Facebook CEO Mark Zuckerberg vigorously defended controversial Internet.org project and its 'Free Basics' during his visit to IIT campus in Delhi.
India's telecom regulator said today that service providers cannot charge discriminatory prices for Internet services, a blow to Facebook's global effort to provide low-cost Internet to developing countries.
Facebook's "Free Basics" program provides a pared-down version of Facebook and weather and job listings to some 15 million mobile phone users in 37 countries around the world.
When it debuted in India in April, however, Free Basics immediately ran afoul of Internet activists who said it violated the principle of "net neutrality," which holds that consumers should be able to access the entire Internet unfettered by price or speed.
Today, Telecom Regulatory Authority of India or TRAI agreed, prohibiting data service providers from offering or charging different prices for data - even if it's free. The Free Basics program has run into trouble elsewhere in the world recently - with Egypt banning it and Google clarifying that it pulled out of the application during a testing phase in Zambia.
Facebook's director of global communications, Mike Buckley, could not immediately be reached for comment.
But in an interview before the ruling, Chris Daniels, Facebook's vice president for Internet.org - the umbrella organization of the global effort - said that India's negative reaction has been "unique versus other markets we've seen. We've been welcomed with open arms in many countries."
Mr Zuckerberg launched the program to great fanfare in 2013, partnering with other international tech firms on a mission to connect the 4 billion people in the world without Internet - which he says is a basic human right.
India has 300 million mobile Internet users but still has close to 1 billion people without proper Internet access. But it is second only to the United States in number of Facebook users, with 130 million, with vast expansion potential as Facebook works to increase its user base beyond the developed world.
Yet the Free Basics program was controversial from the start in India, where critics accused Facebook of creating a "walled garden" for poor users that only allowed them access to a portion of the web that Facebook controlled.
Dozens of well-known tech entrepreneurs, university professors and tech industry groups spoke out against it, saying that the curated app, with its handpicked weather, job and other listings, put India's scrappy start-ups and software developers at a disadvantage.
Vijay Shekhar Sharma, the founder and creator of payment application PayTM, applauded the regulator's move.
He had been among the program's fiercest critics, dubbing Free Basics "poor Internet for poor people" and comparing Facebook's actions to that of British colonialists and their East India Company.
"India, Do u buy into this baby internet?" Mr Sharma tweeted in December. "The East India company came with similar 'charity' to Indians a few years back!"
"In a country like India that's just taking off, it's important that there is an equal playground for every app developer," he said in an interview.
In December, India's regulator put out a position paper on differential pricing and asking for public comment on whether such programs were fair.
In response, Facebook launched a public relations blitz, with television and newspaper advertisements, billboards and an opinion piece by Zuckerberg in the Times of India, where he argued against criticism that the social media giant was providing the service simply to expand its user base.
Facebook also engineered a prompt to users that sent "robo" letters of support for Free Basics to India's telecom regulator. The regulator, flooded with form letters, was not amused.
Facebook's behavior may not have helped its cause, some analysts said.
"Facebook went overboard with its propaganda [and] convinced 'the powers that be' that it cannot be trusted with mature stewardship of our information society," said Sunil Abraham, of the Center for Internet and Society in Bangalore.
Yet David Kirkpatrick, the author of "The Facebook Effect" says that Mr Zuckerberg is determined to see the program succeed.
"Facebook is relentless," he said. "Zuckerberg has said from the beginning his goal is to make the world more open and connected. And that's a phrase he continues to repeat 10 years later."
The regulator had asked Facebook, and its local telecom partner, Reliance Communications, to suspend operations during the public comment period. But the social media giant and its partner appeared to flout the suspension order, with the program continuing to be operational on Reliance SIM cards.
A spokesman for Reliance earlier said that the applications were in "testing mode" and it was not commercially promoting the product.
The regulatory body has said today that anybody violating the order in the future will be subject to a fine of about $735 (Rs 50,000) a day. It will return to review the policy in two years to see if it's effective.