue. According to Chris Daniels, the 40-year-old Facebook vice-president who oversees Internet.org, the company saw Free Basics as a path to draw people online by showing them the benefits of the internet for free — a sort of internet taster.

“What we wanted to do is to build a product that would overcome this awareness challenge,” says Daniels, speaking in Facebook’s office in Menlo Park. “What you want to do is to give people the opportunity to try, [to find out] ‘what is out there on the internet for me?’, discover services, and then become an internet user.”

Free Basics had launched smoothly in most countries but, in India, it quickly became contentious. As activists and start-up leaders began to question Facebook’s motives in offering such a limited version of the internet, the company responded aggressively, buying large newspaper ads contesting activists’ claims, plastering posters across major cities and asking Facebook users to show their support to the regulator. The emphasis on doing good and connecting the poor, without declaring how Facebook stood to benefit, particularly riled activists.

“The patronising tone hit everybody. They completely mispitched it. I know some Facebook employees are super embarrassed about it,” Jonnalagadda says.

Facebook’s most embarrassing moment came after India’s telecoms regulator banned so-called “differential pricing” by internet companies in February, in effect blocking Facebook’s Free Basics scheme. The company said it was disappointed in the decision but would pursue other connectivity projects in India. Then Marc Andreessen, an investor and Facebook board member, enraged many, by tweeting: “Anti-colonialism has been economically catastrophic for the Indian people for decades. Why stop now?” Zuckerberg was quick to condemn the comment, calling it “deeply upsetting”. Andreessen apologised but Jonnalagadda says his comments persuaded many that Facebook deserved to be called colonialist. “What Andreessen and everyone did was to convince people that the commercial interest of these companies is not the national interest of India,” he says.

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Bringing the internet to the masses is not easy: trenches need to be dug, websites need to be translated and even monkeys need to be tamed. Jonnalagadda worked on a public-private project to set up internet centres in Indian villages in 2007, where he learnt that monkeys love to knock satellite dishes off roofs.

Of India’s 1.2 billion population, more than 300 million (mainly urban, and upper or middle class) are internet users, according to the Internet and Mobile Association of India. Bangalore’s technology industry is thriving thanks to a cluster of entrepreneurs, while many Indians have launched successful careers at US tech companies (including Google’s chief executive Sundar Pichai, and Satya Nadella, head of Microsoft, both of whom were born in India and travelled to the US for postgraduate study). Across the country, internet penetration has been increasing by two to three percentage points each year since 2010, according to ITU data. That rise is driven by India’s strong economic growth and falling smartphone prices, with India overtaking the US in 2015 to become the second largest smartphone market, according to Counterpoint Research.

A report by Deloitte, commissioned by Facebook, found that extending internet penetration in India to levels seen in developed countries could more than double the country’s growth rate, adding $500 per capita to annual gross domestic product. Yet existing programmes to spread technology throughout the country — from the Indian government, telecoms operators and NGOs — have all moved slowly. Their sluggish progress is one reason many activists hold back from a wholesale rejection of Silicon Valley’s efforts to spread the internet. Google has been praised for having a more sensitive public relations strategy than Facebook but even the social network’s other projects have not been widely criticised, as long as they offer access to the whole internet.

A government-funded school in Nand Nagri, New Delhi, participates in a “Digital Equalizer” programme that has been run for 14 years by the American India Foundation, an NGO. In a dark classroom off an open courtyard, boys and girls in maroon uniforms sit on the carpet in a room known as the digital “lab”, which has one computer and one projector. Upstairs, a long-promised but only recently installed government-funded computer room contains 11 computers running an old version of Windows. The computer lab supervisor says viruses have prevented them from downloading all the software they need.

The growth in people adopting smartphones as the first form of computing is pretty much unprecedented

Pressed by teachers, the children, aged 12 to 14, are dutifully enthusiastic about digital learning, praising it as more engaging than textbooks. But it is clear that some of them have learnt more about technology outside the classroom, from online games and by using Facebook on mobiles and laptops. Most say they use Facebook to chat, share photos and schedule family events — but one very small 13-year-old says he used it to share his thoughts. On what? “On God,” he says, to laughs from his classmates.

Silicon Valley companies’ cash, technology and devotion to moving fast could help accelerate the adoption of the internet. Google and Facebook talk of reaching hundreds of thousands of communities when discussing connection projects for the next couple of years alone. Tech companies can invest in large-scale projects and recruit talent to design satellites, drones and balloons that can be deployed all over the world and, for Facebook and Google, the amounts of money involved are relatively small. Brian Wieser, an analyst at Pivotal Research, says the tech groups’ connectivity initiatives are “off the radar in terms of mattering” to the companies’ investors because they are “probably pretty small in the context of total research and development spending”.

Caesar Sengupta, Google’s 40-year-old director of product management, says India is proving educational for the company in a number of ways, such as learning how to build products for people whose first experience of the internet is on a smartphone. These lessons will help it develop products suitable not only for other emerging markets but could even improve its apps in the west, he says, where a new generation is coming online mobile-first. “The growth in people adopting smartphones as the first form of computing and in many cases the only form of computing is pretty much unprecedented in history,” he adds.

