WhatsApp blocking in Brazil, Zuckerberg’s business plea, and why the MNOs are fighting a losing battle

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As you’ve probably heard, WhatsApp will be blocked in Brazil by all mobile operators for some 48 hours. The reason: The operators have mourned to the government to block WhatsApp because it’s eating their revenues as people don’t call much anymore. The government, so far, had refused, but then someone (either the government itself or the operators – apparently it’s being kept a secret) approached the courts and a judge ruled in favour of blocking WhatsApp.

Update: When we first reported this story, our only source was a Reuters report which implied the issue of Mobile operators losing revenue to OTTs as the source of the problem. More details have since emerged and it turns out the reason is that WhatsApp had refused to cooperate with a criminal investigation. We apologise for this. We should have worked harder to find more detail. We shouldn’t have gone with questionable analysis because the source was a reputable publication. Because the article is based on incorrect information, most of the opinion part will be removed and posted in a separate article as we feel it’s still valid analysis of an existing issue.

The WhatsApp ban has since been lifted but not before it took effect, apparently for some hours. A different judge in Brazil has recommended that WhatsApp be fined instead of inconveniencing the millions that use it in the country.

The move elicited an almost immediate response from the owners of WhatsApp, Facebook. The founder and CEO of the company, Mark Zuckerberg, said in a statement on his wall that he was stunned by “the extreme decision”, and described it as “a sad day for Brazil”. He also said Facebook is working hard to reverse the decision.

On the one side, this is indeed a sad day for Brazil. In fact it’s a sad day for more than just Brazil, because it sets a new precedent on what operators can achieve if they push hard enough. Operators, even in Africa, and especially in South Africa, have in recent months been lobbying for some action to be taken on WhatsApp by the governments. For example, in October MTN asked the South African regulator to “make sure the playing fields are level between us, the network operators and the over the top players.” The next month, Vodacom outright asked for “some rules and regulations around” WhatsApp and similar services.

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On the Facebook side of things, though Zuckerberg doesn’t mention it, it’s also a sad business day for WhatsApp and Facebook itself for whom, being shut from the 200 million people market that is Brazil, is a significant hit on their user base. So while he is rightfully concerned about the attack on the open internet, his other major concern is certainly an attack on the business.

Looking at this whole OTT (what WhatsApp, Facebook etc.. are referred to in the telecoms sector) vs Mobile Operators issue that’s been the rage this year, it’s tempting to dismiss the network operators as just a greedy bunch that’s failed to innovate and is being overtaken by the technology. Easy because in a lot of ways it actually is true. Still, you can’t deny the fact that they have built and need to maintain the infrastructure that makes it possible for OTTs to be of any use and that a direct hit on their capacity to keep that networks alive is a problem for them, the subscribers and indeed the OTTs. All we’re saying is they deserve some empathy for the knock to their model.

The brutal nature of technology progression however means those revenues are gone and value has to be found elsewhere. Blocking WhatsApp won’t help at all. Users will just use an alternative IM app – Telegram just got more than a million new users since the ban yesterday (again, a concern for Zuckerberg) – or users will just use an alternative means to connect to WhatsApp; free VPNs or just a WiFi providers’ network instead. And if those are blocked, the internet will likely figure out an alternative soon enough. Improved access to the internet will be set back yes, slowed down yes, but there’s no reversing it.

15 Comments

  1. WTH?! says:

    That judge just robbed the brazilian people of their hard earned money. These corporations are too lazy to innovate and somehow think they are entitled to everyones money. Sad. In the states, one of the giant evil internet corps (was it comcast?) managed to beat netflix into submission by making them pay a cut to be on the ‘fast lane’. I think these phone companies look at comcast double dipping (clients pay subs for net, netflix pays extortion fees otherwise they can’t deliver) and start salivating at the prospect of doing the same instead of innovating around and beyond the otts.

