FB Stock: Could This Spell Big Trouble for Facebook Inc?

Facebook StockFacebook Inc (NASDAQ:FB) stock might face some headwinds going forward. A regulator just poured cold water on Mark Zuckerberg’s ambitious plan to connect everybody in the world.

The Telecom Regulatory Authority of India (TRAI) banned “Free Basics,” Facebook’s free-but-restricted Internet service. (Source: “Prohibition of Discriminatory Tariffs for Data Services Regulations,” Telecom Regulatory Authority of India, February 8, 2016.)

To connect everybody in the world, Facebook launched its Free Basics platform. It gives users access to certain apps and web sites without using up their mobile data.

These basic Internet services include news, weather, Wikipedia, and, of course, Facebook. The company is currently calling more developers to build apps for the platform.


FB Stock: Facebook’s Free Basics Banned in India

The platform looks like a great offer to those who want free Internet. But it was met with strong criticism for compromising net neutrality.

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Because certain web sites and apps are offered for free, their content is prioritized. This means that Facebook is putting web sites not included in Free Basics at a disadvantage.

Now, the regulator says you cannot charge consumers different prices for access to different content on the Internet.

Although the ruling was not directly aimed at Facebook, it essentially banned the company’s Free Basics program in the country.

“No service provider shall offer or charge discriminatory tariffs for data services on the basis of content,” said the regulator in the ruling.

As you would expect, Facebook is very disappointed about the TRAI’s decision.

“Our goal with Free Basics is to bring more people online with an open, non-exclusive and free platform,” said a spokesperson for Facebook. “While disappointed with the outcome, we will continue our efforts to eliminate barriers and give the unconnected an easier path to the Internet and the opportunities it brings.” (Source: “India Blocks Zuckerberg’s Free Net App,” BBC, February 8, 2016.)

Facebook investors are always looking at the company’s user growth. By offering services like Free Basics, Facebook hopes to expand its userbase, particularly to the developing world. With Free Basics banned in a country with more than one billion people, Facebook might want to rethink this strategy.