One of the more controversial zero-rating initiatives includes Facebook’s Free Basics – a suite of Internet applications that are packaged together by Reliance Communications in India and given  free to the telecom operator’s users. While the exact legal status of Free Basics and other similar initiatives still remains murky, with telecom regulator TRAI in the middle of its regulatory process, Facebook has embarked on a massive advertisement campaign in favour of its Free Basics service. In the last few weeks, the Silicon Valley-based company has conducted polls, lobbied with industry executives and published its arguments in the public sphere.

Indian venture capitalist Mahesh Murthy recently wrote a piece, which was republished in The Wire last week, that took a critical look at some of Facebook’s claims regarding Free Basics. In the piece below, we publish Facebook’s replies tothe original article as well as Murthy’s responses. We believe that the debate between them is emblematic of the larger net neutrality concerns that plague India. 

FACEBOOK’S ADVERTISEMENT CLAIM: Any developer can have their content on Free Basics. Nearly 800 developers have signed up their support for Free Basics

MAHESH WRITES (ORIGINAL ARTICLE): Who said they can’t? But the big sites don’t. They don’t want Facebook to own their customers, and they don’t want Facebook to snoop on their customer data, because all traffic goes via Facebook servers. Data is cheap enough in India and eventually everybody will be on the full and open internet, given time. Or our government could offer a neutral and free internet service to its citizens. There are other solutions to getting the poor online. Selling our people to Facebook doesn’t need to be one.

FACEBOOK SAYS: It is false that big sites do not participate in Free Basics. Many large sites participate in Free Basics including India Today, Network 18, Accuweather, BBC, Bing and literally hundreds more around the globe. In addition, we think it is great that small sites and big sites both participate.  The concern of net neutrality activists with our original program was that small sites would be locked out. We listened and responded to that concern, so we opened the platform and we’ve been thrilled that small sites have chosen to be a part of the program.  Regarding your privacy concerns, we do not keep any customer personally identifiable information (PII) past 90 days.

And we only keep it for the first 90 days to ensure we zero rate the appropriate traffic and to improve the user experience. Finally, accelerating internet adoption is good for the whole ecosystem and is what this program does. A lot of the above assertions are covered at the following link for your reference.

MAHESH’S RESPONSE: Only two of India’s top 40 sites, as ranked by Alexa, are in the list of Free Basics sites released by Facebook – and one of those is Facebook itself. The other is Wikipedia. The rest are sites that range from a number 43 at best to a number 1 million plus ranked at the worst.

To make it clearer let’s tell you what the people of India will NOT find on Free Basics: no Google. No YouTube. No Amazon. No Flipkart. No Yahoo. No LinkedIn. No Twitter. No Snapdeal. No HDFC. No ICICI. No PayTM. No eBay. No IRCTC. No NDTV. No Rediff. No Quora. No Quikr. No RedBus. No BSE. No NSE. And the list goes on. It’s clear: the “Basics” of the Indian internet are not on Free “Basics.” Just like Internet dot Org was neither Internet nor Dot Org, Free Basics is neither Free, nor is it the basics.

Now to the point about privacy. What’s interesting is this – that even when the user goes to Bing to search – her bits and bytes go via Facebook servers – so they know what you’re searching for. Look for an article on India Today, and Facebook knows that too. These sites, in effect, have handed over your profile and personally identifiable data to Facebook.

Facebook claims – and we’ll re-visit this in Point 10 – that they are not currently selling ads at this audience. But they clearly reserve the right to do so in the future. They say they are currently keeping your data for just 90 days, but first – there’s no one to audit Facebook, and second even if it is for just 90 minutes – that’s a lot of time for a lot of ads – you’ve handed over your data to the largest reseller of personal profiles in the world.

Basically, the wolf is saying, trust me, I’m guarding the sheep.

