This piece of information comes from two separate sources, which say that the Chinese government is interested in acquiring a stake in Facebook big enough "to matter," which is something to the tune of US$ 1.2 billion. Citibank is supposedly trying to secure this on behalf of two sovereign wealth funds -- one from China and another from the Middle East
Does This Mean China Will Own Facebook?
Now this does not necessarily mean that the Chinese government will own the shares. The fund might represent government, but does not actually constitute the government as an entity in itself. For instance, government might be using funds to sponsor a group of investors or VCs, just in time for Facebook's rumored upcoming IPO.
But why will China want to have a stake in Facebook, when Chinese companies are, themselves, trying to break into international markets? Sina-owned microblogging service Weibo will be releasing International editions soon. And while it is more of a challenge to Twitter, Weibo has additional features that make the service more akin to a enterprise-grade social network than a microblogging site. The answer might lie in control.
China is rumored to be eyeing shares in Facebook enough "to matter" -- that is, to have a say in how Facebook does its business. This might have something to do with China's policy of Internet censorship.
Should We be Worried?
Putting things in perspective, China's reported US$ 1.2 billion stake represents just a small fraction of Facebook's latest valuation of about US$ 100 billion. And being a private company so far, Facebook will have a say in what kind of shareholder status the Chinese hedge funds will acquire, and this is likely to be the non-voting kind -- one that does not come with a seat on the board of directors. But nonetheless, even a small stake would give an investor at least some clout in Facebook's management decisions.
For now, we shouldn't be worried that Facebook might soon be implementing censorship on all its users. However, consider that Mark Zuckerberg sees going into China as an opportunity to become an "agent of change." Let's just hope that whatever change happens will be for the better. This will depend on who has the better ability to influence change.