What’s in the stars for Facebook? 

Many thought Ajit Mohan was brave when he took the helm at Facebook India in January 2019. On the outside the transition looked natural. In his previous gig as the CEO of Hotstar, he had seen stupendous success. He had launched the video-on-demand service for Star India in 2015 and steered it to great heights. Six months before he quit to join Facebook, Hotstar had racked up 150 million monthly active users. It was time he moved on in search of new shores and new quests. But why Facebook? The trappings that come with the job are not easy to pass on. In prestige, captaining the biggest social media company of our times in its largest market in terms of users, it is right up there.

Facebook was going through perhaps the stormiest phase in its entire history then. It began in March 2018, with the Cambridge Analytica scandal—which involved the data analytics firm harvest-ing personal information of more than 80 million Facebook users. A month later, Mark Zuckerberg, its 35-year-old billionaire founder, was summoned by the U.S. Senate to testify on whether Cambridge Analytica used the data to influence U.S. voters in the presidential election. In September, another data breach occurred; this time the compromised numbered about 50 million, including Indians.

In India, WhatsApp Pay, a payment feature on its cross-platform messaging and Voice over IP service, was stuck over data localisation rules (it has since been granted regulatory approval for a phased roll-out). The company was pulled up over incidents of lynching allegedly incited by fake news on WhatsApp. And while all this was playing out in 2018, there was no one to watch over the India business for about a year. Umang Bedi had left by 2017-end after about 15 months at the helm; he later joined news aggregator Dailyhunt.

After about a year as Facebook India vice president and managing director, Mohan is calm when he says of the then and now: “There is purposefulness and excitement about India.” He says he joined the company in the middle of a big transformation. “I think over the last three years, especially after 2016, it’s very clear that it's not the same company as earlier, especially in its emphasis on privacy... on fundamentally reorienting the company with privacy at the core of it,” he says, echoing what Zuckerberg has iterated on various occasions.

India is an important market for Facebook. Since China, which has the largest number of Internet users in the world, has been elusive for most big western Internet firms, India with a growing digital population presents the next big opportunity. And, worryingly, Facebook's flagship product, the Facebook blue app, is losing popularity among young users, especially in developed countries where it makes most of its money. In India, the potential to grow the user base still remains high as around only 40% of the country use smartphones or have access to the Internet. India also presents a fantastic opportunity for the Menlo Park, Cal-California-based company to experiment with new products and revenue streams, and replicate them elsewhere in the world.

That’s what caught Mohan’s eye. “One of the reasons I made the move [is] ... if I look at Facebook with more than 320 million users, WhatsApp with more than 400 million users in India, and Instagram growing dramatically, the canvas for impact is on a different scale,” says Mohan.

It was as if the stars had aligned for Mohan, who was up for a bigger challenge, and the company, which wanted to navigate its sea of troubles and focus on what mattered most: increase its user base and build new revenue streams. For this, it has got two new bets: social videos and social commerce. As always, this journey, too, is fraught with challenges. The main ones? Competition and regulation.

Let’s talk about Facebook’s plans for the country. One of the big ideas that Facebook is exploring in India is social videos. “There’s been so much movement on video over the last few years. And we are quite keen that we bring to the party things that are unique about Facebook. We are able to move the evolution of video forward ... we are really excited about the movement of video from passive consumption to a form of video that’s a lot more engaging,” Mohan tells Fortune India.

According to Business Insider Intelligence forecasts, social video ad spend is expected to reach $25.6 billion by 2023, up 128% from$11.2 billion in 2018. It says video is only 30% of Facebook’s total ad revenue, but the social giant accounts for the largest share of social video ad spend overall.

Facebook clearly saw synergies between Mohan’s digital media experience and its own ambitions of building a sizeable video streaming business. In September, Facebook announced a partnership with the International Cricket Council (ICC) for exclusive digital content rights for ICC events in the subcontinent until 2023. Facebook will carry on its platform a range of digital content including match recaps, in-play key moments, and other match and feature content. In 2018, the company also bagged rights to live-stream La Liga matches in India. It had even put in a bid to stream Indian Premier League matches but lost out to Star.

Mohan says the focus on video will not just be on entertainment but also on videos which allow people to connect with each other, have“conversations around them, and build communities around it”. “The power of Facebook” is at the heart of the communities that it connects, says Mohan. “A lot of our energy is [spent] now really in charting what social video looks like; how do you bring the power of videos to communities, and the process of forming communities on Facebook,” he explains. It could be through conversations, through interactivity, through making it easy for a whole group of people who are not sitting in the same place to watch something together.“This is now at a very early stage of its evolution.” This focus on social video is to counter the TikTok phenomenon, say experts, who say the short-video sharing platform could turn into a real threat for Facebook in the long run.

Facebook already has Instagram and WhatsApp where its users can share videos, as well as Watch, a video-on-demand service launched more than two years ago. Watch allows creators to upload their own short- and long-form videos, and it also has original programming. So will Facebook be investing in more original content also?