FACEBOOK’S ADVERTISEMENT CLAIM: It is not a walled garden. 40% of our users go on to access and pay for the full Internet within 30 days. In the same time period, 8 times more people are paying versus staying on just the free services.

 MAHESH WRITES (ORIGINAL ARTICLE): Which means 60% of their users are stuck in Facebook jail. Why should even one Indian citizen be? The internet should be open for all our people, or the net should be neutral as we say, especially on public property, which the wireless spectrum is.

FACEBOOK SAYS: Here’s the simple math that we’ve released: 40% of people who start their online journey at Free Basics go on to access the full internet within 30 days. Eight times more people have gone on to access the internet as stay on only using Free Basics.  That means that 5% are using only free services. 55% have churned which is a pretty typical number for any new service that people use. So actually, of people who use the service, the vast majority is off to use the entire internet. We’ll always work hard to get the 55% to use to the entire internet, but we’re happy with how this is working so far. For the 5%, we hope that they’re using the tools to access health information, communicate with people, or find a job. We think it is good that they can at least access this information and do it for free.

MAHESH’S RESPONSE: There’s lies, Facebook statements and statistics. There’s no “simple math” in the fancy footwork of words Facebook is using. Let’s simplify all of this to Facebook and Reliance’s own declared data and real numbers. As of October, about 1 million people had logged on to Free Basics.

Of these, about 80% by Facebook’s own admission were already users of the full internet who dropped in to try the offering of free data. They’re not, as Facebook puts it “people who started their online journey on Free Basics”. That leaves around 200,000 people who were newbies who actually came on board. Of these, 80,000 or 40% went on to the full internet, and the rest 60%, that is 120,000, were locked in the Facebook walled garden.

And of the 120,000 who were locked in the walled garden, almost all of them: 110,000 dropped out and never came back again (the 55% of 200,000 who have “churned”) – perhaps disappointed with what they saw there. And 10,000 continue to remain locked in there.

(Again this is my personal read from all the dibs and dabs of data Facebook and Reliance have revealed. They’ve never shared any real numbers – and one has to read deep between the lines to try make out what they’re trying to say – or not say. I could be wrong, and if I am, I hope Facebook can come and correct me with the right data. The data above is my best guess.)  Now here’s the irony. Facebook, by industry estimates, has spent over Rs. 100 crores on this advertising, PR, lobbying, Narendra Modi hugging and diplomacy effort.

If they’d simply put that money sponsoring, say the first 100MB a month at 2G speeds for new users of the full internet, that would have barely cost Rs. 200 a year, per person at current published pre-paid top-up rates of many mobile carriers. In effect, the same spend from Facebook could have given 5 million Indians full internet access for a year. Instead of these 50 lakh new Internet users from India, what it’s gotten them instead is 10,000 people locked in their walled garden and 110,000 people who don’t want to go online again, even to the free Facebook offering. And a net of 80,000 people who went online to pay for full internet access from their own pockets.

If I was the Facebook CFO, I’d be asking some tough questions indeed. Meanwhile, you, dear reader can take a shot and telling us tell us which of these routes actually “brings the benefit of going online” to the poor and the unconnected.

FACEBOOK’S ADVERTISEMENT CLAIM: Free Basics is growing and popular in 36 countries, which have welcomed the program with open arms and seen enormous benefits.

MAHESH WRITES: This is a lie. This scam may have been pushed through in these poor, mostly helpless African nations who have no experience of anything better, like we have, and who have no ‘activists’ like us who tell their governments they’re raising a generation of deprived children with no access to the real internet. Also, tellingly, the more online-progressive countries like Japan, Norway, Finland, Estonia and Netherlands have outright banned programs such as Free Basics. With your help, and 12 lakh emails to TRAI last year, we’d helped to work towards a ban for it in India too – but Facebook has since spent a large amount of cash in ads, lobbying, diplomacy and PR to try to get it unbanned here. They’ve managed to re-open a closed issue, again. With your help, we’d like to re-shut it.  More to the point, this program, call it digital apartheid, if you will, has been roundly condemned by experts ranging from Tim Berners-Lee, the gent who invented the world-wide web, to Ph. D. researchers to civil society officials working in the field, globally.

