A ‘virtual’ Standstill

A ‘virtual’ Standstill
The Facebook outage has highlighted the vulnerability of digitally-mediated economies, which are precariously dependent on a few servers or platforms.

In one of the largest network failures in recent memory, Facebook Inc. faced a six-hour-long outage on October 4, 2021. Apart from paralysing its core social media platforms, the technical issue affected its family of apps, including WhatsApp, Instagram, and Facebook Messenger. With billions of individuals and businesses deprived of a vital communication lifeline, the social and economic fallout of such disruption in services has triggered concerns across the globe.

Background

From its relatively humble origins at Harvard University, Facebook has emerged as one of the largest communications behemoths in the world, offering a range of digital services like messaging, live streaming, photo and video sharing, virtual reality etc. During the U.S. Presidential elections in 2008, it established itself as a powerful political tool, with thousands of groups and networks running influence campaigns on its platform.

This was followed by the widely-publicised acquisition of Instagram in 2012 and WhatsApp in 2014, which proved to be a watershed moment in the company’s history. While the former was motivated by the need to eliminate competition, the latter served to boost the number of users on the core platform. Since then, the rise of Facebook has been unparalleled, with a large part of the world singularly dependent on its social media products.

Although the company has experienced occasional outages in the past, it increased its investments in infrastructure and data centres to prevent such eventualities. The last major outage was reported in 2019 when a technical error affected its sites for around 24 hours.

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Analysis

As Facebook and its allied apps went dark on October 4, more than 2.75 billion people who depended on their services for communication, business and consumption of news were left in the lurch. The technical failure was attributed to configuration changes on the backbone routers that had coordinated the traffic between data centres. Although services were restored after six hours, the impact was nonetheless devastating.

Given that the platform services of Facebook are often used by small and local entrepreneurs to conduct their businesses online, the disruption in services meant that they were cut off from their customers. While this meant a direct loss of revenue for some, others witnessed a decline in their online engagement and traffic.

This was particularly discernible in countries like the U.S., Australia, UK, France, Germany, Spain, Brazil, Mexico, and Italy, where Facebook and its family of apps had a clear market dominance. In India, the effects were believed to have been relatively less, as the outage had occurred at night, outside traditional business hours. Nevertheless, this incident served as a grim reminder about the vulnerability of digital services to single points of failure.

In addition to this, the outage had significant knock-on effects on other apps and services which were linked to the Facebook accounts of users. IoT devices like smart speakers, streaming devices, thermostats, smoke detectors, security systems etc., were also affected.

Meanwhile, reports indicate that Facebook’s market value dropped by nearly $50bn, as jittery investors lost confidence in the infallibility of the brand. The shareholdings of CEO Mark Zuckerberg alone plummeted by around $7bn. Even the internal tools and communications systems of the company were affected, with employees resorting to other apps like Zoom and LinkedIn to resume their work.

For the tech conglomerate, the timing of this outage has been particularly sensitive, as it faces increasing regulatory scrutiny over its alleged monopoly and anti-competitive behaviour in different parts of the world. Only recently, a former employee of the company had come out publicly against the harms caused by the social media giant, accusing it of prioritising profit over the welfare of users. Against this backdrop, Facebook will have a hard time convincing the public that the centralisation of digital services is in their larger interests, especially when one outage can cripple entire work economies.

Counterpoint

While the recent outage underscores the need for businesses to diversify their digital tools, it is unlikely to lead to a significant decline of frequent Facebook users in the near term. The platform continues to offer a unique set of services, which cannot be easily replaced by other competitors. More importantly, it is deeply integrated into the delivery of services like health care, banking, education, government, and other critical infrastructure.

Assessment

  • The Facebook outage highlights the vulnerabilities of a virtual economy, which is dependent on a relatively small number of servers. This bolsters the regulatory push for a more competitive digital market.
  • For independent entrepreneurs, it is important to reconsider their social media strategies by establishing a presence on rival platforms. Only by remaining agile and diversifying away from dominant platforms can they ensure that their businesses remain resilient.

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