To attract new users, Facebook made deals with cellular carriers in countries including Pakistan, Indonesia and the Philippines to let low-income people use a limited version of Facebook and browse some other websites without data charges. Many of the users have inexpensive cellphone plans that cost just a few dollars a month, often prepaid, for phone service and a small amount of internet data.
Because of software problems at Facebook, which it has known about and failed to correct for months, people using the apps in free mode are getting unexpectedly charged by local cellular carriers for using data. In many cases they only discover this when their prepaid plans are drained of funds.
In internal documents, employees of Facebook parent Meta Platforms Inc. acknowledge this is a problem. Charging people for services Facebook says are free “breaches our transparency principle,” an employee wrote in an October memo.
In the year ended July 2021, charges made by the cellular carriers to users of Facebook’s free-data products grew to an estimated total of $7.8 million a month, when purchasing power adjustments were made, from about $1.3 million a year earlier, according to a Facebook document.
The documents reviewed by The Wall Street Journal were written in the fall of 2021 and are not part of the information made public by whistleblower Frances Haugen, a former Facebook product manager.
Facebook calls the problem “leakage,” since paid services are leaking into the free apps and services. It defines leakage in internal documents as, “When users are in Free Mode and believe that the data they are using is being covered by their carrier networks, even though these users are actually paying for the data themselves.”
A Meta spokesman said Facebook has received reports from users about data leakage and has investigated them. “We’ve continued work trying to resolve the issue we’ve identified.” He said the company has mitigated most of the problem and that work continues. The spokesman said new versions of free mode are labeled “text only” and don’t prominently display the words “Free mode,” although previous versions still in use continue to do so. He said the company is working on updates.
The spokesman said free-mode users are notified when they sign up that videos aren’t free. They are supposed to get a notification that they will be charged if they click on a video, but it doesn’t always work. He said Facebook is working to fix that.
The spokesman said the estimate of the additional monthly data charges isn’t based on billing information from carriers. He said without the purchasing-power adjustment the estimated overcharges total a little over $3 million a month.
One document, in which employees ask management for additional resources to tackle the problem, notes that the issue is “Easy to dismiss” because Facebook’s partners—the cellular companies—aren’t being hurt. “In fact,” the document says, “it’s benefiting carriers by giving them additional $$$.”
The unexpected charges are one of several concerns employees have about Facebook’s efforts to bring people online in places with limited economic and technical resources, according to the documents. The program, called Facebook Connectivity, is one of the company’s flagship efforts to deliver continued growth.
Facebook’s user growth has stalled in prosperous countries, and almost all of its new users in recent years have come from the developing world. Such countries represent the company’s biggest growth opportunity—poor but populous countries such as Indonesia, Bangladesh, the Philippines, Brazil and much of sub-Saharan Africa.
To gain new users, Facebook has invested in programs that get people online by building new Wi-Fi services, extending internet cables to new places and making deals with cellular carriers to let people use a low-bandwidth version of Facebook and some other websites on inexpensive smartphones without being charged for cellular data. (Users aren’t charged for data if they are connected to a Wi-Fi network.)
The free cellphone-data program would help Facebook gain a projected 10.6 million new monthly users world-wide in the second half of 2021 according to an August forecast, internal Facebook documents say.
In Asia, Facebook’s top markets have a population of one billion, “and 50% of this population is still unconnected,” an executive wrote in a May document that the Journal reviewed while reporting its Facebook Files series last year. “We have only scratched the surface” of potential customers, he said.
In the 12 to 18 months following May 2021, Facebook’s goal is to increase the number of people in Asia who get online monthly through its initiatives to 10 times the current 1.65 million, the documents say.
Another document says one Facebook goal is to develop a “proactive, positive narrative” for the company and improve its “reputation among key audiences.”
The free services launched in tandem with cellular operators are attractive to users such as Zafar Iqbal, a 35-year-old high-school teacher in Muzaffarabad, a city in POK region. Cellular data is expensive relative to wages in Pakistan, and Mr. Iqbal said the free offering lets him communicate without having to pay.
