Following in the footsteps of Google when it invested in and completed the “Unity” cable project between the United States and Japan two years ago, Facebook has decided to participate in submarine cabling by investing in a project that will directly connect Malaysia, South Korea, Japan, and several other Asian countries when it is completed in October 2014.
The project is titled the “Asia Pacific Gateway,” and it is being funded by a consortium of companies that include Malaysia’s service provider Time dotCom. The Malaysian Stock Exchange has received documents indicating Facebook’s participation in the project. In total, the cabling is expected to reach 10,000 km in length, connecting more integrally countries and cities of importance to Facebook’s growth including India, Indonesia, Malaysia, the Philippines, Hong Kong and Singapore. The cable is expected to allow for transfer speeds as high as 3.4 Tbps between Malaysia and Japan.
Facebook expects Asia to be an important market—and rightfully so—though the company is of course still noticeably absent in China. Facebook says it does not expect to build data centers in Asia, so this project is of great significance to them in terms of market penetration and access. But why would they try to do it in this way?
I would say that Facebook is making its own attempts to encircle China as best it can. Given the fact that Google ran into political trouble just as it finished its own cabling in 2010, famously fighting with the Chinese government over censorship and eventually leaving the country entirely, one can imagine that Facebook’s strategy will be to get as close to China as possible without actually entering. In this way, they will be able to compete with Chinese social networks by making sure that they do not get much of a chance to expand beyond China’s borders, while still increasing market share in the growing telecom markets of Southeast Asia.
Until the country opens up, all of this will continue to be speculation, but it at least appears that Facebook is making its move. After the IPO in May, this will be one of the safest ways for them to guarantee more expansion and advertising revenue to shareholders without taking a risky direct move into China, where business success has never been very transparent.