Stunning Dominance Of Global Undersea Cables Lifts Facebook

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The future of the internet is not really in the cloud. It is in vast networks of undersea cables snaking around the bottom of the Atlantic and Pacific oceans. And one big tech company benefits most.

Facebook (FB) is working with Google on a cable system linking Japan and Southeast Asian countries. Another project with China Mobile will connect 26 countries to Africa. And an Amazon.com joint venture runs from California to the Philippines.

Facebook executives want to control the plumbing.

It makes sense. Undersea cables transport 95% of all of the voice and data traffic crossing international boundaries. We think of the internet as airborne, shifting about in WiFi packets that we can’t see or touch. It is not that. Undersea cables reached 750,000 miles in 2020. They are the backbone of the modern internet.

Some $10 trillion in financial transactions are sent over this system every day, according to a report at Defense News. And the Guardian noted in 2013 that GCHQ, the British spy agency had secretly tapped 200 cables to listen in on 600 million telephone conversations daily.

While the news media is worrying about advertising, Facebook is building an undersea cable empire.

This is not a bad thing for investors. It is the opposite.

Facebook wants to control internet infrastructure so it can expand rapidly all over the globe without relying on other companies. The social media company currently has 3.1 billion active accounts across its Facebook, WhatsApp and Instagram properties. For many of these members, Facebook is the internet. The goal is unfettered access to all 8 billion people on the planet.

Owning the infrastructure is a big competitive advantage.

The project with Amazon.com could start commercial operation as early at 2022.

Facebook is a company the media loves to hate. Investors should see the business for what it is: A dominant tech platform with strong competitive advantages that mints free cash flow.

At $366.56 shares look as though they are getting ready to move to substantial new highs.