Facebook announces mobile payment initiative

By Reuters | Updated: 5 June 2012 18:26 IST

Highlights

Facebook said it could collaborate with mobile operators on payments, so as to gain part of the revenue and influence they've lost to Apple and Google in recent years.

Facebook said it could team up with mobile operators on payments, in an offer that would give them back part of the revenue and influence they have lost in recent years to Apple and Google.

Speaking for the first time at Mobile World Congress, the industry's biggest gathering, Facebook said operators could help it make money from its hundreds of millions of mobile users buying games or music on the social network.

Mobile operators have been increasingly sidelined by internet companies, which often appeal directly to consumers, hog network capacity with bandwidth-hungry services like YouTube, and compete with the telcos' own products.

"Facebook and mobile were made for each other," chief technology officer Bret Taylor said on Monday, echoing then-Google chief executive Eric Schmidt's first overtures to the industry at the Barcelona event two years ago.

Facebook said earlier this month in its filing for an initial public offering more than half its 845 million active users accessed its site from a mobile device.

It has yet to figure out how to make money from mobile -- the vast majority of its $3.7 billion revenue last year came from ads delivered to desktop users.

That mobile is central to Facebook's future success is clear, but whether it will prove a valuable partner or a value-destroying competitor to mobile operators is less so.

Facebook has a popular messaging service that allows users to have group chats and exchange photos and video in real time for free, which is drawing users away from SMS text services offered by telcos.

Andrew Collinson, research director at British telecoms consultancy STL Partners, said operators should be wary of betting their future on Facebook.

"Short term, Facebook is a good ally for the telcos. The danger is that, I think, it will eventually have to move into communications to justify its valuation," he said.

Taylor said operators could play a vital role in billing for Facebook's services, potentially putting the 30 percent tolls that Apple and Google collect in their app stores in the hands of the operators instead.

The billing alliance includes eight major carriers such as Spanish group Telefonica, U.S. operator AT&T and Japanese company Softbank.

Operators could also help Facebook make money from users of more basic phones in emerging economies such as India and Nigeria, many of whom do not have access to app stores or own credit cards to make online purchases.

Taylor said Facebook would lend its weight to a push for better web standards that enable more apps to be delivered via a simple internet browser, instead of going through Apple and Google's stores.

Copyright Thomson Reuters 2012

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