Facebook is going through a rough patch.
Hours after the social network giant’s plans for a first office in China were revealed, authorities cancelled its business registration – strangling once again its hopes for making inroads into a vast, as-yet untapped market.
Then Facebook shares fell as much as 23% overnight in pre-market trading after it missed forecasts on top line and user growth.
Yesterday it was revealed that Facebook had initiated a startup office in the Euro America Centre in Hangzhou’s High-tech Development Zone after last week obtaining government approval. The unpublicized filing to China’s National Enterprise Credit Information Publicity System had a registered capital of US$30 million under Facebook Hong Kong.
A Facebook spokesman confirmed the company’s interest in setting up an innovation hub in Zhejiang to support Chinese developers, innovators, and start-ups.
Share prices soared in three Chinese listed companies associated with Facebook – BlueFocus Communication Group, Beijing Meteno Communication Industrial Technology and Sichuan Xun You Network.
Then came the news that the company’s registration has been removed from the Chinese government database, New York Times reported, citing an unnamed source familiar with the matter.
Jiemian.com, operated by Shanghai Press Group, which is a state-owned media outlet, also withdrew an exclusive report about its visit to Facebook’s new office in Hangzhou. The report remained on the Internet as it was republished by other media.
The sudden changes raised concerns that Facebook was caught in the middle of the Sino-American trade war.
One explanation, reported by New York Times, was that the reversal came after a disagreement between Zhejiang government officials and the national internet regulator, the Cyberspace Administration of China, which was angry that it had not been consulted more closely.
Even before recent trade tariff disputes, it was almost impossible for Facebook, search engine giant Alphabet Inc’s Google and international news media outlets to engage in uncensored business in China.
Facebook was officially banned in China after the 2009 Urumqi riots, in a move put down to official concern that social media networks could be used to channel anti-government sentiment.
In July 2014, a media report claimed that Facebook had signed an agreement with HKI China Land to rent an 800-square-meter office at Fortune Plaza in Beijing’s Central Business District. Both HKI China and Facebook declined to comment on the report, and the office never opened. Until this week’s news there were no further developments connected to Facebook operations in China.
Facebook has long campaigned for the right to do business in China, so far without success. Founder and CEO Mark Zuckerberg has visited China on several occasions, once to deliver a speech in mandarin to university students in Beijing.
Asia Times requested a response from Facebook on its China plans, but as of publication, no reply has been forthcoming.