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Facebook Targets Russia With Aim to Be More Than Social Network

facebook button for Johnson's Russia ListDec. 30 (Bloomberg) -- Facebook Inc. is the world's largest social network site, with 500 million-plus members at last count. However, there are plenty of big markets where Mark Zuckerberg's creation isn't dominant.

In Japan, Facebook doesn't rank in the top three, and the site isn't much of a force in Brazil or China, two populous countries where Internet usage is off the charts.

The outlook for Facebook in Russia may be more promising, despite the popularity of homegrown social network sites, Bloomberg Businessweek reports in its Jan. 3 issue. Facebook officially launched its site in April and only ranks No. 5 so far, according to Internet tracker comScore, but its growth has been impressive. From January until August in 2010, its Russian operation has racked up a 376 percent increase in users, to 4.5 million, according to comScore data.

The company cut deals with Russian wireless carriers Beeline and OAO Mobile TeleSystems, so that their subscribers could tap the mobile version of Facebook.

To overcome the language barrier, Facebook allowed users to suggest translations for the name of features not easily understood in Russian such as "poke" (as in trying to get another Facebook user's attention), and then let the site's members vote them up or down.

"Russian is a very complex language, so we allowed the users to translate the interface themselves so that it captures the complex grammar," said Javier Olivan, a London-based Spaniard who is head of international growth at Facebook.

Google's Struggle

Its founder has made no secret of his ambitions to thrive in Russia, a market where other Western players, including Google Inc., have struggled to get their footing. Speaking at an Oct. 17 event at Stanford University in Palo Alto, California, Zuckerberg said that if Facebook succeeded in penetrating the Russian market, it might have a shot at doing the same in China, the country with the largest number of Netizens.

Russians' heavy use of social network sites makes the country an ideal test case. Russians spend 9.8 hours per visitor on a monthly basis on such sites -- more than double the world average, according to comScore.

Why do Russians while away so many hours online? For one thing, there's the climate: Staying indoors and socializing via the Internet is much more attractive when winter lasts a good six months. Then there's the physical isolation, compounded by poor infrastructure, especially in cities like Murmansk, which lies north of the Arctic Circle.

Network of Friends

Most importantly, though, there is a tradition in Russia of relying on informal information networks for simple day-to-day survival.

"In Russia, there is no sense that you can rely on the public or the system, so you've traditionally had to rely on a network of friends," says Esther Dyson, a venture capitalist who has been investing in Russia's technology sector for over a decade. In a country with weak institutions, "it's very natural for people to network for what they want."

Even in these less oppressive, post-Soviet times, relationships are critical to everything from landing a job to wriggling out of a problem with authorities.

It's no coincidence that the Russian love affair with the Internet has blossomed at a time when citizens are once again seeing their political and media freedoms dwindle. "[The Web] has become a place where you have absolute freedom of speech, where you can say whatever you want, good or bad," says Ilya Krasilshchik, editor-in-chief of Afisha, a Russian lifestyle magazine and website.

'Like' Feature

Afisha was one of the first Russian sites to incorporate the Facebook "Like" feature, which allows users to share content with friends on the site. Krasilshchik points out that Russia is different from China, where censorship prevails online. "We have this strange paradox where civil society is hemmed in, but its freedoms are limitless online."

Not surprisingly, then, social networks have multiplied in Russia. Odnoklassniki.ru, a site modeled on Classmates.com with 17 million users, is the preferred destination for older, less tech-savvy users, along with being a popular dating site for Russians of all ages. Then there's Moi Mir, similar to News Corp.'s MySpace, with 20 million members.

The leader of the social networking pack is VKontakte, which is majority owned by Mail.ru Group Ltd., a Russian investment fund specializing in Internet companies that also owns a small stake in Facebook.

VKontakte Inspiration

VKontakte, which has 28 million users, is inspired by Facebook. VKontakte has been dogged by claims that it has allowed the unauthorized posting of pirated music, movies, and other content free on its site. Mail.ru declined to comment on allegations that VKontakte has engaged in such practices, though the company did disclose in a prospectus for a recent initial public offering in London that it is currently defending itself against several lawsuits. As for Facebook, the company "will not host any content that violates our terms of agreement," Olivan said.

One thing Facebook does have over its Russian competitors is cachet. Whereas Odnoklassniki.ru has become the domain of the older generation, and VKontakte the hangout of young middle- and lower-class Russians, Facebook is the network of choice for the urban and the urbane.

Facebook's Russian users are generally of the wealthier, well-traveled, cosmopolitan variety, have foreign friends and tend to live in Moscow and St. Petersburg.

Facebook's status received a boost in September, when the company hosted its first developers' conference in Russia. The event, held in Winzavod, an up-and-coming art complex in Moscow, drew hundreds, including some prominent Russian Internet investors. The bulk of the crowd was made up of software developers hoping to transform their Facebook apps into riches.

Anton Nossik, the Russian Web guru who has a number of successful Web startups and used to run the company that owned the popular blogging platform LiveJournal, notes that in Russia sites such as Facebook and Google attract a particularly cosmopolitan set. Both are "for the global Russian, for the circle of people for whom the world doesn't begin and end with Russia."


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