“Destructive” Facebook’s outage disaster makes case for breakup, say critics

By Robert Scammell

As Facebook engineers scrambled to get its services back online on Monday following a mega outage, its lawyers were asking a judge to dismiss a revised US antitrust case seeking to break up the same family of apps that billions were unable to access.

For nearly six hours some 3.5 billion people could not communicate using Facebook and its family of apps, which include WhatsApp, Instagram and Messenger.

The downtime, believed to be the longest in Facebook’s history, underscored how vital the company has become for both businesses and consumers.

For Facebook’s critics, the outage provided more ammunition for why the social media giant should be broken up.

“We need alternatives and choices in the tech market, and must not rely on a few big players, whoever they are, that’s the aim of [the] DMA,” said EU competition commissioner Margrethe Vestager via Twitter.

Facebook acquired Instagram in 2012 for $1bn and WhatsApp for $19bn in 2014. Those acquisitions, which have proven extremely successful for Facebook, are currently the subject of a Federal Trade Commission (FTC) antitrust case that accuses the tech giant of illegal monopolisation.

In June, the District Court for the District of Columbia found the FTC’s argument to be “legally insufficient” and dismissed the suit.

Two months later the FTC refiled its case, claiming to have “direct evidence” that Facebook can use its market power to “control prices or exclude competition” and “significantly reduce the quality” of its services without suffering a significant drop in users.

While Facebook critics are emboldened by the outage, its market dominance means it will unlikely see a significant fall in users over the downtime – despite a clear reduction in quality for users.

“We might wonder whether such an incident would have happened if there was more competition in the social media market and other companies were able to innovate and to offer the best services to consumers,” said Laura Petrone, principal analyst in the thematic team at GlobalData. “Since innovation is a way to improve a company’s market position against its competitors, if the probability of entry by rivals reduces, innovation to protect market position is less likely.”

The company apologised for the outage, blaming it on “configuration changes” that inadvertently took its entire infrastructure offline. The update meant Facebook’s DNS and BGP routing information that directed traffic to its servers suddenly disappeared.

Because Facebook runs its own centralised infrastructure, the outage meant its employees were unable to communicate using its enterprise software Workplace or even access buildings because key cards stopped working.

The company’s Oculus virtual reality headsets were also unavailable, due to a controversial decision announced last year that requires users to log into the virtual world using Facebook.

WhatsApp is the most used messaging app in the world, while Facebook is used by more than 200 million businesses to reach customers.

“The incident raises the question of how sustainable it is that companies like Facebook can amass all this power and at the same time be so vulnerable to global outages affecting billion of users,” added Petrone.

For users in some countries, those five to six hours of downtime were incredibly disruptive. In many developing countries Facebook is synonymous with the internet and acts as a gateway to the web.

“It’s almost as if Facebook’s monopolistic mission to either own, copy, or destroy any competing platform has incredibly destructive effects on free society and democracy,” said US Democrat Alexandria Ocasio-Cortez.

“If Facebook’s monopolistic behaviour was checked back when it should’ve been (perhaps around the time it started acquiring competitors like Instagram), the continents of people who depend on WhatsApp & [Instagram] for either communication or commerce would be fine right now.”

She added: “Break them up.”

The outage wiped some $7bn from the paper wealth of CEO and founder Mark Zuckerberg, with Facebook’s shares nosediving by 5% as markets closed on Monday.

Facebook makes nearly all of its money from targeted advertising, with the outage estimated to have cost the company $60m to $100m in lost ad sales during the near-six hour period.

“To all the people and businesses around the world who depend on us, we are sorry for the inconvenience caused by today’s outage across our platforms,” Santosh Janardhan, vice-president of engineering and infrastructure, said in a statement.

Facebook whistleblower comments on outage

For Facebook, the outage was an unwelcome precursor to a whistleblower testifying in front of US lawmakers on Tuesday about how the social media giant allegedly buried research threatening its bottom line, including how it risked harming young users’ mental health.

“Yesterday we saw Facebook get taken off the internet,” Haugen said during her opening statement. “I don’t know why it went down, but I know that for more than five hours, Facebook wasn’t used to deepen divides, destabilise democracies, and make young girls and women feel bad about their bodies.”

But, perhaps surprisingly, when asked if Facebook should be broken up, Haugen said:

“I’m actually against the breaking up of Facebook. Right now Facebook is the internet for lots of the world … If you split Facebook and Instagram apart, it’s likely that most advertising dollars will go to Instagram.”

She said Facebook systems would still be dangerous if broken up, but would be less well resourced to deal with problems.

“Facebook will continue to be this Frankenstein that is altering and endangering lives around the world,” Haugen continued. “Only now there won’t be money to fund it.”

Despite the sharpening of knives from Facebook’s antitrust critics, it is unclear whether breaking up the social media leviathan would increase competition and solve the platform’s biggest problems.

“There’s no clear evidence that separating companies would increase competition in social media,” said Petrone. “While it would undoubtedly reduce Facebook’s power in the short-to-medium-term, the underlying market dynamics, such as network effects and economies of scale, would continue to favour concentration.”