Analyst says outage cost Facebook $100M in lost ad revenue — and a lot more to its reputation
For most of the billions of Facebook, WhatsApp and Instagram users around the world, Monday's outage was annoying.
But for Holly Rockbrune, it was something much more serious. That's because she and business partner Jenna Parkes use Instagram, the social media platform owned by Facebook, to run Jolie.tte (new window), an online boutique selling French vintage and antique items to their customer base of 35,000 followers.
Founded in 2019, the venture has grown swiftly, and Rockbrune says it's on track to make roughly $250,000 in net sales this year. But that came to a screeching halt when Instagram went down, because Jolie.tte operates exclusively on the platform.
From marketing and sales through to customer service, Jolie.tte's whole operation went temporarily kaput around noon on Monday.
'Everything shut down'
When the power went out for Instagram, everything shut down, Rockbrune, who lives in Toronto, told CBC News in an interview. Monday is typically a busy day for the store, which releases new items twice a week, on Tuesdays and Fridays, and the partners usually spend the day before promoting what's coming up.
We couldn't post any of our teaser pics, which is hugely detrimental, she said.
It really is our sole means of advertising to get people excited to come to our online shop to buy things.
Even worse, Jolie.tte uses WhatsApp — also owned by Facebook — to communicate with its marketing agency, and the messaging service was offline for much of the day, too.
When it first happened, I was in a panic because I thought something was wrong with my account, like I've been hacked — our business is ruined.
When it first happened, I was in a panic because I thought something was wrong with my account, like I've been hacked — our business is ruined.- Holly Rockbrune, Jolie.tte co-owner
Things came back online by the end of the day Monday, but for Rockbrune, the experience was eye-opening.
If it were to be longer term, if it was down for several days or a week, we'd have no means of communication with our customers, she said.
It stressed me. I started thinking 'how can we reach these customers?' and I don't really have a great answer for it.
Jolie.tte's owners weren't the only ones stressed by the outage. Tanya Tessier runs Mararamiro Home + Studio, an online store and photography studio that realized on Monday just how dependent it is on Instagram and WhatsApp for every part of its business.
Coincidentally, the store had planned to launch its fall selection on Monday, and was planning to spend the day offering its latest wares to its more than 3,000 followers.
But that didn't go according to plan, Tessier told CBC News in an interview.
We were stuck for the whole day.
If one day the platform just disappeared, we kind of have all our marketing eggs in one basket, she said. Worse still, because WhatsApp was also offline, Tessier couldn't source new items as planned. On Monday, the business was scheduled to liaise with a buying agent in North Africa, where WhatsApp is the most reliable method of communication.
She was going to be selecting and sourcing products for us, so normally we would work together over WhatsApp sharing videos and pricing negotiations ... but we were cut off completely, Tessier said.
I don't know what the immediate solution is, [but] definitely a scary reminder that we should be thinking about a backup plan.
Daniel Tsai, a lecturer on law and technology at the University of Toronto, says the influence of social media giants like Facebook has only become larger during the pandemic as so much of every day life has moved online.
The pandemic has actually exacerbated the reliance on using Facebook and online venues to sell their products and get out to the customers, he said in an interview.
They really are hostage to a situation created by COVID-19.
While Instagram has been a great venue for sales, that over-reliance brings with it danger.
Businesses that rely solely on Facebook are going to find themselves extremely vulnerable because they have a 80 per cent duopoly on all the advertising, he said.
I think it's a big risk to be married to one platform, like a Facebook when there are so many other opportunities get online, like using Shopify and getting into Amazon Marketplace or doing other types of business to consumer platforms.
WATCH | Here's why Facebook went down on Monday:
The outage didn't just cost small businesses like Jolie.tte and Mararamiro money. It cost Facebook some serious coin, too.
The company's shares were already slumping Monday morning, after the airing of an explosive 60 Minutes interview with a company whistleblower suggested Facebook knows how complicit it is in spreading misinformation, and actively encourages it (new window) because it compels people to spend more time on the platform.
Then, word of the outage caused the stock sell-off to pick up steam, with the company's shares down more than five per cent at the close of trading on Monday.
Morningstar analyst Ali Mogharabi, who covers the company, said in a note to clients on Tuesday that the outage likely cost Facebook between $110 million and $120 million in lost advertising revenue, because ads weren't loading during the outage.
People and businesses around the world rely on us every day to stay connected, Facebook said.
We understand the impact outages like these have on people's lives, and our responsibility to keep people informed about disruptions to our services. We apologize to all those affected, and we're working to understand more about what happened today so we can continue to make our infrastructure more resilient.
Pete Evans (new window) · CBC News