The fact that Tanzania didn’t know how to say no to Facebook doesn’t mean India has to say yes. In fact, we hope that India saying no to this digital apartheid will inspire the African and other poor nations to kick out this evil program that serves no one but Facebook at their government’s expense.

FACEBOOK SAYS: Your characterisation of these countries is rather insulting. We wouldn’t categorize them all as poor and we wouldn’t categorize any as helpless. People everywhere are interested in the benefits that the internet can bring to their lives. The statistics of people moving off of the service hold up in these countries so nobody is getting stuck – people worldwide are smarter than you’re giving them credit for. The list includes Columbia, Philippines, Thailand, Bolivia, Peru, Mexico, Pakistan, Mongolia, Bangladesh, Panama, Mongolia, Iraq and others. By the way, it seems pretty arrogant to refer to “mostly helpless African nations.” That is just our opinion.

MAHESH’S RESPONSE: By the way, it’s “Colombia” in South America not “Columbia” in the US that you probably mean. That somewhat-telling slip aside, when we refer to ‘poor’ countries, it’s on GDP and other economic norms, not some imaginary “insult” or “arrogance” you seek to pin on us.

The insult and arrogance here really is your hypocrisy, Facebook. In the US, you are strongly on the side of net neutrality – but in the developing and undeveloped world, you speak from the other side of your mouth, blatantly seeking to violate net neutrality and to give our citizens here a second-rate online experience that you wouldn’t dream of offering people in your home country. There are almost 50 million unconnected people in the US. Why don’t you try offering them this shoddy program there, and let’s see how the FCC responds to you?

Also, it’s good to see that you don’t disagree with Tim Berners-Lee and other experts who say your program is terrible.

But we’re the natives, right? How would we know, hmm? You wonderful folks in the developed world have decided what’s best for us, and with your high-decibel ad campaign and the pamper-the-ego-of-their-prime-minister tactics, you’re trying to push your low-quality offerings down our throats.

And now you ask, Mr Zuckerberg, in your piece in The Times Of India: “Who could possibly be against this?” More than a few of us, massa, as it turns out, more than a few of us.

FACEBOOK’S ADVERTISEMENT CLAIM: In a recent representative poll, 86% of Indians supported Free Basics by Facebook and the idea that everyone deserves access to free basic Internet services.

MAHESH WRITES:  Guess what, if you’ve ever clicked “yes” on any misleading poll by Facebook apparently asking you to support “connecting India” or “free internet”, then you too apparently voted for them. They never brought you both sides of the story, to take a fair decision.

FACEBOOK SAYS: This is false.  This was a door to door in person poll of more than 3,000 people in India. Link is here.

By the way, the poll as well asked pointed questions that opponents have used as arguments against Free Basics. We tested a number of arguments:

• When the Internet is restricted, it means India is weaker. To be strong, the Internet should be free and open to everyone. Free Basics is just a scam by Facebook to try to get more people to use their site. The only reason they care about people without Internet is because they want to make more money.
• Free Basics creates a world with two types of Internet: one for rich people and one for poor people. It’s important that everyone has access to the same Internet.
• Free Basics has given Reliance a monopoly by partnering with them and no one else.
• Free Basics does not protect its users, many of whom are new to the Internet and will be exploited by the service.

We wanted to fully understand what a broad range of Indians thought of Free Basics, rather than just speak to supporters or opponents. And we have been incorporating global feedback into the program all along.

MAHESH’S RESPONSE: We can see that your questions in the survey itself were misleading. No one can sensibly answer “yes” to both statements: “the Internet should be open to everyone” and “I support a program like Free Basics that takes people away from the full Internet”.