    With the power certain telecom players now have to influence policy, I hope this trend doesn’t make landfall in Zim

  2. Tapiwa ✔ says:

    The ruling to block Whatsapp is independent of telecoms complaints: instead, it relates to a separate criminal investigation in which Whatsapp declined to cooperate with the Brazilian police to provide evidence. Since Whatsapp has no Brazilian office/ employee to charge with contempt of court, temporarily blocking the service is the next base option (in the judges eyes) to show Whatsapp that they are serious.

  3. mupini says:

    The real reason for the court order isn’t the phone companies, it’s been reported that Whatsapp has repeatedly failed to cooperate with a criminal investigation in Brazil.
    This sounds somewhat like what blackberry went through when some government (i think Canadian) wanted them to handover communcation between some users of their BBM service.

  4. macd chip says:

    “….but then someone (either the government itself or the operators – apparently it’s being kept a secret) approached the courts and a judge ruled in favour of blocking WhatsApp…”

    This is very sneak and cheaky reporting, you can do better than this!
    Lets not bent what is clear to suit our own ego.

  5. RsTade says:

    Apologise to your readers! .. …. You couldn’t resist it could you ? You wanted to take a swing at the Mobile Operators so you ever so slightly misrepresented the true facts. We come to this website so we can get factual information. So even the opinion pieces must be based on facts. We are willing to accept the lack of complete information if it is a story that is just breaking but not on stories that have been reported worldwide where everything about it is known. That is how to lose our trust nd then our patronage.

    1. Our intention was not to misrepresent the facts. One of the earliest reports on the matter was this one here from Reuters and reported on CNBC http://www.cnbc.com/2015/12/16/reuters-america-brazil-court-orders-phone-companies-to-block-whatsapp-message-app.html

      We relied on it for the facts and it implied it was the phone companies that were working to have WhatsApp blocked. As a result, our article too had wrong facts. We should have worked harder yes, coz even in writing this, some things didn’t make sense but we trusted the source.

      Thank you for calling for our integrity in coming back to this article to address the problem.

  6. R says:

    Still when i give my info to whatsapp facebook etc it is done on the level that it is safe. We all know gvts will abuse this facility and demand info on their husbands wives etc.

  7. Chris Mberi says:

    This opinion is empty and smacks of senseless new edge thinking that pushes for blind targets without any real strategy. For starters Brazilians had their own reason and our rants change nothing. How ever I’m worried when Africans talks of innovate or die in the face of billion dollar corporates like FB and Google who’s mere size render our country’s GDP is way smaller than their marketing budget. Who works for the for these Telecoms companies that we shoot at and who has been benefitting all along. Are we not shooting ourselves in the foot by accepting things that render our only investments for development. Anything local is a reflection of how far we’ve gone with our capability to innovate. We never invented the Internet, we are a net consumer of data and are not giving ourselves time to incubate instead we will gladly pay our few hard earned dollars to Netflix, Amazon, Google Apps, Facebook….. China put restrictions to their market, look where they are today. They bought incubation time in the face of international ridicule and manged to duplicate all major Internet innovations from the west and now have alibaba, wechat, etc. These sites continue to further push innovations from downstream manufacturers to the international. Zvino isu touraya the little that we have

    1. Chris Mberi says:

      *new age thinking

    2. ow ever I’m worried when Africans talks of innovate or die in the face of billion dollar corporates like FB and Google who’s mere size render our country’s GDP is way smaller than their marketing budget.

      I’m not rooting for the death of our local companies and neither am I happy that the internet is disrupting their business model. Like you imply, we’re part of one local same ecosystem. However, as harsh as the reality is, it is the reality. The internet is what is it and we cannot deny the reality that people actually use Netflix, Ali Express, DStv, Amazon because they find value. In the face of such competition, the truth is indeed that operators/government etc.. have to innovate or they will increasingly play dumb pipe.

