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Why Facebook Data Scandal Might be an Opportunity for Local Social Networks in Hindsight Facebook's growth in user base - an aging one, is also slowly flat-lining. At least, in its two core markets – the US and Canada, which perhaps would trickle down to other major markets, like India.

By Sandeep Soni Edited by Punita Sabharwal

Opinions expressed by Entrepreneur contributors are their own.

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The recent speed bumb of data leaks that Facebook went through, might shake off few more users, particularly the young. However, those few more users are in itself quite a market for young social networks, in India too.

Facebook's performance in the first quarter of 2018 has a caveat – the data leak scandal struck the social network only two weeks prior to the end of first quarter of 2018. Hence, the fallout from Facebook's gaff with British political data mining and analysis firm Cambridge Analytica would be certain in the second quarter of 2018. Further, market research firm eMarketer estimates, Facebook losing 2 million users, under the age of 24, this year, even as Snapchat and Instagram would siphon off most of them. In between, there are users who would be experimenting with new local networks. That's a good enough parallel opportunity for "Made in India' social networks to acquire users.

"There is a huge opportunity in terms of connectivity, as people seek relevant information around areas such as healthcare, education etc., instead of sharing good morning messages and holiday pictures," says Hemant Joshi, Partner, Deloitte India.


Pune-based Pankaj Salunkhe, who launched social networking app Tokbiz, in July 2017, has added eight lakh users so far. For him, acquiring dormant or ex-Facebook users work well. "It is a good upcoming opportunity to acquire customers, who are moving out of Facebook." Regional language app ShareChat's Co-founder Farid Ahsan also hints towards the added channel to acquire more users. "It is great, if those leaving Facebook are joining ShareChat, eventually that helps us grow."

This, however, adds to the underlying long-term problem at Facebook – its users are feeling bored of posting things online. The character of the social media giant is changing from people talking to each other, to a platform for news and updates. Hence, it's now becoming less personal and more public. "The youth is already the post-Facebook generation. They might have an account on it but they have moved to niche social networks, which are more relevant to their interests," says Anurag Gaur, Co-founder and Chief Executive Officer, Mooshak – a non-English community platform. Moreover, it has also been continuously blamed for heightened anxiety and stress levels and distraction at the workplace.

Nonetheless, making Facebook's outgoing users part of a social network's integral customer acquisition strategy may not be a great idea. Eventually, if a network continues to scale up, there will be a stage where it has enough liquidity that users outside the target groups would also join. "While the opportunity is there, making your strategy based on it is not right," says Ahsan.


The value proposition differentiation between Indian social networks and Facebook, however, has to be quite wide – much more than just a regional platform or another photo or video sharing app, to scale up efficiently. Otherwise, going back to Facebook is always an option for users, who are currently spooked by the data leaks. "Is there anything that you can offer, which Facebook can't? Photos, videos, regional content, it has everything. For instance, buying a phone with a local language feature doesn't make sense, when your existing phone can support multiple languages," says Joshi. Tokbiz is trying to tweak its app with added features, such as offline messaging, video previews and image access, without downloading it, unlike WhatsApp. "Soon, we are also adding emojis that smile, laugh, cry instead of just a normal ideogram," adds Salunkhe.

This adds to the relevance brought forth by Mahindra Group's Chairman Anand Mahindra in March this year, through his tweet, in the backdrop of the Facebook firestorm -

"Beginning to wonder if it's time to consider having our own social networking company that is very widely owned & professionally managed & willingly regulated. Any relevant Indian start-ups out there? If any young teams have such plans I'd like to see if I can assist with seed capital." Mahindra, later, tweeted back the overwhelming responses he received.

The understanding from that tweet points towards the opportunity to build a social network on national pride in case the value proposition continues to overlap with what bigger social networks offer. "India has built Indian Space Research Organization to create its own technology instead of using National Aeronautics and Space Administration services. That was also about national pride. Indian social networks can likewise build businesses on other aspects such as security or unique appeal like the Unified Payments Interface, for the interoperability it offers," asserts Joshi.

What lies at the heart of the Facebook mess – data security, remains questionable in other social networks as well. While the permissions that apps seek such as access to contacts, location, picture, videos etc., to mine customer data, they are much beyond that, which is out of user control. Hence, it is more about how ethical the app is, because apps like Facebook track users outside the app as well, which users don't know.

"The permission access gives networks only certain amount of information but what you do with that permission, that is what regulation or self-regulation has to be all about," says Gaur. For instance, GPS is used to track location but if it is used to push ads, based on the location, then that has to be regulated. "It is time to have regulation similar to tobacco industry that government has on the cigarette packet with aggressive campaign or in movies, in the media etc., about the risks associated with it," concludes Joshi.


Users age 24 and younger are estimated to quit Facebook this year for new social platforms.


Expected New users in 2018 (percentage)









Source- eMarketer

(This article was first published in the May issue of Entrepreneur Magazine. To subscribe, click here)

Sandeep Soni

Former Features Editor


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