Just like your survey triumphantly reports the idiocy that a majority of Indians want net neutrality and at the same time want the opposite of net neutrality, that is Free Basics. So pardon us if there’s not much credibility in your survey or how you conducted it.

What adds to the lack of credibility is how you pushed even Americans into voting to show support for Free Basics in India, and how you carefully failed to give Facebook users the other side of the story – all among the 3.2 million votes you speak proudly of.

FACEBOOK’S ADVERTISEMENT CLAIM: In the past several days, 3.2 million people have petitioned the TRAI in support of Free Basics

MAHESH WRITES: Let’s again say it for what it is: 3.2 million people out of Facebook’s base of 130 million people who were repeatedly shown a misleading petition by Facebook on top of their pages clicked yes and submit, without being told both sides of the story, and thinking they were doing something for a noble cause, and not to further Facebook’s business strategy. A large number of them, shocked at realizing what they were conned into doing have since said no.

FACEBOOK SAYS: This is false. Only a small fraction of our 130 million users were notified. We largely provided the notice to people who had previously indicated their support of Free Basics months ago and then notified their friends only if the person showed support once again. And the response rates of support are high compared to average campaigns.  There is no evidence that “a large number” of them feel conned. Note: Claims on Twitter about false sends or notifications are disproved by the code – which we will happily supply to TRAI. Our program is benefiting people and we will continue to advocate for its benefits, much like its critics are using their communication channels to make their opinions known.

MAHESH’S RESPONSE: Thank you for confirming that your Facebook vote-getting effort wasn’t representative, but aimed as you say at only that “small fraction” of your users who had already showed support for Internet.org. In other words, you’d stacked the deck.

So why wouldn’t you say this earlier, and why brandish a number like 3.2 million about that you yourself admit is heavily selection-biased and not representative at all?

FACEBOOK’S ADVERTISEMENT CLAIM: There are no ads in the version of Facebook on Free Basics. Facebook produces no revenue. We are doing this to connect India and the benefits to do so are clear.

MAHESH WRITES:  First the unintentional lie. Facebook DOES produce revenue, about Rs. 12,000 crores worth globally. Then the intentional half-truth: It may not produce revenues from this Free Basics YET because the current version of Facebook on it has no ads YET.

FREE BASICS SAYS: No revenue is given to Facebook from the Facebook app on Free Basics: None. We responded to this in the link above, but here it is cut and paste: “There have never been ads in the version of Facebook in Free Basics. Ever. What if we find out that an ad-based model down the road has better conversion to the full internet and better serves the unconnected? We don’t think that’s likely, but this is why we do not want to say “never.” By the way, some opponents of Free Basics want it to have ads, so we’re a bit wondering how much of this particular criticism is based in anything logical and how much is just wanting to debate for its own sake.

MAHESH’S RESPONSE: Just a roundabout way of saying what they’ve said and we’ve said all along – Facebook doesn’t have ads yet, but reserves the right to bring in ads at any point in time.

Nothing new here.

GENERAL ISSUE #1: Has Facebook started Free Basics for altruistic or corporate reasons?

MAHESH WRITES (ORIGINAL ARTICLE): Let’s add a point here, and actually get to why Facebook is doing this. Forget their lies about “wanting to connect India” – if they really did, they would offer the open and full internet to everybody, free. They can, easily, but they have repeatedly have declined to do so, saying first the poor person has to sign up for Facebook and then a few scraggly sites are also shown to them.

The real reason is something they have never denied: their rivalry with Google and their questionable stock price. We are no apologists for Google, but this might interest you: Both companies have 1.5 billion users, but Google makes Rs. 70,000 crores while Facebook does less than one-fifth as well. In other words, for every new user that comes on the internet, Facebook makes Rs. 8, while Google makes around Rs. 48. Facebook’s stock is valued at a much higher multiple than Google, but people have begun to ask why they deserve this. With no reason to support the stratospheric price, it will fall.

