Facebook Outage: Loss of Revenue and Face?

Blog | OUTLOOK

The outage of the Facebook family of apps (early July) was ironically, ‘trending’ across other platforms as disgruntled users, influencers, and marketeers took to other social channels like Twitter to express their displeasure.    

It resulted in a huge number of users; especially those across Europe and North & South America, being unable to access media files such as images, videos and GIFs across Facebook, Instagram, and WhatsApp. The gaffe was attributed to a ‘server configuration change.’   

But this isn’t the first time that these apps have faced an outage at such a scale. In March this year, there was a similar blackout that lasted close to 24 hours. 

But why is this such a big deal? Let’s look at how big an impact this could possibly have created. In Q4-2018, Facebook reported that it had around 2.7 billion people using at least one of its core products: Facebook, Instagram, Whatsapp or Messenger each month. Given this staggering number, even if one percent of this base faces an issue, it would mean close to three lakh people are affected!

And if this becomes a regular occurrence—which seems to be the case with Facebook—it will not be just a nuisance, but will also have serious business implications. In 2018, the social network reported revenue amounting to USD 55.8 billion and a net income of USD 22.1 billion, with a majority coming from advertising. 

Businesses, professionals and influencers alike use Facebook and related apps as major marketing and advertising platforms, spending millions on acquiring, targeting, and engaging existing and potential customers. An unexpected outage like this—and that too for a sustained period (this one lasted 9 hours)—could throw plans out of gear and even money down the drain.

Apart from the business and financial implications of such a situation, it is also a huge loss of face for the company, especially when it is not able to contain the damage or reverse it quickly. It lowers the trust that people place in the brand and could even erode the brand’s market cap; something Facebook has experienced just early this year. In March, the company lost approx. USD 37 billion in just four days, due to successive ‘challenges’ it faced, such as the exit of a senior executive and outages like the recent one, among others. In a social-media obsessed world as fickle as this, it could mean a slide in terms of market position… and could even spell doom for the company.