      As for the Chinese example, their strategy was deliberate government strategy in opening up China while firewalling their internet user base. They also had engineering capacity to build alternatives, plus their huge population to ensure a big enough market inside the country to grow their tech companies into giants that can fight globally (Huawei, ZTE, Tencent, Alibaba etc… We have no big market internally, no deliberate government or private sector led strategy to fight for a better tech future where we’re not at the mercy, no engineering capacity to build and attract global investment (acquisitions etc… so we can oil the startup ecosystem of innovation), and we have a bit of money to spare on investment, we ourselves invest in American companies that we don’t even understand and we lose the bit we have.

      It is an innovate or die situation. And the sooner we face the reality that the solution is not the band aid of blocking/taxing WhatsApp/the internet etc… the sooner we start building whatever most effective capacity we need to compete meaningfully. Instead we’re focused on the investment in mining and basic agriculture -> it’s not that these are bad – but making mining & basic agric our top priority is.

      Even though you cite how the Googles & Facebooks are 800 pound gorillas impossible to take on, the strange thing is that on the internet their access to billions doesn’t deter entrants from making just as big or us having a piece of the new entrants. Before being bought by Facebook, WhatsApp had received only $58 Million in investment ( https://www.crunchbase.com/organization/whatsapp#/entity ), Instagram about the same amount. Softbank invested $20 Million in Alibaba in 2000 and today own a significant share of the giant. Just next door Naspers invested some $34 Million in Tencent and now we cry that WeChat is taking away our cheese. These are all amounts that an Econet, NSSA, CABS can managed or a round they can be part of.

      To be clear, I don’t know if innovation means developing our engineering skills and investing in young startups that have potential, I don’t know if it’s playing global and starting to invest in Shenzen & New Delhi startups ourselves, or maybe attracting African startups to HQ in Zimbabwe, Or funding African startups wherever they are, or developing our funding skills so we can be Africa’s best at spotting game changing entrepreneurs and investing in them, or sending our young people to intern in Shenzen or be educated there. Or deliberately attracting back skill Diasporans that can found tomorrows global startups here in Harare. Whatever it is, we’re certainly not having enough of that discussion. Instead we’re mourning about WhatsApp eating into the ridiculous profitability that was bound to not last.

      1. chris mberi says:

        That the frequency with which we discuss these matters is increasing, is a very good start for innovation to thrive.
        Yes Internet is what it is and people are finding value but have we really thought of who is defining value and whether it is true value or just influence in the interest of the big companies. We need studies of how all this has benefited us and whether it is sustainable.
        I believe we need to move fast in defining what we want to offer the world market and move as a single unit towards that goal. To rise to this challenge, our governments, Zimbabwe included, need complete updates to their operating systems given the frequency with which they patch and go.
        It matters not that we define innovation completely for it changes with space and time but it matters much more that we define our space and present a clear identity to the rest of the world. The challenge, in my view, is apathy, the lack of a united effort caused by fragmented policies and lack of ownership of our future. It takes Africa buying from itself to give value and that takes a change of mindset which currently is in disrepair due to excessive foreign influence and now requires innovation to bring back on track. Sites like yours are the very spark we need to get moving.
        I am particularly worried about how Facebook and whatsapp have very little or no investments in our parts of the world yet cause job loses. Yes I agree with you we need to think fast

    3. rr says:

      china is a market of over a billion people. our markets are just not that big on any level alibaba made over 5 billion on its singles day promotion can you assure the next company of that kind of size.

    4. RsTade says:

      People forget that Companies like Facebook, Google, WhatsApp grew from an idea . Before they where the 400 pound gorillas they are now. In the beginning they where just an idea but when they first started out they where given a chance to succeed or fail. They didn’t face unnecessary regulations and laws.

  8. oruchumaru says:

    Tinogona kunakirwa neApp yacho google ikoko hazvisi zvedu sema Africnz ngati gadzire zvedu vakazitanga seii.google yakatangira mugaraji

  9. Lj says:

    You can learn a lot by just reading the comments.

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