For Facebook to have a chance to keep their stock price high, and to keep Zuckerberg and wife as rich as they are, they need to find new users who sign up for Facebook, but at the same time do not use Google. 

Enter the strategy: A program to offer Facebook but not Google at the mass, poor people level. Who is outside the first 1.5 billion people? Mostly people in India and China. Facebook is banned in China. So who becomes essential to Mark Zuckerberg’s balance sheet? Enter us Indians. What’s a hundred crores of ad spend, against tens of thousands crores of valuation? 

FACEBOOK SAYS: First of all, Free Basics is the best bridge to a full internet we’ve seen and we have proof from many other countries that this is true. Second, the mission of Facebook is to connect the world and it matters to us more than money. This is so true that a Wall Street analyst on an earnings call asked why he should care about internet.org because it’s non revenue producing. Mark Zuckerberg, our CEO, simply suggested that if he felt that way then he should invest in a different company.

There are several, practical reasons we cannot offer full, free internet to everyone and just giving away a full data pack does not work: a) it’s not a sustainable business model for telcos or anyone else over the long term. Telcos invest nearly a half trillion dollars (US) per year infrastructure; b) giving away free megabytes mostly only helps existing internet users, as opposed to the unconnected as existing users are more likely to have access to better connections; c) it also means users on low–bandwidth phones in 2G environments burn through their data very quickly – or have a terrible user experience with data intensive sites; and d) this latter point means that conversion to full paid internet is likely to be poor. We’ve studied this issue in 35 countries.

We’re not perfect, but we’re getting a very good idea about what actually works to connect people around the world; d) Finally, you’re implying that people must sign up to Facebook to use Free Basic Services.  This is false.  They don’t.  They only sign up to Facebook if they choose to use Facebook. Using Free Basics does not force you to use Facebook.

MAHESH’S RESPONSE: Nonsense and still more nonsense. Let’s start very simply. We don’t need a “bridge” to the full internet, when we can have the full internet itself. The “bridge” is a fancy invention by Facebook to refer to a holding area where Facebook holds, numbers and tracks people before they pay up and wander off into the real internet.

Study after study has shown that the poor and the less fortunate in undeveloped nations vastly prefer limited access to the full internet (for example a data limit or a speed limit) rather than full access to a few limited sites – like Facebook Free Basics offers. They want the freedom of choice.

Why hasn’t Facebook chosen the other, proven options to bring people to the internet that do not violate Net Neutrality? For example, in India, Aircel has begun providing full internet access for free at 64 kbps download speed for the first three months. Facebook could sponsor and expand that.

Schemes such as Gigato offer data for free for surfing some sites. The Mozilla Foundation runs two programs for free and neutral Internet access. Facebook could work with them. In Bangladesh, Grameenphone users get free data in exchange for watching an advertisement. In Africa, Orange users get 500 MB of free access on buying a $37 handset.

There are many, many proven and better ways to get the less fortunate on the Internet – rather than have to come in wearing the Facebook Free Basics handcuffs.

And contrary to what Facebook claims, these are ALL sustainable models for telcos. They’re already up and running. More importantly, by offering the full internet to all people, these are the models that are best in line with how the scarce national resource of wireless spectrum should be best put to use.

We believe India’s spectrum should be made available only to folks who offer the full internet to people – and not just a self-serving tiny slice of it.

One more proof of this assertion is in the actual data itself: Facebook itself says that 55% of newbie users who see a glimpse of the Facebook walled garden in Free Basics actually drop out from the service altogether. Shouldn’t that be proof enough that it’s a bad idea and needs to stop, and that our people want and need the full internet?

Now to notice that Facebook completely ducked the valuation and anti-Google nature of Free Basics. Thank you for your very revealing non-rebuttal there, folks. And to your assertion that you don’t make money till people enter the full internet, that’s false too. You will make money the moment ads or sponsored posts are served against this audience – on whichever version of Facebook or Messenger they are on: the Free Basics one or the regular internet one.

