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Facebook Blackout Highlights the Company’s Wide Reach and the World’s Dependence On It

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The crash of multiple social media sites impaired the work of small businesses around the world.


Facebook-Owned Platforms Go Down

Facebook, Instagram, and WhatsApp were inaccessible for nearly six hours on Monday, putting the world’s dependence on a single social media company and its various platforms on full display. 

The blackout stemmed directly from Facebook, Inc., which owns all three platforms. According to a company blog post published Monday evening, the crash was a result of “a faulty configuration change on our end,” rather than a malicious attack.

“This disruption to network traffic had a cascading effect on the way our data centers communicate, bringing our services to a halt,” the company added. 

“The underlying cause of this outage also impacted many of the internal tools and systems we use in our day-to-day operations, complicating our attempts to quickly diagnose and resolve the problem.”

While many people likely found themselves simply out of a way to look up memes on their lunch break, for others, the blackout was much more consequential. That’s because the three platforms are used for a variety of purposes, including conducting business, providing emergency notifications, arranging medical care, and holding virtual classes. 

For instance, one Colombian nonprofit, which uses WhatsApp to connect victims of gender-based violence to lifesaving services, had its work impaired during the blackout, according to The New York Times. 

WhatsApp, while less of a dominating force in the U.S., is crucial for many people in other countries. In fact, WhatsApp is so vital to countries like India and Brazil that some believe it should be considered a “utility” rather than just a social media platform, The Times reported.

The loss of multiple major social media platforms had several notable side effects. During the crash, many also began reporting issues with non-Facebook-owned platforms like Twitter, TikTok, and Snapchat as they flocked to those entities. 

On Twitter, Rep. Alexandria Ocasio-Cortez (D-Ny.) condemned Facebook and called for it to be stripped of some of its platforms to prevent a similar blackout in the future. 

“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,” she said. “Remember: WhatsApp wasn’t created by Facebook. It was an independent success. FB got scared & bought it.”

“If Facebook’s monopolistic behavior was checked back when it should’ve been, the continents of people who depend on WhatsApp & IG for either communication or commerce would be fine right now. Break them up.”

In its blog post, the company later apologized, saying it knows people and businesses around the world rely on it and that it’s now “working to understand more about what happened” so it can continue to make its infrastructure “more resilient.” 

Bad Timing for Facebook

The outage itself is just the latest controversy Facebook is currently facing. 

Prior to the blackout on Monday, Facebook filed a motion to dismiss an FTC lawsuit that accuses it of forming a monopoly through its acquisitions of Instagram and WhatsApp. As long as that lawsuit doesn’t get thrown out, the FTC will very likely cite the blackout as an argument against Facebook in court. 

The crash also came the morning after a whistleblower who turned over thousands of internal documents to the federal government identified herself on CBS‘s “60 Minutes.” During her interview, the whistleblower — former product manager Frances Haugen — accused Facebook of using anger and hate speech to fuel engagement, and in turn, ad revenue.

On Tuesday, Haugen testified before the Subcommittee on Consumer Protection, Product Safety, and Data Security in a bid to convince Congress to impose tighter regulations on Facebook.

“Facebook wants you to believe that the problems we’re talking about are unsolvable,” she said in her opening statement.

“They want you to believe in false choices. They want you to believe you must choose between a Facebook full of divisive or extreme content or losing one of the most important values our country was founded upon: free speech. That you must choose between public oversight of Facebook’s choices and your personal privacy,” she continued.

“I am here today to tell you that’s not true. These problems are solvable. A safer, free-speech respecting social media is possible, but if there’s one thing I hope everyone takes from these disclosures, it’s that Facebook can change but it’s clearly not going to do so on its own.” 

Despite noting that small businesses were hurt during Monday’s blackout, Haugen also said that “for more than five hours, Facebook wasn’t used to deepen divides, destabilize democracies and make young girls and women feel bad about their bodies.” 

See what others are saying: (The New York Times) (CNN) (Wall Street Journal)

Business

NFL Reaches Agreement to End Race-Norming, New Testing Formula Remains Unclear

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The practice, which was adopted by the league in the ’90s, assumes that Black players operate with a lower cognitive function than players of other races. 


NFL Ends Race-Norming

The U.S. District Court of Philadelphia uploaded a confidential proposed settlement between the NFL and former players on Wednesday that confirms the league’s plans to abolish race norming. 

The NFL previously halted the use of race-norming in June as part of a$1 billion settlement with retirees Kevin Henry and Najeh Davenport, but details of the deal weren’t supposed to be released until it underwent review from a federal judge. 

In fact, it currently seems as if someone in the court accidentally uploaded the document, as it was deleted hours later. 

Among the details reaped from the settlement, it was revealed that the league plans to modify cognitive tests over the next year as part of a short-term change regarding how it verifies dementia-related brain injury claims. Previously, it used race-norming — the practice of assuming Black players have a lower cognitive function than players of other races — to test whether retirees seeking financial compensation had sustained brain injuries from the sport. 

Black retirees who were denied access to compensation originally will also have their tests automatically re-evaluated over the course of the next year, if the settlement pushes through. 

The NFL has additionally agreed to develop a long-term replacement system with the help of experts and players’ lawyers.

Still, the exact formula behind these new testing metrics, which will be designed as race-neutral per the agreement, is unknown. For example, retirees don’t know how the new changes will affect their scores or if they might potentially need to take additional tests before becoming eligible for compensation.

The Issue With Race-Norming

Race-norming was first adopted by the league back in the ’90s, and in theory, it was meant to help offer better treatment to Black retirees who had developed dementia from brain injuries related to football.

