Earlier this week I was planning to interview Lia Machado de Matos, chief strategy officer of StoneCo, a fintech company sometimes described as the Square of Brazil. When I tried to ring her, I discovered we wouldn’t be able to connect. Facebook had gone dark—knocking WhatsApp, and the rest of Facebook’s services—offline for six hours.
De Matos and I were supposed to be prepping for a panel discussion at CB Insights’ Future of Fintech event this past Tuesday—a session titled (ironically, given the WhatsApp downtime), “Super Apps: Where to Next?” When I later asked de Matos about the impact of the outage on stage, she described it as effectively grounding life to a halt in Brazil.
The other panelist confirmed her point. Juan Pablo Ortega, cofounder of Rappi, a Latin American food-delivery service, said the effect of the Facebook outage was crippling. The blackout disconnected Rappi’s WhatsApp-based customer service line—and it threw workers for a loop. While Rappi ostensibly uses Slack for office communications, everyone really uses WhatsApp, Ortega said.
WhatsApp, with more than 2 billion users, has become an essential utility for people in many parts of the world. That’s true in Latin America, where de Matos and Ortega are based, but also across vast stretches of Asia and Africa. The app became an even more crucial conduit for communications during the COVID-19 pandemic. Facebook, meanwhile, continues to ramp up WhatsApp’s commercial capabilities with shopping and other features that cater to small businesses, embedding it even more deeply in people’s day-to-day lives.
Unlike in the U.S., where people increasingly view Facebook skeptically or even outright negatively (see these recent survey findings or whistleblower Frances Haughen’s many data leaks and Congressional testimony), many people worldwide view WhatsApp positively. It’s reputation for low-cost connectivity stands in stark contrast to historically entrenched, monopolistic telecom companies. As Facebook adds networking infrastructure globally—subsea cables, fiber optic line-laying robots, “last mile” wireless transmitters, and other advanced communications tech it demoed this week—it is relying on WhatsApp’s aura of goodwill, a global brand ambassador.
At the mothership, Facebook’s trust-breaking, spiraling public sentiment, and bad press are contributing, oppositely, to a branding crisis. The company is shying away from its own name. Facebook is calling its new “smart” glasses Ray-Ban Stories, leaning into the luxury eyewear brand of Luxottica instead of Mark Zuckerberg’s embattled app, as I noted here last month. Similar considerations are no doubt at play in Facebook’s recent decision to rebrand its virtual reality service “Horizon Worlds,” instead of “Facebook Horizon.”
If Facebook can keep its media empire together in the face of all this heated antitrust action, WhatsApp could be the crown jewel of its global growth ambitions. That is, if it can keep the lights on.
Robert Hackett
@rhhackett
robert.hackett@fortune.com
NEWSWORTHY
My world's on fire, how about yours? Google and YouTube are banning ads on climate change-denying content, thereby disabling people's ability to make money off the false claims and conspiracy theories. It's one of the strongest measures yet by a tech giant to combat climate misinformation. The move follows a number of sustainability-oriented updates to Google products this week.
All the news that's fit to search. Google is working on a search feature called Big Moments that aims to deliver authoritative information about major world events in real-time, according to a report by The Information. The company already started testing it, including during the August terrorist attacks at an airport in Kabul, Afghanistan. Also—this one's cool—the search engine added a guitar-tuning feature.
You gotta fight for your right to repair. Following pressure from investors, Microsoft has acceded to some demands by the "right to repair" movement, which pushes Big Tech companies to let DIYers independently fix their gadgets. Microsoft said it will give third parties access to replacement parts and repair information while studying the social and environmental impacts of doing so. The company said it will take action based on its findings by the end of next year. Also, Microsoft just bought Ally, a workplace productivity startup for an undisclosed amount.
Speak up, speak out. Calif. Gov. Gavin Newsom just signed into law the "Silence No More" act. The law, cosponsored by a former Pinterest employee, will prohibit companies from muzzling employees with "non-disclosure agreements" to keep them quiet on matters related to workplace harassment and discrimination. Meanwhile, California just appointed Ashkan Soltani, a former Federal Trade Commission official, to head up its data protection authority, the California Privacy Protection Agency. Bloomberg has a good profile of the regulator.
Chips and dip. Smartphone giant Samsung reported its highest profits in three years for the third quarter, up 28% to $13.3 billion year over year. A global chip shortage allowed the company to boost the price of its electronic components, and macroeconomic trends, such as a weak Korean won compared to the U.S. dollar, helped boost its profit margin. The stock ended very slightly down for the day, a 0.14% dip, as intensified competition from rivals like TSMC and Intel looms.
All my EVs live in Texas. Tesla is moving its headquarters to Texas, the latest blow to California's tech scene following the departures of Hewlett Packard Enterprise and Oracle. “There’s a limit to how big you can scale in the Bay Area," CEO Elon Musk said during an annual shareholders meeting, citing the high costs of housing there. Musk earlier threatened to leave around the time he defied the state's mandated factory closures early in the pandemic last year—a threat he is now following through with. But this isn't goodbye; Tesla will still operate—and indeed expand—in California, Musk assured investors.
FOOD FOR THOUGHT
What's going to happen to Facebook after its latest firestorm of controversies? Probably...nothing. Alex Kantrowitz, writing for his newsletter Big Technology in a column reproduced on the tech blog OneZero, notes that "advertisers—its actual customers—can’t get enough of its targeting and scale." Wall Street loves Facebook, even if you're fed up with the company's antics. It's got our eyeballs and our data, and that means it's gonna keep making money.
From the article:
The question of whether this round of scandal would do immediate, direct damage to Facebook seemed settled soon after the Senate adjourned its Tuesday hearing. Facebook’s two most important stakeholders — investors and advertisers — didn’t run away after whistleblower Frances Haugen testified that it harms teen girls’ mental health and profits from outrage. They already knew the drill.
“This is gonna effectively be a storm that comes through,” Jeffries analyst Brent Thill told CNBC Wednesday morning. “And in past storms, this has been a great buying opportunity.”
IN CASE YOU MISSED IT
Ozy, and what happens when charisma sours by Lucinda Shen
EV sales surpass dirty diesel in Europe for the first time—with plenty of help from Tesla by Christiaan Hetzner
BetterUp, the coaching startup that hired Prince Harry, nearly triples its valuation by Lucinda Shen
Musk puppy pic was only one factor in Shiba Inu coin’s breakout week by Grady McGregor
Will around-the-clock trading be a good thing for U.S. stocks? By Declan Harty
Facebook’s worst sins cannot be easily regulated away by David Meyer
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BEFORE YOU GO
If it looks like a security, walks like a security, and sounds like a security... Startup Visionrare, an NFT marketplace originally designed to let people buy and sell synthetic shares in private companies, had to pull off a hard pivot just a day after opening an early version of its app to the public. Critics pointed out that the fantasy investment service seemed to flagrantly controvert U.S. securities law. In a note on its website, the company's founders wrote that they "underestimated the legal complexities" and would become a free-to-play game instead.
Sometimes fantasy gets just a little too real for the SEC's taste.