And again, if you are really concerned about getting people on to the full internet because that’s where you’ll make your money, we’ve detailed above a few ways to do it. Thing is, you know of all these ways and you yet seek to not do that because you probably really don’t care a fig about bringing people to the full internet – all you want is to keep them away from Google for as long as you can so you can save your stock price. That’s why you’re spending a ridiculous amount of money to defend what is otherwise a completely indefensible position.

Especially when the same amount of money demonstrably can deliver 100 times more numbers of full internet users, if you were to work towards that and not this truncated little sliver called Free Basics.

And to your last point about advertising, we notice the fancy footwork again. What we’re saying is that brands who want to reach out to these Free Basics users cannot find them on the full Internet and hence will need to pay you to reach them, as and when you decide to turn the advertising or promoted post tap on.

GENERAL ISSUE #2: Is Free Basics bad for new, digital entrepreneurs?  

MAHESH WRITES (ORIGINAL ARTICLE): There are many other reasons why Facebook’s Free Basics Digital Apartheid is bad. It’s bad for entrepreneurs – your business can’t be discovered by these new potential users on the Internet till you advertise on Facebook. The same goes for big businesses.

FACEBOOK SAYS: This is not true. No one needs to advertise at all with us to have their application on Free Basics. And there are a lot of small developers seeing success on the Free Basics platform.

GENERAL ISSUE #3: Are India’s net neutrality activists, the Save the Internet movement, speaking on behalf of India’s rural population? Are they against greater Internet access?

MAHESH WRITES (ORIGINAL ARTICLE): We are happy to support any effort that brings the full and unfettered internet to as many Indians as possible, as cheaply as possible.

FACEBOOK SAYS: Then you ought to support Free Basics because it serves as a bridge to the full internet. For example, Socialblood is building the largest network of blood donors, hospitals, and blood banks on the internet. Since joining the Free Basics Platform, Socialblood has seen an 85 percent increase in monthly visitors, a 59 percent increase in requests for blood, and a 65 percent decrease in donor response time. Through Free Basics, Socialblood has connected thousands of patients across the globe to life saving blood products. How is this not a good thing?

MAHESH RESPONDS: Like we’ve said before – why build a tiny bridge to the full internet, when the entire darn thing can be made available to all at lesser cost and with full net neutrality?

And it’s nice to see social programs. Pity they’re on a tiny, small and unconnected part of the online world. We’re certain the entrepreneur would much rather have the full gamut of potential blood donors than what just the Facebook micro-network offers. Even citizens who need and can give blood would also much rather be on the full internet. We wonder about the lives that’ll be lost because either the donors or donees can’t be found on the real Internet in an actual time of need.

It’s not that the full internet is an impossibility to offer and hence government spectrum needs to be used to deliver the Facebook micro-network of sites. It’s quite the opposite. The full internet is very viable to provide, globally, at lesser cost and much larger benefit than the Facebook micro-network.

The shame is that Facebook seems to have no apparent real interest in its supposed mission to make the world more open and connected. If it did, it would absolutely support full access. The Facebook interest – as can be seen from the tremendous spend in media and lobbying on this issue – to create a closed and disconnected Facebook province, separated from the real world of the full Internet.

GENERAL ISSUE #4: The need for a public debate on Free Basics and net neutrality.

FACEBOOK ASKS: Finally: Mahesh – would you agree to a public debate on this topic in front of an audience of developers (large and small), tech students and media? We’re game if you are.

MAHESH RESPONDS: Absolutely. But why just developers and tech students? Let’s get all kinds of students, all kinds of entrepreneurs, lots of media, politicians and even the lay public. We could do it in Hindi too, if you like.

It’s all about keeping it open, right? You know where to reach me. Lord knows you track me enough online!

This article has been edited for clarity.

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