Social media giant, Facebook has been busy in the month of May, announcing within the space of one week, three additions cutting across telecommunications, eCommerce and data collection that could prove pivotal for many businesses in Africa.
In the month which has seen several lockdown orders eased in many African countries, the company kicked off on 13 May with the announcement of 2Africa, a monstrous subsea cable that will stretch to 37,000km (nearly equal to the circumference of the earth) covering 23 countries in Africa and the Middle East.
On May 15, two days after it announced 2Africa, Facebook said it has completed the acquisition of animated-image database firm, Giphy in a deal worth $400 million.
Finally, on May 19, four days after the Giphy deal, the social media giant also announced the release of Facebook Shops, a platform that enables businesses to set up free storefronts on Facebook and Instagram.
While 2Africa is the only project directed on the continent, the Giphy acquisition and Facebook Shops also have ramifications for the eCommerce and social marketing sector in Africa.
2Africa means internet monopoly?
Despite leading the world in fastest mobile uptake with three-quarters of the population having a SIM card as of 2017, according to GSMA report, Africa has been unfortunate in the deployment of broadband infrastructure.
Mobile subscriber penetration is around 44 percent, well below the world average of 66 percent. As of December 2019, internet penetration on the continent was at 39.3 percent less than the world average of 59 percent.
When completed, 2Africa is expected to deliver an expansive internet capacity, redundancy, and reliability across Africa; supplement a rapidly increasing demand for capacity in the Middle East; and support further growth of 4G, 5G, and broadband access for hundreds of millions of people.
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The 2Africa cable by Facebook promises to provide nearly three times the total network capacity of all the subsea cables serving Africa today making it by far the largest network operator in Nigeria and Africa. It also makes Facebook impossible to compete with, hence existing operators would either collaborate or as a last resort merge to survive.
Facebook Shops could eat ecommerce firms’ lunch
Facebook Shops would not be selling products and services directly to users like eCommerce platforms do, but it promises consumers even better shopping experience.
According to the company, Facebook Shops is a mobile-first shopping experience where businesses can easily create an online store on Facebook and Instagram for free. The platform lets sellers choose which of their items they want to feature, merchandise with product collections and tell their brand stories with customisable fonts and colours. Visitors can then browse, save and order products.
Shops comes as small businesses have been pillaged by COVID-19 pandemic with a third of them (31%) saying they have shut down, according to a survey conducted by Facebook and the Small Business Roundtable. An additional 11 percent of the 86,000 business owners and employees that responded said they could fail within the next three months if the pandemic does not end.
But many online businesses have also seen growth during the period. Mark Zuckerberg said Shops will improve on the standard web commerce experience by storing users’ payment credentials in a single place that they can then use on any Facebook or Instagram storefront. There are currently over 160 million small businesses using the company’s apps.
“The Google product will abstract what many African tech firms offer for largely free and Facebook Shop will become a mortal threat to many ecommerce companies,” said Ndubuisi Ekekwe, chairman of Fasmicro Group and a technology expert. “By the time Facebook adds Libra and an evolved payment system, turning Facebook, Messenger and Instagram into a global market platform, African fintechs may struggle. Practically, if you can buy from a Facebook Shop and pay therein, you will not see any incentive of clicking out or launching another app.”
Keeping tabs on third-party apps with Giphy
Facebook’s intention for acquiring Giphy is not immediately clear as GIFs are still nascent and are yet to become advertisers toast. But the fact that they are appearing more frequently in many conversations makes them immensely beneficial to the social media giant.
When people use happy or sad GIFs to express how they feel, that becomes valuable data for a company like Facebook that has over the years learned to almost accurately match products and services to particular users.
As of January, Giphy said it has 200 million daily users. That number is likely to go up with the acquisition. Experts say with Giphy Facebook can focus on creating tailored GIF contents – like Africa GIFs – that will draw in more advertisers.
“Seems like the Giphy deal is strategically great for FB and probably gave Giphy the lifeline it needed,” tweeted a tech expert by the name @Vivekxk.
Facebook, he said, gets valuable intelligence – Giphy is embedded into many top apps including Twitter and the SDK requires disclosing user deviceIDs.
“With this type of tech, Facebook can keep a watchful eye on what’s picking up buzz and gives them ample time to react or understand what’s going on at the ecosystem level,” he said.
