Personal Finance

Lessons for businesses from Facebook outage

facebook
cathymputhia_img

Summary

  • Many people use the sites for social networking while many businesses have a presence on the sites.
  • There has been an increased use of the sites for business-related purposes, prompting the company to have special products for enterprises, for example, WhatsApp Business and Facebook Business.

It has been a trying week for Facebook Inc. that owns several social media sites including Facebook, Whatsapp and Instagram. Last Monday, there was an outage of the social media sites for several hours affecting the company’s about 3.5 billion users worldwide.

Many people use the sites for social networking while many businesses have a presence on the sites.

There has been an increased use of the sites for business-related purposes, prompting the company to have special products for enterprises, for example, WhatsApp Business and Facebook Business. According to reports, a technical issue caused the outage.

Last Tuesday, the global tech giant faced further negative public scrutiny when a former employee, turned whistleblower, released adverse information about the company.

According to media reports, the whistleblower alleged that the social media sites had negative effects on various people.

The claims ranged from toxic impact on teenagers, harmful to children and weakening democracy. According to the whistleblower, the global giant can make social media sites safer but has been reluctant to do so.

There are very many lessons to learn from the tech giant’s woes last week.

One is the danger of monopolies. The global tech giant has established itself as a monopoly of sorts in the social networking sector.

While previous case law in the US found that Facebook is not a monopoly, an article by a social networking founder documented reasons he thought that tech firm is not a monopoly.

One interesting reason is that it is alleged that Facebook conducts uncompetitive behaviour against its competitors, including allegedly blocking rivals’ content from trending on its site.

The outage on Monday demonstrated the dangers of having one company dominating a particular sector. It leaves consumers dependent on the company.

It was reported that Facebook competitors — Telegram and Twitter — gained more users.

Businesses depend on social media sites for networking and marketing. Others are wholly dependent on the sites for various business usages.

Therefore, an outage can destroy such businesses completely. It is highly risky to depend wholly on social media to conduct your business as the outage has demonstrated.

It is, therefore, good to minimise risk by diversifying into several other sites and also using independent platforms.

An online shop, for example, should not only operate on social media but also have a website.

Does a social media outage comprise an event of force majeure if performance of any material terms depended on social media?

Coincidentally, I had this discussion with some of my colleagues, who thought I was being overanalytical when I suggested that it would comprise an event of force majeure. I was vindicated on Monday when the outage proved so.

If your business depends primarily on social media to perform, an outage that affects performance would be an event of force majeure.

For example, if your business takes orders via WhatsApp and fails to deliver due to an outage then this cannot be blamed on you.

Force majeure would protect you as the outage was an unforeseen and uncontrollable event beyond your control. Social media outages may form part of force majeure in contract drafting.

Meanwhile, the whistleblower has a lesson to teach us.

The first is the importance of engaging in ethical business practices. The law allows whistleblowing and contractual laws cannot protect the employer against whistleblowing.

Nevertheless, if the allegations by the employee are false and malicious then the organisation can take action against the malicious whistleblowers.