In fact, the Free Basics debacle may have pushed the Indian government and telecoms operators to recognise the need to move faster to connect the unconnected. Parminder Jeet Singh of IT for Change, a Bangalore-based NGO working to use technology for social good, says the high-profile battle made connecting people to the internet a political issue for the first time.

Rural communities had not been persuaded of the value of the internet, so they had not demanded it. “Delays take place because there is no demand pull. If you are a government official, there is no one on the other end shouting,” he says. “The Facebook issue was the first internet policy issue to hit the public consciousness.”

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The Taj Mahal hotel stands grandly above the boulevards of New Delhi. In the lobby, suited businessmen greet each other. Upstairs, Facebook runs its Indian policy and communications office from a suite overlooking a large swimming pool.

It is the day after the telecoms regulator issued the ruling that made Free Basics obsolete. On the table in front of Munish Seth, Facebook’s 46-year-old head of connectivity solutions in India, lies a pile of unopened newspapers — Facebook’s failure has made every front page.

“The government of India decides what they do, so we follow the guidelines,” says Seth, who worked for Alcatel-Lucent in India before joining Facebook. “Do I see [the ruling] as a big impediment in the near-term future? No, no.”

Facebook is not backing away from its mission in India. Seth declares he is a “man in a hurry”. He says he doesn’t care whether the people he helps to connect to the internet use Facebook — but he thinks they probably will, in the end. Just back from a week in what he calls “the hinterlands” of rural India, Seth is busy launching Express Wifi, where Facebook is joining forces with local internet service providers to bring wifi to rural town squares, helping villagers buy small chunks of timed access.

Clearly keen to refute accusations that Facebook doesn’t understand India, Seth points at the posters advertising Express Wifi. “You see the content is localised, these are Indians, not someone from MPK in the picture,” he says, using the Facebook slang for Menlo Park, its Silicon Valley headquarters. Signs are in local languages, he notes, and some of the backbone of the network is built using innovative hardware designed in India.

In a Facebook post the night before, Zuckerberg suggested the company was already trying to learn lessons from the failure of Free Basics.

“As our community in India has grown, I’ve gained a deeper appreciation for the need to understand India’s history and culture,” Zuckerberg wrote. “I’ve been inspired by how much progress India has made in building a strong nation and the largest democracy in the world, and I look forward to strengthening my connection to the country.”

The lessons of the digital colonialism row are worth learning fast, as the battle has the potential to spread around the world. Mishi Choudhary from the Software Freedom Law Center, which provides pro bono legal services to developers of open-source software and which fought for net neutrality in India, has already been contacted by activists eager to challenge Free Basics elsewhere.

“I’ve heard from people in Kenya, in Mexico, some countries in south-east Asia also, that what happened here has become like a beacon,” she says. “They have been forced to look at the binary false choice Facebook is trying to sell.”

The most important lesson, perhaps, is not specific to India. It is about how the rest of the world perceives Silicon Valley’s complicated motives, and how that jars with the Valley’s own image as simply a bunch of engineers with smart ideas. In India, concern about the power of US technology companies results in debates about colonialism; in Europe, it leads to campaigns over tax arrangements and privacy.

Anyone who signs up to solve the tough Indian problems is welcomed with open arms

In India, tech companies also need to admit that some of the challenges preventing widespread connectivity will take time to resolve. As long as the supply of electricity in certain regions is patchy and unreliable, internet access will also be held up; similarly, rural villagers who have not been educated to read and write will hardly be able to make full use of the internet, even if it is available. Google, for instance, has struggled in some areas to find enough educated women to give its blue bikes to.

Rajan Anandan appears to recognise the struggles facing India, reeling off a list: education, infrastructure, healthcare, sanitation — and sees that Google can only really help with connectivity. “At Google, we’re not in the business of building roads,” he says. The company can, however, support Indian start-ups who are addressing Indian problems, and Anandan says it has helped developers including ones creating apps in healthcare, education and agriculture.

Sharad Sharma, a former Yahoo senior vice-president and venture capitalist who now runs iSPIRT, a Bangalore-based software trade body, says that if Facebook and Google are prepared to invest their money, rather than coming up with a “cheap hack” such as Free Basics, and if they try to truly understand Indian issues without imposing their own will, they will be accepted. “Anyone who signs up to solve the tough Indian problems is welcomed with open arms,” he says.

In Mumbai Central railway station, Google has just started providing a high-speed wifi connection; it’s the first of a hundred stations that will receive wifi through a Google-RailTel partnership. The project was mentioned in the Indian budget as an example of a public-private partnership that, while three years in the making, is providing the kind of internet service Indians crave.

At 5.30pm, as the station gears up for a sweaty rush hour and people arrive for long-haul trains to Delhi, one family is not here for a train but for the wifi. Crowding around a smartphone, a mother and her three children watch a Bollywood movie streamed on the station wifi, while the father runs errands nearby. The drama unfolds, the dances amaze and the video keeps rolling without buffering for even a second.

Hannah Kuchler is the FT’s San Francisco correspondent

Photographs: Philippe Calia; Nishant Shukla; Manjunath Kiran/AFP/Getty Images