Mohan says the idea is to make the social media platform the preferred choice for partners who want to leverage social video. “A lot of this is sustainable only when our partners derive revenue that makes it sustainable for them,” he says. “It’s about engaging with partners to make sure that they have all the tools available, and there it makes sense to do experiments ... like [what] we are doing with ICC.”

The video experiment can also help Facebook to eventually leverage Oculus, a maker of virtual reality headsets which it bought in2014 for about $2 billion.

The other interesting project is social commerce, which involves the promotion and sales of products and services on social media platforms. The company has bought a minority stake in social commerce website Meesho and has launched Facebook Marketplace in select cities in India.

We needn’t look far to see the potential of social commerce. According to Forrester Research, social commerce in China is expected to reach $684 billion by 2023. The research firm in a report titled Social Commerce Fore-cast, 2018 To 2023 (China) says while Alibaba (Tmall and Taobao) and JD.com dominate online retail in China, the rise of social e-commerce platform Pinduoduo in four years after its launch in 2015 (it became a unicorn in just two years) has enabled new players to get investor backing to sell goods to over 588million online buyers.

The year 2020 is likely to see a lot of investment in social commerce in India, but For-rester Research analyst Satish Meena warns there could be many failures, too. A lot of the merchandise sold via social commerce inChina is unbranded and comes at throwaway prices, courtesy excess manufacturing. “A large chunk of online buyers in India are still buying branded stuff. It will also take some time to offer those [unbranded] products to customers. Logistics will also be an issue ... this audience is beyond tier 3 towns and cities where last-mile delivery is difficult,” he says.

Meena says Facebook has the wherewithal for social commerce. “It is something that can give Facebook a new market. Everything depends on how it does this in India because India is its biggest market. If it’s able to execute this in India on a [great] scale, it can replicate this further,” he says.

There are other compelling reasons for Facebook to focus on social commerce. Piyush Sharma, executive in residence at the Indian School of Business (ISB), says India is a heterogeneous market. The country’s online population is about 176 million English speakers and about 205 million vernacular speakers now. In five years, 90% of new users will be vernacular speakers. In rurban India, TikTok has deep roots already. “Where e-commerce was 10 years ago, is where social commerce is today. Truly, the real big e-commerce equivalent boom will come through social commerce and it will be driven by tier 2, 3, 4 towns and cities where the ByteDances of the world dance large,” says Sharma.

But Facebook’s Mohan exudes confidence. “I think it’s exciting to have different companies explore different models, create disruption, grow dramatically ... I feel comfortable that across our family of apps, we are deeply embedded into India,” he says.h speakers and about 205 million vernacular speakers now. In five years, 90% of new users will be vernacular speakers. In urban India, TikTok has deep roots already. “Where e-commerce was 10 years ago, is where social commerce is today. Truly, the real big e-commerce equivalent boom will come through social commerce and it will be driven b y tier 2, 3, 4 towns and cities where the ByteDances of the world dance large,” says Sharma.

But Facebook’s Mohan exudes confidence. “I think it’s exciting to have different companies explore different models, create disruption grow dramatically ... I feel comfortable that across our family of apps, we are deeply embedded into India,” he says.

Facebook has enough reasons to feel secure. It has about 90million small businesses using its platform around the world. Also, Instagram has introduced various features for small and medium businesses. Add-on features like ‘Shop’ allow businesses to let users buy their products on Instagram. Similarly, Mohan says for a lot of small merchants, WhatsApp is becoming their first presence on the Internet as a business. There are several companies which were born on WhatsApp. For example, Dunzo.

In a future where social commerce is big in India, Facebook is best placed, unlike Amazon or Google, to strike gold because of its social media platforms. “If at some point WhatsApp opens for business, then it can become much bigger and try to replicate what WeChat did in China,” says Meena.

However, issues of privacy, the spread of misinformation on its platforms, and data protection remain. Regarding fake news, Mohan says the social media giant wants to give its users the information to make choices on their own, and that the company is not comfortable making those choices for them. And this has led to third-party fact-checking programmes. “India, by the way, has one of the largest deployments of the programme with eight fact-check-ing organisations in 12 languages,” he adds.

Then there is the revised data privacy Bill. According to Harsh Walia, partner, Khaitan & Co., the Personal Data Protection Bill,2019, designates social media companies of a certain nature as significant data fiduciaries; they have to comply with requirements of providing voluntary verification to its users, which even other significant data fiduciaries are not supposed to undertake. “This could mean for India there may be a different kind of Facebook, and for the rest of the world it may be a different kind of Facebook. These are rather big repercussions for social media intermediaries.”

The Bill also empowers the government to ask companies for non-personal data for better targeting of delivery of services or for formulation of policies. This again will not bode well for companies like Facebook. There have also been calls for a regulatory body for social media platforms. Berges Y. Malu, head of public policy at ShareChat, a Twitter-backed Indian social media platform, says: “The government should ensure higher transparency by foreign platforms which operate in India—both in word and spirit”.

ISB’s Sharma says so far Facebook may not have done “as great a job as Google in terms of its government policy”. Their India appointments have been remotely controlled by the global top order.“Today you have someone who seems to be taking decisions at the India level,” he says—which may help the company realise its full potential in India.

(This story was originally published in the March 2020 issue of the magazine.)