Facebook paid WhatsApp a ridiculous $19 billion, presumably for the messaging service's impressive growth opportunities in emerging markets. But perhaps what attracted Facebook and other tech startups to poorer countries is what they don't have: a strong demand for privacy, at least compared with the West.
In Silicon Valley, data, not profit or sales, determine a tech company's worth. The reason data are so precious at companies like Facebook is the prospect of crafting ads, goods and services specifically designed for individual tastes.
"This is the Holy Grail," a top executive at a major retailer recently told me. "There are companies with multibillion-dollar valuations sitting in Silicon Valley, and the only reason that they have a valuation at all is because they have the ability to know your customer and socialize."
At least that's the theory. In truth, personal data is a touchy subject in the United States and Europe (thanks Edward Snowden, the National Security Agency, and Target's credit card snafu). Gathering data is immensely valuable, but violating a user's sense of privacy can scare them away for good.
But what about Web users not steeped in liberal Western values - those who live in totalitarian countries like Russia, China, or Egypt where privacy is more theory than expectation?
Whenever Facebook tweaks its privacy settings in the United States, the company faces a roar of criticism from customers and privacy groups. That might not be the case in a surveillance state like Egypt, where privacy is the exception, not the rule. With the government wiretapping phones, a social network selling personal information to a third-party marketer seems trite.
With high birth rates and young populations, developing countries are the next frontier for many tech companies. Pew Research recently surveyed residents of emerging and developing economies and found that at least 20 percent used the Internet daily in 15 of the 24 countries studied. In 21 of the nations, a majority of Internet users also use social networking sites like Facebook and Twitter.
"While the Internet still has a limited reach in the emerging and developing world, once people do gain access to the Internet, they quickly begin to integrate it into their lives," the report said.
One company expanding into the Middle East and North Africa is Telly, a 2-year-old San Francisco startup that's billing itself as the "Netflix for emerging markets." The company recently inked a licensing deal with Sony Pictures Television and Miramax to stream movies, including "Kill Bill" and "The Social Network," in countries like Saudi Arabia.
While Netflix's international ambitions so far center on Europe, the emerging world is ripe for opportunity, Telly co-founder and CEO Mo Al Adham told me.
"The mobile broadband infrastructure has already been built," Al Adham said. "Most of the users have access to these networks that are as fast if not faster than (those in) the United States. There's also lots of disposable income."
The life of Telly's business is data. Al Adham said Telly's strong social network infrastructure will allow users to tap their friends and families for recommendations on movies and TV shows. Streaming services like Telly, or its rival Netflix, need to tap their vast customer databases to market the right content to the right person. But like any large pools of data, security and privacy risks loom.
Research firm IDC estimates that emerging markets will constitute 62 percent of the world's data by 2020. Privacy International in London warns that the emerging and developing world is even more vulnerable to hacks and intrusion than developed countries.
"Previously unimagined amounts and types of data are being generated on banking, mapping, voting, browsing, reporting on health status, claiming benefits, and reporting crimes," the group said in its annual report on privacy. "However, the very thing that makes the data generated or collected by mobile phones valuable is what makes these programs risky for individual privacy. These are some of the most intimate details of an individual's life: financial records, political affiliation, sexual orientation, and familial records."
Privacy International, however, is a Western organization that's sounding this alarm. What's missing in the group's report - or anyone's report for that matter - is what people in these countries feel about privacy.
And for growth-hungry companies like Facebook, ignorance is bliss.
©2014 the San Francisco Chronicle