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I came across a rather astounding set of numbers yesterday, posted on Shanghaiist.com. As you probably already know, access to Facebook — as well as YouTube (NASDAQ:GOOG) and Twitter – have been blocked in China since July.

The ban came in apparent response to two events that greatly alarmed China’s leaders: the disputed election in Iran, where all three social networking sites provided citizens with a vital tool for coordinating protests and broadcasting information, and the deadly ethnic riots in Xinjiang, in far western China. No official explanation was given, but most people held out hope that the block might be lifted after China’s sensitive 60th Anniversary took place on October 1st. So far, no such luck.

With the largest number of Internet users in the world, China is a critical market for all three companies. They must be feeling the pinch, but I had no idea how hard they are feeling it until I saw the following figures. According to the Global Facebook Monitor report issued by Inside Facebook, in July — the month it was first blocked – Facebook had one million monthly active users in China. The figure dropped to half a million in August, before collapsing to 41,000 in early September and finally, at the start of October, just 14,000 users. Essentially, Facebook’s entire customer base in China has been wiped out in three months.

The remaining hold-outs must be accessing Facebook using a VPN (Virtual Private Network, or encrypted proxy server) like I do. You also need a VPN to read this blog from China, since most blog hosting sites (such as WordPress) are entirely blocked. If I ever go radio silent, you’ll know that China has finally pulled the plug on the VPNs. It could do so (simply by blocking any encrypted messages heading in or out), but has only interfered with them sporadically in the past because businesses — both foreign and Chinese – rely heavily on VPNs to access the Internet securely.

None of this, of course, helps Facebook, YouTube, or Twitter. Some speculate that “security” concerns are only part of the equation, a convenient excuse to favor home-grown social networking sites by blocking out foreign competition. Several of these sites are planning IPOs in the near future, so the “help” comes at a very convenient time. And from the government’s point of view, domestic Chinese sites can be more easily monitored and controlled. In the meantime, Facebook, YouTube, and Twitter are watching their largest potential market slip away, with barely a peep of protest.

Source: Facebook, YouTube and Twitter Facing Uphill Battle in China