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China Looking to Buy a Piece of Facebook

By Wael Nabbout | July 7, 2011 | Section: Cheatsheets |

Business insider recently reported that China has its sights set on acquiring a large chunk of Facebook shares. The article claimed that Citibank is looking to acquire as much as 1.2 billion dollars worth of stock on behalf of two sovereign wealth funds from China and the Middle East. While the article downplayed the concern over whether such an acquisition should worry Facebook’s 700 million users, a number of web analysts doubted such a claim in light of the role social networks played in the ‘Arab Spring’ and China’s hostility towards online privacy.

In the article published on June 30th, Nicolas Carlson gave little importance to concerns that might arise from such a deal. His assumption stemmed from the fact that even a billion dollar stake would be insignificant when compared to Facebook’s expected 100 billion dollar IPO; second, China would be buying non-voting stock; and third, the fact that shareholders cannot access information on users’ activity on the social network. Nicolas also pointed out that sovereign funds were pretty distinct from their governments.

Author and lawyer Gordon G. Chang later dismissed Nicolas’ reasoning as being beside the point. In an article posted on Forbes’ blog, Gordon mocked the claim that the sovereign fund in question could be independent from the government. With the Chinese government’s monopoly over political power, the fund would be “no more independent of the Communist Party than the Beijing municipal government.” He clearly stated his belief that Chinese leaders are looking to control social media as part of their campaign “to dominate the conversation about China—not just inside the country but around the world as well.”

Gordon concluded his article by highlighting the potential impact of such a deal on Facebook. He believes that although allowing China to own a piece of Facebook would grant the latter access to where no foreign internet giant has gone before, it would inevitably lead to demands to censor content, and that such a bad publicity could mean defections from the world most popular social network.

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