Rumor: China wants to buy a stake in Facebook

Rumor: China wants to buy a stake in Facebook

Summary: A new rumor suggests that China wants to invest as much as $1.2 billion in Facebook.

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China reportedly wants to buy a huge chunk of Facebook. The sources for the rumor vary from people at a fund that buys stock from former Facebook employees to people at a very influential investment bank in Silicon Valley. Unsurprisingly, representatives from Facebook are declining to comment.

China approached one such source to see if he could help put together a stake large enough "to matter." Citibank may currently be trying to acquire as much as $1.2 billion worth of Facebook stock on behalf of two sovereign wealth funds – China's and another from the Middle East, according to Business Insider.

Facebook's approximately 750 million users may be worried if China were to suddenly own a chunk of the social network, especially given that the country's government doesn't believe in privacy online. Thankfully, such a deal would not affect users of the website.

First of all, A $1.2 billion dollar stake in Facebook isn't very large for a company expected to start with a valuation of $100 billion or more when it goes public,. Secondly, China would be buying non-voting stock and would have no say in Facebook's operations, not to mention that Facebook shareholders can't see what users are doing on the site in the first place.

Last but not least, because it's a private company, Facebook would have to approve any sale of its stock to China. On the other hand, Facebook co-founder and CEO Mark Zuckerberg is interested in having Facebook move into China, given that the country has the world's largest Internet population. The Chinese government tends to favor local companies when it comes to regulation, and one way to avoid this problem is to allow the government to own a stake in your venture.

It's important to remember that this is still just a rumor. Three months ago, there was a rumor that Facebook was entering China with help from Baidu which was quickly countered with another one saying that Facebook had not signed a deal in China.

In December 2010, Zuckerberg visited China, which obviously received a lot of media coverage. Two months later, the number of Facebook users in China septupled. This is despite the fact that Facebook is banned in the country by the ruling Communist Party. After events like these, it's not surprising that rumors about Facebook and China keep cropping up.

Topics: China, Social Enterprise

Emil Protalinski

About Emil Protalinski

Emil is a freelance journalist writing for CNET and ZDNet. Over the years,
he has covered the tech industry for multiple publications, including Ars
Technica, Neowin, and TechSpot.

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8 comments
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  • RE: Rumor: China wants to buy a stake in Facebook

    Ok, now that would make me feel a little scared, because how come I invest in a company and can't have any kind of influence on it?

    If the Chinese want something with Facebook, is not only the investment return for sure.
    czorrilla
  • They shouldn't let China near it

    I'm Ok with sovereign funds investing in things, but to insist on investing or else they won't allow facebook to operate in China is anti-competitive.

    That goes for airplanes, telecom, whatever.
    croberts
  • Errrr.....

    If China buys a chunk of Facebook, I'll drop my already limitedly used Facebook account. I can't see Zuckerberg allowing this....
    Gis Bun
  • RE: Rumor: China wants to buy a stake in Facebook

    I have adopted a personal policy that I strive hard to maintain ... I will not buy anything from China that can resonably gotten elsewhere. However, if I were buying something because of a China connection, art, souvenirs of China for example then I would be happy to make an exception, a souvineer of The Great Wall I would expect to be made in China.

    If the item I am after is only available "Made in China" then I do question whether the item is necessary and make a decision based on necessity.

    I DO NOT NEED FACEBOOK and my life would be relatively unchanged in any significant way should I stop using it.

    If Mark Zuckerburg takes money from China then it's goodbye Facebook. There's not much I can do about the state of the world to a large extent but I can decide who I will and won't do business with. My voice is small but it is mine and it will only be used as I direct. I won't do business with China if I can help it and anyone who wonders at my particular stance please google China and human rights.

    China is not the only regime I won't do business with but it is the foremost.

    If you read this, thank you for your attention.

    Tom Attwood - Canadian
    Greeneyes
  • RE: Rumor: China wants to buy a stake in Facebook

    Waves @ Friending Facebook
    Emil Protalinski Are you kidding Zuckerberg would sell out his mother for a for a quarter 0.25 Facecrook is a direct line to big brothers forehead , the morons up load everything they are doing , Whoots wee just came from a party Bob weee let me post some pic's . Humm well group 17 1/2 loves budweiser .Why do you think it went from a nothing to billions in no time. Of course China would want it
    iguanaware
  • RE: Rumor: China wants to buy a stake in Facebook

    World's biggest seller of personal information combined with the world's greatest miner of personal information for the purposes of suppressing it's populace! It's a match made in heaven! What could go wrong?

    I am amused by the image of Chinese intelligence officials trying to gather good intel about other countries from Facebook though. Be about like some aliens trying to decipher human culture from a stack of paparazzi magazines.
    SlithyTove
  • RE: Rumor: China wants to buy a stake in Facebook

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    JOYCEwe
  • Does Mark Zuckerberg...

    ...pay you for PR? Seriously, I used to trust ZD Net as one of the top ranking sources for tech news and all things geek savvy. I've done so for 15 years. When I have a problem or want info, I come here as part of my routine. However, in doing a research paper for forensic computing, I've stumbled on your blogs (which is essentially what they are) twice tonight.

    Your opinions are clearly biased in favor of FaceBook. You present no counter evidence to the contrary and .... what is the point of this? Is FaceBook paying ZD Net for a continuous ad now?

    Report accurately or get a different job please. Your colored views taint the computing industry and tech world.

    Oh and since you asked (because I am writing this for an essay and have it typed anyway--do NOT repost/edit without my permission), this is why people are upset:

    If one traces FaceBooks start and board of directors high enough up the ladder, the realization that many have either very right wing conservative associations, or have served as management in the a US department related to defense in some way, makes the implications become truly frightening. In 1999, the Central Intelligence Agency created a private technology investment and development company called In-Q-Tel with the task of building a bridge between the Agency and a new set of technology innovators (In-Q-Tel, History). In-Q-Tels founder and first chairman, Gilman Louie, also teamed up with Dr. Anita Jones, former director of the Department of Defenses defense research and engineering branch, who is on the board of In-Q-Tel to this day (BusinessWeek, Anita Jones: Executive Profile). Mr. Louie sits has sat on several investment boards along with Accel CEO Jim Breyer. Together they handed 12.7-million dollars to a young Mark Zuckerberg to develop TheFaceBook, which was restricted to college-specific campuses. Mark Zuckerberg was a Harvard drop out at that time. It is important to note that Accel has invested $1.5-billion in China (Rusli, Early Facebook Investor). While this has created the Internet Facebook/CIA conspiracy, it is also important to note that the links between these people and the government cannot be denied, or ignored. It becomes more dubious in nature when one takes into account the rumor circulating in mid-2011 that China desired to purchase a substantial piece of FaceBook (Carlson , China Wants To Buy). At the worst end of the spectrum, the conspiracy theorists are entirely correct and FaceBook is collaborating with the US government to spy on users. At the least end of the fiasco, Jim Breyers corporate activities in China could at the very least be seen as a valid question of ethics based on a conflict of interest and a potential setting for the compromising of users security on a large scale.
    Rilriia