Essentially, the thought process was to take socioeconomic factors into account since Black people come from disadvantaged communities at higher rates; however, that quickly became a major issue since Black players were held to a higher standard of proof than players of other races. 

For example, since the tests assumed Black people have less cognitive skill, Black retirees seeking claims needed to score lower to be granted compensation. That then led to many having their claims denied because they tested too high — even if they would have tested within the range to receive compensation had they been white. 

See what others are saying: (Associated Press) (The Washington Post) (ABC News)

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Facebook Plans Name Change as Part of Rebrand

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News of the alleged rebrand came the same day Facebook was fined nearly $70 million for breaching U.K. orders related to the company’s 2020 acquisition of Giphy, as well as the same day it reached a $14 million discrimination settlement with the U.S. Justice Department.


Facebook Allegedly Plans To Debut New Name

Facebook, Inc. is planning to announce a new company name next week, according to a Tuesday report from The Verge. 

The rebrand would reportedly align with CEO Mark Zuckerberg’s vision to shape the company into a full-fledged “metaverse” — AKA a virtual reality space where users can interact with one another in real-time. 

The new name is currently unknown, but it would likely not affect the social media platform Facebook. Instead, the change would target its parent company, Facebook, Inc. — similar to how Alphabet became the parent company of Google following a 2015 restructure. 

On Monday, Facebook said it is currently planning to hire 10,000 people in the European Union to help make its metaverse goal a reality. 

Still, plans for the metaverse have not gone uncriticized, especially given the recent weeks of increased scrutiny regarding Facebook’s dominance over people’s daily lives. “Metaverse” was first coined in 1992 by American author Neal Stephenson in his novel “Snow Crash,” which depicts a corporate-owned virtual world.

Twitter CEO Jack Dorsey even cited one user who referenced the novel, agreeing that Stephenson was right in his prediction of “a dystopian corporate dictatorship.”

Facebook To Pay Fine and Settlement

Also on Tuesday, regulators in the United Kingdom fined Facebook nearly $70 million for breaching orders related to its 2020 acquisition of Giphy. 

While that’s only a fraction of the $400 million it paid to purchase Giphy, UK regulators warned that they could eventually order Facebook to sell off Giphy if they find proof the acquisition has damaged competition.

In the U.S., the Justice Department said the same day that Facebook has agreed to pay up to $14.25 million to settle discrimination allegations brought by the agency under the Trump administration. 

In December, the department accused the company of favoring foreign workers with temporary work visas over what it described as thousands of qualified U.S. workers. 

“Facebook is not above the law and must comply with our nation’s federal civil rights laws, which prohibit discriminatory recruitment and hiring practices,” Kristen Clarke, an assistant attorney general at the department, said. 

Notably, this settlement is the largest ever collected by the department’s Civil Rights Division.

See what others are saying: (The Verge) (Engadget) (The New York Times)

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SEC Releases Long-Awaited Report on January Memestock Frenzy, Pokes Hole in “Short Squeeze” Narrative 

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Among other findings, the SEC said hedge funds weren’t broadly damaged by January’s unprecedented trading event.


SEC Publishes Findings

The Securities and Exchange Commission released a long-awaited, 44-page report on Monday detailing its findings regarding this year’s “Memestock Frenzy,” which involved companies such as GameStop and AMC.

During the frenzy in late January, the share prices of those companies soared exponentially. According to one of the key narratives of the situation, smaller investors piled onto GameStop as a way to directly attack hedge funds that were actively betting against GameStop’s success and future. As CNBC reported at the time, those “hedge funds and other players had to rush in to cover their bets against the stock.” 

What followed were reports that hedge funds had lost billions of dollars all at once. In fact, one notable hedge fund, Melvin Capital, received what many described as a nearly $3 billion bailout. Meanwhile, in June, it was reported that the London-based White Square Capital had shut down its main fund due to the losses it suffered in January.

However, now, the SEC has said there is no real evidence to support some of the key pillars of this narrative, including that hedge funds were substantially hurt in the long run.

“Staff believes that hedge funds broadly were not significantly affected by investments in GME and other meme stocks,” the agency said in its report. “Staff did not observe that any advisers to private funds and registered funds experienced liquidity issues or difficulties with counterparties.”

On the whole, hedge funds even saw a 1.2% increase in profits in January, according to data from the HFRI Fund Weighted Composite index.

The agency also noted that GameStop purchases to cover bets were just “a small fraction of overall buy volume,” adding that “GME share prices continued to be high after the direct effects of covering short positions would have waned.”

“The underlying motivation of such buy volume cannot be determined,” the agency concluded. “Perhaps it was motivated by the desire to maintain a short squeeze. Whether driven by [that] desire… or by belief in the fundamentals of GameStop, it was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock.”

SEC Not Currently Issuing Any Recommendation

The agency did not offer any policy recommendations with this report, though it did stress that a number of small-time investors who either initially bet against GameStop’s success or tried to ride the wave of gains saw significant losses.

Given that the number of investors trading GameStop rapidly jumped from 10,000 at the beginning of January to 900,000 by the end of the month, it’s not surprising that the FTC confirmed heavy losses for many.

With that in mind, the SEC aligned its next focus on commission-free trading apps and the way in which they promote potentially excessive trading. Notably, that includes apps such as Robinhood and Webull, both of which faced controversy during the frenzy for severely restricting users’ ability to trade so-called memestocks. 

“Consideration should be given to whether game-like features and celebratory animations that are likely intended to create positive feedback from trading lead investors to trade more than they would otherwise,” the SEC said in its report.

SEC Chair Gary Gensler said Tuesday that by April, the agency could propose rules limiting how those apps make money from each trade, which is known as “payment for order flow.”

See what others are saying: (The LA Times) (The Washington Post) (The Wall Street Journal)

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