How Facebook lost Sh110b revenue during downtime

Facebook Inc lost an average of Sh24.5 million during every minute it was affected by a service downtime that hit its key applications on Monday.

This is according to an estimate by Fortune, the US-based business magazine, which estimated that the tech giant lost a total of Sh11 billion in revenues following the six-hour global outage on Facebook, Instagram, WhatsApp, Messenger and Oculus.

The estimates are based on Facebook’s quarter two earnings, which saw revenue of $29.08 billion (about Sh3.2 trillion) over a 91-day period. 

The outage, which began at about 6.42pm East Africa Time on Monday and went on till 1.56am on Tuesday, attracted sarcastic memes on Twitter and Reddit with many users who depend on the platforms for social commerce also losing out on business revenue.

“I was almost closing some deals when I realised the apps were not working. I restarted my phone because I thought it was a data connection glitch. But this went on for many hours. I lost Sh8,000 but I hope to recover today,” Susan Cherop, who relies on Facebook Marketplace, WhatsApp for Business and Instagram to sell shoes in Nairobi, told the Nation. 

The outage was preceded by a whistleblower report by Frances Haugen, a former product manager on the civic misinformation team at Facebook, who appeared on the CBS television programme 60 Minutes on Sunday, revealing that Facebook routinely chose "profit over safety."

Consequently, the company’s stock closed down about 4.9 per cent while also knocking off over Sh700 billion from the net worth of founder and chief executive Mark Zuckerberg.

Mr Zuckerberg was the first to alert users that his company's services were back through his Facebook page, apologising for what is now another long social media downtime. A previous disruption in 2019 left Facebook and its other apps mostly inaccessible across the world for more than 14 hours.

“Sorry for the disruption today. I know how much you rely on our services to stay connected with the people you care about,” he wrote.

What concerns many data security experts around the world was the fear that private user data was compromised during the outage, given that the three platforms are used by almost half of the world population.

“Of great interest would be to know the cause of the outage.  I hope it wasn't as a result of a security breach,” said Ronald Ojino of the Kenya ICT Action Network (Kictanet).

But Facebook said in a Tuesday statement that it has no evidence that user data was compromised during service restoration, and confirmed that the cause of the outage was a configuration change to the backbone routers that coordinate network traffic between the company’s data centres.

“With our servers unable to communicate properly, the problems cascaded, causing outages across our systems. No user data was compromised as a result of this incident,” the company said.

A Facebook spokesperson told the Nation that the underlying cause of the outage also impacted many of the company’s internal systems, making it harder to diagnose and resolve the issue.

Earlier, multiple security experts said a Domain Name System (DNS) problem was the cause of the outage. The DNS translates website names into IP (Internet Protocol) addresses that can be read by a computer. It's often called the "phonebook of the internet."

Absa Bank Kenya, which launched WhatsApp banking in the country last August, had to deal with long hours of transaction outage despite confidence that the new service was cyber secure.

While the company’s head of digital channels Andrew Mwithiga told the Nation that sending and receiving cash via WhatsApp was secured under double encryption and internal cyber security measures, an outage from the parent company means an outage across all its products since all of them are run from a centralised point.

This has further revived the debate on decentralised internet, with proponents of blockchain technology calling for investments towards distributed internet networks where a downtime in one service does not affect the uptime of all services on the ‘chain.’

Twitter chief executive Jack Dorsey revealed last January that his company is funding an initiative around an open decentralised standard for social media dubbed Blue Sky, a transparent public conversation layer of the internet.

Experts have also argued that decentralised web, or DWeb, could be a chance to take control of user data back from tech behemoths, which for a long time have used private data to make more profits without user consent.

During the Decentralised Web Summit in August, and hosted by the Internet Archive, DWeb promoters said the need for a new, better web where the entire planet’s population can communicate without having to “rely on big companies that amass our data for profit and make it easier for governments to conduct surveillance” had become inevitable.

Proponents of this style of internet use already have projects and apps that are beginning to function, targeting to ensure Cambridge Analytica-style scandals don’t happen again.