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After massive outage, small-business owners lament — and reconsider — dependence on Facebook – NBC News

During the six hours Facebook was offline on Monday, small-business owner J.D. Holland frantically printed 250 flyers to post around Burnsville, Mississippi, and considered buying an ad in the town’s two-page local paper to keep business flowing at his farm store and nutrition club.

“They have my life,” said Holland of the social platform and advertising giant. Since the beginning of the pandemic, his company has depended on Facebook Live videos and posts on his business page to drive sales for his nutrition club, he told NBC News. But with no access to the site, his business was completely shut down.

Monday’s outage led to losses of anywhere between $300 and $400 in Facebook-driven sales, Holland said. “I know the pandemic was big, but I responded to this more so like ‘This is a big threat.’ What if it really went down?”

“What if Facebook really went down?”

Holland is one of around three million businesses worldwide that actively advertise on Facebook who were affected by Monday’s shutdown. While Facebook apologized late Monday for the massive outage, saying the problem had been caused by “faulty” configuration changes, the outage has forced many small-business owners to consider what risk they carry in depending so heavily on one platform for their livelihood.

“It really made me get in my thinkers about what I need to do from an advertising perspective in case anything goes down,” Holland said. “Facebook won’t care [we lost sales], but we have so much trust.”

Facebook apologized to the business community in a statement on Monday, and said advertisers were not billed for ads during the outage.

“We understand the impact outages like these have on the millions of businesses that use our services to find and reach customers,” the statement read. “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.”

Zahid Buttar, who runs an online vitamin store in Mooresville, North Carolina, told NBC News that he lost between $5,000 and $6,000 in sales during yesterday’s outage. Buttar said he spends about $1,000 a month on Facebook ads for the business. But after Facebook went offline for several hours, he’s considering pulling those ads entirely and using email and text messaging instead.

“What do we do?” he said. “It’s like a bait and switch. It’s like you set the hook in our cheek and we have some semblance of a business and then, boom, it went down.”

Facebook is the country’s second-largest online advertiser, according to eMarketer. Google leads, with roughly 29 percent of the U.S. digital ad market share, with Facebook following with 25 percent and Amazon at about 11 percent, according to the online marketing research firm. In July, Facebook reported a second quarter profit that had soared by 101 percent, to about $10 billion, led by a 56 percent increase in advertising revenue compared to the year before. Much of this growth is driven by higher prices for ads, along with strong ad purchases by small- and medium-sized businesses, Facebook Chief Financial Officer David Wehner said in April.

“Our goals going forward are, we want to continue to be the very best place to advertise,” said Facebook’s Chief Operating Officer Sheryl Sandberg, in an earnings call with investors in April.

Facebook’s outage came as public scrutiny over the platform’s size and influence in the country’s everyday political, social and economic lives continues to escalate. Former Facebook employee and whistleblower Frances Haugen testified Tuesday morning before a Senate panel that “Facebook’s products harm children, stoke division, weaken our democracy and much more,” she told the Senate Commerce Subcommittee on Consumer Protection.

Meanwhile, the company is challenging a second antitrust suit filed by the Federal Trade Commission alleging Facebook used anticompetitive acquisitions of Instagram and WhatsApp to expand its market dominance and unfairly blocked rivals from accessing its application programming interface.

“Yesterday really showed small businesses and all of us how much control Facebook has for an online communications platform,” said Nidhi Hegde, strategy director with the anti-monopoly policy research group American Economic Liberties Project. “The takeaway from that is that a monopoly should not be controlling such crucial information infrastructure.”

“A monopoly should not be controlling such crucial information infrastructure.”

Even though the outage forced some businesses to use mailing software, texting and old-fashioned flyers, the primary medium for advertising is online where most people shop and socialize, Hegde said.

“It’s right you want to diversify the channels by which you reach customer base,” she said. “But if the only way you can advertise online is one of two companies, that is not a real choice that you have.”

But Michael Roth, managing partner for the small business advisory firm Next Street, said the flip side of witnessing such a wide-scale small-business meltdown on Monday is the opportunity for lawmakers and Facebook to think about how to reach business owners. The company has rolled out several initiatives over the course of the pandemic aimed at small businesses, including a free Facebook Business Suite platform, a dedicated $40 million from its $100 million small business grant program to Black-owned businesses, along with several online tutorials on marketing, online branding and customer acquisition.

“Facebook is clearly a huge piece of the infrastructure that supports small businesses,” Roth said. “What this outage shows is Facebook and other platforms like Facebook have as much reach or have more reach to small businesses than any other platform than probably the U.S. government as a whole and certainly banks and financial institutions.”

But for independent business owners like Sam Gibbs and his wife Ashley in Indianapolis, Indiana, a day of lost sales leaves a sting. The couple supports its small family solely from what it earns selling accessories online through its Facebook store.

“I realize people might joke around that Facebook is gone, but that’s not how we look at it,” said Sam Gibbs. “We depend on that for our livelihood.”

They recently hired a company to build an app so the business is not entirely dependent on Facebook to drive traffic.