Did you know that Facebook, Inc. (NASDAQ:FB) suffered another outage earlier this month, its second in two weeks? Some were so upset at not having their status updates that they called the L.A. sheriff. Really:
Forget for a moment that this is manna from heaven for every late-night talk show host. For investors, it also illustrates that Facebook has become an essential part of our lives. More frequent outages suggest the social network is having trouble bearing that burden.
Is Facebook faltering under pressure?
In June, the site went down worldwide for roughly 30 minutes. In a statement to TechCrunch, Facebook explained that users began to have problems accessing the site after the tech team updated the configuration of one of its software systems.
"This doesn't happen often, but when it does we make sure we learn from the experience so we can make Facebook that much more reliable," Facebook added. And I'd buy that, except that the last two outages were 12 days apart (i.e., June 19 and Aug. 1).
The latest outage lasted just 19 minutes, but it also appeared to affect the entire network of over one billion people who use Facebook around the world. Isn't that at least a little troubling? Modern networks are designed for redundancy, and generally, Facebook is quite good at isolating problems. For example:
In December 2012, the site went down for a short while in the wake of a Gmail outage, but only a portion of Facebook's user base was affected. A spokesman would later say that an update to the "DNA infrastructure" of the site kept it offline for some users.
In August 2011, Facebook began experimenting with changes to its chat and news feed, kicking off complaints of log-in errors and other problems. Performance also suffered for some users, for apparently unrelated reasons.
Fortunately, these problems didn't last long or affect the worldwide base of Facebook users. Now, global outages are back. We can't be sure why they're happening. My personal theory is that the underlying system is changing to create touchpoints for acquired technologies while supporting a wider base of users.
In Q2, Facebook reported 1.32 billion monthly active users, versus 1.15 billion in last year's second quarter. Mixing in WhatsApp adds another half-billion users, while charity efforts with Internet.org could add even more users in areas where Web access is a new phenomenon. Give it a few years, and we may be able to call Facebook "Earth's Largest Network."
Outages are par for the course on the Internet
Should investors be concerned with how Facebook is handling growth? I wouldn't be. Outages occur all the time on the Internet, and they rarely last more than a few minutes.
What's more, even huge outages have done little to forestall growth at the Web's biggest operators. Let's review two examples:
Last August, Amazon.com (NASDAQ:AMZN) went down for 30-40 minutes, costing the site an estimated $3 to $4 million in lost sales. Only a few months earlier, on Christmas Eve 2012, a problem in its Amazon Web Services infrastructure affected millions of Netflix customers, many of whom were unable to log in for at least seven hours. The impact on the business? Negligible. Amazon reported a 23% year-over-year increase in second-quarter revenue as the company grows to dominate virtually every niche in which it participates.
In August 2008, Google (NASDAQ:GOOGL)(NASDAQ:GOOG) suffered three significant outages in Gmail and its other online productivity software. In February 2009, the desktop version of Gmail went offline again -- this time, for about two and a half hours. And in the years since? An estimated 50 million business users have adopted not only Gmail but also Google Apps for Business.
Facebook is playing to win the long game
Outages always seem more problematic than they really are. Here, it may be instructive to return to what founder and CEO Mark Zuckerberg wrote in the S-1 filing ahead of Facebook's troubled IPO:
"There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice, and to help transform society for the future. The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on."
Encouraging words for investors, I think. This a long game that Facebook is playing to win. A few errors and outages along the way are to be expected.
Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google (A and C class), and Netflix at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
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