Saturday, November 25, 2017

Equinix ends Brazil’s 24 days ‘digital blackout’ affecting 16,000 organisations

But it’s not over yet. ServerLoft’s owner accused of corruption by customers; has disappeared since services went offline on December 19.

Hospitals, town halls, other governmental bodies, e-commerce players and thousands of businesses have been left unable to operate while a “digital blackout” in Brazil brought 16,000 to 20,000 organisations to a standstill.

Servers were shut down on December 19, 2016, after Equinix ceased providing data centre services to São Paulo-based cloud provider ServerLoft after the company failed to pay Equinix for its infrastructure for six months, despite continuing to charge clients for services.

As a result, Equinix cut ServerLoft’s access to its data centres which led to the thousands of organisations loosing access to their data.

According to local media, some of the clients were also unable to use their backup emergency services when and while the outage happened.

Equinix has now re-established connection to all the more than 16,000 affected parties, keeping the same service level agreement previously in place with ServerLoft.

The end of the 24 days of downtime was confirmed by the Associação Brasileira das Empresas de Hospedagem na Internet (Abrahosting).

According to ServerLoft’s website, the company has ceased to provide any sort of services simply saying in a pop-up message: “Warning: We are not selling our services anymore. Thank you.” Data Economy has tried to contact the company, but has obtained no response.

Abrahosting acted has the negotiator between the affected clients and Equinix.

The company, which has branded the downtime as Brazil’s first major “digital blackout”, said it had requested Equinix to download all ServerLoft customers’ data and return it back to the owners.

However, Equinix shortened the process and opened the servers for customers to carry out their own data checks and migrations.

Customers have been given the opportunity to carry out their data backup, download their data and migrate it to other providers. Equinix has refused to comment.

Equinix runs two data centres in São Paulo with a third one set to be opened in Q1 2017. SP1 is localed in central São Paulo. SP2 is a 64,500 sfq facility located in Baruei. SP3 will be the new hub in the city and willmeasure 90,000 sft of colocation space.

It is understood that ServerLoft was using SP2 in Baruei as the company is also registered in the area, according to company filed documents.


Manhunt for ServerLoft’s owner ongoing

Mr Paulo Roberto Zivieri, ServerLoft owner. Source: Facebook public profile picture

While customers have gained access to their data, the case is far from resolved and many took to online channels such as forums, Facebook and WhatsApp to express their discontent with ServerLoft’s service provision.

Those affected have also launched a “manhunt” to find ServerLoft’s owner, 30-year-old Mr Paulo Roberto Zivieri.

Mr Zivieri’s whereabouts are unknown until this point. Data Economy has spoken to Mr Zivieri who has refused to publicly comment on this story for now.

On his Facebook page there have been several customers directly accusing him of stealing their money and having a negative impact on their businesses.

One member has asked Mr Zivieri if he was “playing Temer”, referring to Brazil’s current president Michel Temer and the corruption accusations directed at the politician over the last few months.

More than 100 customers joined a Facebook group, ‘ServerLoft Offline‘, to discuss and keep track of the situation which is predicted to have cost from thousands to millions of Dollars.

In an online forum, a user from Curitiba, who had experienced several downtimes throughout the year, labelled the company’s services as “simply the worst possible server”.

Another user from Campo Grande also complained of several downtimes throughout 2016, and that after 12 hours offline, the company still failed to issue a statement about the occurrence.

Several clients said online they were planning to leave the provider in the first hours of the blackout fearing their own customers would lose trust in their services.

On LinkedIn, ServerLoft’s company page describes the company as a privately held organisation with 11 to 50 employees.

However, further research into the business networking tool reveals that only two people have worked at the company. One being Mr Zivieri and the other being Diana Valeriano, sales executive.

Activate since May 2012, on LinkedIn the company page says the provider focus on “quality infrastructure, working with a 24/7 dedicated and extremely technical team”.

It adds: “ServerLoft is extremely worried with the security of its network, and as a consequence, it was the first one in Brazil to launch an efficient protection against DDoS attacks.”

Abrahosting has left a warning to businesses in Brazil following ServerLoft’s blackout.

Vicente Neto, president, said: “Our market if full of informal or individual companies. [Companies where] there is only one person doing all the work.

“You have to be very careful when selecting a provider for something so critical.”


How much could ServerLoft have cost its customers?

As most businesses rely on digital services to run today, ServerLoft could have had a minimum total loss of around $10.4m to $51.8m.

In Brazil, businesses are split into micro, small, medium or large. Micro businesses should not excess R$360,000 (around $112,000 as of January 15). Small businesses are recognised as such from R$360,001 and R$3,600,000 ($1,112,000), according to The Brazil Business.

If we consider all 16,000 businesses are of a ‘micro’ size with up to nine employees, the total cost of downtime per minute is about $300. 24 days, containing 34,560 minutes, would represent a total loss of about $10,368,000, according to

Applying the same process to a small business sample, costs per minute would result in about $1,500. In total, if all 16,000 businesses are considered ‘small’ with up to 49 employees, total loos could ascend to $51,840,000.

Even though these figures are figurative and the sample of customers is much more varied, it is possible to understand the scale at which ServerLoft’s “digital blackout” affected customers.

Yet, ServerLoft’s blackout is one of a series hitting one of Brazil’s largest cities recently.

On a smaller scale, on January 3, IBM clients also felt victim to downtime as the cloud provider’s services were brought to a standstill after a power cut.

Nevertheless, interest in Brazil as an emerging market is driving investment from large service providers such as Equinix, which through the acquisition of Verizon’s data centre business in the Americas, has expanded its footprint in Brazil.