Just over a week ago, the government approved Citizens Protection (Against Online Harassment) Rules 2020, which created much controversy in the tech community and civil society.

Read: Govt okays rules to regulate social media

Many believe that imposing requirements, such as establishing physical offices in Pakistan or hosting in-country servers, on global social media companies is a move in the wrong direction.

Provisions to limit what the users say and exposing that data to the government bring up many civil liberty concerns. But beyond that, how is the move going to make an impact on the world of business? Although that depends on the final shape of the rules, for now it has created a bunch of potential winners and losers.

Take the numerous digital agencies, for example, that have clients around the world and offer services like web development, content writing etc. “Most of our business comes through running advertisement campaigns like adword, pay-per-click. And if access to the services of Google or other such players is stopped, it could incur as much as $10,000-15,000 a day in lost revenues for us,” says Muhammad Hamza, who works at one such Karachi-based company.

And it’s just not the agencies that are set to lose from a possible blockade of social media services. If anything, smaller startups are even vulnerable as they rely heavily on these platforms to build a brand and acquire customers.

Many startups heavily depend on Facebook and Instagram for low-cost marketing, leads and sales

“Most of our buyers actually come from Facebook. It was this traction that validated us in front of the business-to-business clientele and helped seal partnerships with industry giants like Amreli Steels,” says Talha Lukman of TameerGhar, a marketplace for home-improvement and construction material.

In fact, many startups — especially within the e-commerce space — heavily depend on Facebook and Instagram for not only low-cost marketing but also leads and sales. Even for customer service, Messenger (especially with a chatbot integrated) is a convenient way to offer agile user support.

How much difference in the cost can it make compared to the traditional customer acquisition avenues? “For us, it gets a bit difficult to trace the exact source of lead generation. Given the value of goods we sell, customers usually go through a number of channels before closing the transaction — call, visiting the office etc — but based on my observation, Facebook is usually the most common route to attract a buyer,” Mr Lukman says.

Where a campaign on Facebook can generate a lead for as low as Rs15, depending on the type of business while exposing to a much bigger audience, the alternative channels are neither as affordable nor targeted. They don’t have anywhere close to the same level of potential market.

But one company’s poison is another company’s drug. While many entrepreneurs are worried about the potential shutdown of tech giants, there are some who are celebrating the latest move. TelloTalk, a home-grown instant messaging app that raised some $1.6 million a few months ago, is excited.

“We saw national security concern years ago and went for the local route from the beginning and hosted our servers lacally,” says TelloTalk COO Adnan Lotia.

Bringing the servers to Pakistan will obviously come at an additional price, be it in the form of setting up own infrastructure or hiring local third-part vendors. But is our market lucrative enough for them to bear it? And how much will that cost look like anyway? When tried to reach Facebook and Twitter, both passed on the same copy-pasted response from the AIC letter. But according to the head of a major cloud hosting service here, it should be somewhere in the range of $150,000-200,000 a month per company.

“For the concerned companies, this amount is peanuts so cost considerations wouldn’t really be on top of their minds,” he says. “Some like YouTube and Netflix are already hosting smaller content servers in the country, partnering with local vendors and can do at a larger level too.”

That raises the question whether the home-based hosters even have the capacity to entertain the magnitude of Pakistani data generated on platforms like Facebook, YouTube etc, especially considering the timeline? “Honestly, no. Not right now but it will develop and operational challenges will smooth out over a year or so after the implementation,” the executive believes.

Most importantly, if they do make the move, is there any regulation in place? After all, even our data policy has been in draft stages for almost two years now. “That draft itself is copied from Malaysia’s without much regard to the framework behind, but it’s a chicken-and-egg problem: legislation won’t develop until there is usage which, in turn, hinders due to the former,” he continues.

In any case, the proposed policy has brought in a wave of cheer among the local cloud industry, which naturally has been unable to match the low-cost services offered by the likes of Amazon, and they feel some level of data localisation is a welcome move.

Published in Dawn, The Business and Finance Weekly, February 24th, 2020