Wednesday, October 18, 2017

Exclusive. Equinix faces being sued after 16,000 lose server access in Brazil’s ‘largest digital blackout’

Colo caught up in large scandal created by ServerLoft which has “shocked” the industry. Data Economy spoke to owner who has been accused of keeping clients’ data hostage.

Data centre provider Equinix could be sued in Brazil after servers were switched off triggering the country’s “largest digital blackout” ever which affected 16,000 organisations, including town halls, hospital services, schools, e-commerce websites and manufacturing plants.

The provider shut the services down after local cloud distributor ServerLoft failed to pay six months worth of services to Equinix between July and December 2016.

The machines were offline at Equinix’s SP2 data centre starting December 19, 2016 for a consecutive period of eight days. Equinix then put the servers back up so ServerLoft’s customers could extract their data and migrate to other data centres.

ServerLoft’s owner, 26-year-old Mr Paulo Roberto da Silva Zivieri, has been accused of misleading customers and providers including Equinix, Dell, Juniper Networks and VMware.

Speaking to Data Economy, Adriano Mendes, partner and specialist in Digital Law and technology at Assis e Mendes Law Firm, said: “The damage [caused by the downtime] was vast and we are now looking into and gathering enough evidence to open a case against ServerLoft and Mr Zivieri.

“We are also looking into suing Equinix because they could have re-connected the machines earlier and without the need of a judicial order in order for clients to extract their data.”

Data Economy has spoken to Mr Zivieri who said he is not yet ready to talk about the case. Equinix was not immediately available for comment.

Mr Mendes explained that Assis e Mendes Law Firm carried out ten collective actions against Equinix and ServerLoft for ten ServerLoft clients before Equinix turned the servers on again for a limited period of time.


Equinix blamed by ServerLoft

ServerLoft’s website shows a message where the company says it 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.”


When the ‘blackout’ started on December 19, Mr Mendes said ServerLoft first blamed Equinix’s data centre for the downtime caused by a fictional power outage.

“It took two days for clients to learn that the problem was caused by ServerLoft’s lack of payment to Equinix for six months,” he said.

“At that point, ServerLoft stopped talking to customers. Clients and vendors started then to try and talk directly to ServerLoft’s providers in order to try to rescue their data.

“The biggest problem was the fact that providers did not recognise the clients as service users and in contractual terms they could not disclose any information or help due to technical issues and contractual clauses.”

Mr Mendes said ServerLoft then released “two more laconic communicates, that said nothing at all”. In the first document, the company said they would free up the data in up to 60 days. In the second file, ServerLoft tried to blame Equinix for the situation once more.

“Clients then went to the available addresses associated with ServerLoft, including Mr Zivieri’s home and his mother’s home. There, his family told clients that Mr Zivieri was being medicated and emotionally shaken, reason why he could not help.

“In the end, we understood that Mr Zivieri fooled several providers, misleading people who believed in the cloud service being offered by him. People were also fooled into believing the size of his company, the non-existent back-up site in Rio de Janeiro and the technical team.

“The more we investigated, the bigger was our surprise that Mr Zivieri was just a “boy” with no technical knowledge who sub-contracted all the services.

“ServerLoft was just an elegant website, with a good marketing investment.”


Process to get servers back on was long and unnecessary 

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

Despite Equinix understanding the scale of the problem, Mr Mendes said that Assis e Mendes Law Firm had to take legal action and to get in touch with the juridical and business departments at Equinix.

“Even though they understood what had happened, Equinix said at the beginning they could not help and they depended on a judicial order to re-establish the services.

“We then got the judicial order, made an agreement and managed to temporarily re-establish services giving clients enough time to extract their data and migrate to other providers and data centres.

“Services were completely off-line for eight days. After services were re-established, data extraction and migration took another seven days.

“After regaining control of their data again, clients managed to go back to their own clients to explain what had happened.”

Mr Mendes said Mr Zivieri was given the opportunity to go to Equinix’s São Paulo data centre to switch his servers back on for customers to extract their data.

Mr Zivieri failed to show up “continuing to make his customers hostages of the situation”.

ServerLoft’s clients include brands with large sets of data, from transactions, to customer data, to historical archives. Some customers spoke to Data Economy to show their discontent and share that they are still working with their own clients to stabilise the situation.

“The market is shocked. Even for the more experienced, this is new,” said Mr Mendes.

“There was a huge irresponsibility and amateurism from Mr Zivieri’s side. Even with all the warnings he received from Equinix, he never told his clients that his business was in danger.

“Some of the owners of businesses affected by this have not slept much since Wednesday last week in an attempt to revert older backups and migrate all services to other providers.”

Data Economy will continue to follow this story in the weeks to come.

Inside Equinix’s SP2 data centre. Source: Equinix



ServerLoft should not be confused with serverloft, a Host Europe Group company that hosts businesses’ data in Europe and the US.