Facebook's economic effect on India and the world

22nd Jan 2015
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The world’s largest social network, Facebook, says it was responsible for creating 4.5 million jobs in 2014. The Facebook commissioned Deloitte report claims Facebook added $227 billion to the world's economy by virtue of being a platform for marketers and app developers.

Facebook Chief Operating Officer Sheryl Sandberg said, “We know Facebook is one of the main drivers of why people buy phones, particularly in the developing world. People will walk into phone stores and say, ‘I want Facebook.’ People actually confuse Facebook and the internet in some places.” After all Sandberg may not be off the mark here, for we have witnessed people buying phones primarily for Whatsapp use, which is owned by Facebook now.

Sandberg added, “Technology creates non-tech jobs as well, and it’s creating them in big numbers.” However, Stanford economist Roger Noll told the WSJ, “The results are meaningless; Facebook is an effect, not a cause of the growth of Internet access and use.” Many economists are skeptical of the way the report is crafted owing to its number rounds.

The report claimed

  • The United States is estimated to capture the largest share of economic impact enabled, $100bn;
  • High rates of engagement enabled $21bn of economic impact in Central and South America;
  • The thriving app economy in EMEA has helped to generate $13bn of economic impact for the region through the platform effects; and
  • In APAC internet uptake and purchases of devices motivated by Facebook have contributed to $13bn of economic impact.


Facebook economic effect_YourStory

The India effect

The report had three broad categories to measure Facebook effect across macro-regions, including India.

The report tallies up Facebook’s impact on India, it is estimated $4 billion and 335,000 jobs have been benefited. With over 112 million users, India is the second largest market for Facebook.

Marketing effects: The economic impact of Facebook for business that use it as a marketing platform to connect with consumers and build brand value. The report considers three sources of effects for this impact: Pages, Targeted advertising and referrals. The report estimated the marketing effect category generating 1, 29,000 jobs with an impact of $1.4 bilion in India’s economy.

Platform effects: The impact in developer app economy derived from third party products and services built on top of Facebook platform. The app economy creates impact through revenues enabled by the Facebook platform, in addition to traffic from social plug-ins. The report indicates 40,000 jobs have been impacted in India with economic value of half a billion dollar.

Connectivity effects: The impact created through the sale of mobile devices and internet connectivity. Facebook has developed partnerships with local operators and optimized its product for lower speed and smaller data packages. Interent.org app allows people to browse health, education and other information services. The report estimates about 165,000 indirect jobs were generated and had an impact of $2.1 billion.

This report comes in at a time when Facebook is trying to break into a new enterprise market; recently the company debuted new iOS and Android apps called, Facebook At Work, a private, in-house social network for companies.

Does Facebook’s proactive move to claim credit for economic impact makes it also officially take the blame for the billions of dollars in lost productivity from office workers who are social- not-working all day?

You can read the 32-page report here.

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