Early last fall, Mr. Iqbal said, a friend pointed out that his prepaid data was being depleted after using the free app. Mr. Iqbal said he started keeping track of his data usage. He said he pays between 500 and 600 rupees monthly for phone data—a little over three dollars. He found that over four weeks, about 100 rupees worth of data seemed to be used up while he was using the Facebook app in free mode.
“Where I’m living, in an underdeveloped country, this is very costly,” Mr. Iqbal said. His job pays him about $175 a month, he said, so the charges are significant.
Facebook documents estimate that in Pakistan, users of Mr. Iqbal’s cellular carrier, Telenor Pakistan, are charged for $14,736.96 worth of data each day when Facebook is in free mode. Telenor didn’t respond to a request for comment.
In total, users of all carriers in Pakistan are being charged an estimated $1.9 million each month for data that is supposed to be free, more than any other country, the Facebook documents say. The documents say the problem is occurring in some two dozen other countries, with the Philippines and Indonesia the two with the largest estimated charges after Pakistan.
The documents blame technical problems. Videos, which are the major drains on data, aren’t supposed to appear in free mode. But the documents say about 83% of the estimated excess charges come from videos that show up anyway because of glitches in the Facebook software that is meant to strip them out, or notify users of charges if they watch videos that do appear. The documents say the problem has grown substantially in recent months.
The documents also show that as part of the negotiations with mobile carriers, the social-media giant lets phone customers buy data plans via the apps. That is easier than having customers go through the cell company’s own website or retail locations, and gives people the opportunity to purchase data while they are looking at Facebook, and thereby get access to more Facebook content. The documents call it a way to bring the cellular companies on board with the program and allow them “to monetize their customers” via Facebook’s free apps.
Facebook is also helping companies move customers away from prepaid services to Western-style monthly plans by offering them through the apps. In these plans, which Facebook and the phone companies call “loans,” users are billed after they consume the data, and companies consider this a way to increase usage.
In Nigeria, one internal document says, Facebook is helping carrier MTN NG by having its app “show loans to as many people as possible by increasing loan eligibility parameters.” As a result, Facebook’s free-to-use app in Nigeria helps get more people to also pay for cellular data, according to what the document calls an “upsell analysis.”
The practice of pushing the “loan” data plans through an app developed to provide free internet service comes with hazards, said Brian Boland, a former Facebook executive who headed programs in developing countries before leaving the company in November 2020.
“The whole point of trying to provide these services is to provide them to people without a lot of means,” he said. “The idea of tantalizing people with something that would put them in debt is something that would have made me really uncomfortable.”
Facebook’s programs to connect the world’s poor to the internet have been criticized by academics, open-internet advocates and governments. In some cases the criticism has been that Facebook favors its own services over other websites. Facebook over the past decade has responded by making its free services offer broader access to the internet.
In India, the government banned one of the programs in 2016, saying it violated the principles of net neutrality, or the notion that all traffic on the internet should be treated equally, with no preferences given to individual services, the country’s telecommunications regulator said.
Meta Chief Executive Mark Zuckerberg defended the project in 2015, writing in Indian newspapers that “If you can’t afford to pay for connectivity, it is always better to have some access and voice than none at all.”
In some countries, including Peru and the Philippines, Facebook offers a free-data program called Discover. Facebook says publicly that Discover gives people access to any website, although it can’t be used to consume data-intensive content such as video or audio.
Internal documents the Journal reviewed cite a University of California, Irvine study that found that while Facebook content is easily available on Discover, content from other websites is not. The documents also reference an internal Facebook audit of the program that found Discover “is not functioning consistent with our commitments” to treat all websites equally and allow browsing of text from any website.
Write to Justin Scheck at justin.scheck@wsj.com, Tom McGinty at tom.mcginty@wsj.com and Newley Purnell at newley.purnell@wsj.com
