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After WhatsApp blackout in Brazil, Facebook (FB) has lessons to learn from Microsoft Corporation (NASDAQ:MSFT)


Brazil’s recent decision to cut off millions of citizens from Facebook Inc (NASDAQ:FB)’s WhatsApp was a landmark move, one full on lessons as well. But the company that could be even a greater lesson for its peers is Microsoft Corporation (NASDAQ:MSFT).

To deal with the increasingly tightening international data protection laws, Microsoft Corporation (NASDAQ:MSFT) is divesting itself of data handling functions in overseas markets. In Germany, the company has turned the custody of its data to a local firm. With the move, German authorities cannot pursue Microsoft for data on local users, which to a greater extent eliminates Microsoft’s data handling burden. In the same vein, Microsoft is able to win the trust of its German users because it doesn’t keep their data where U.S. spies can access it.

Deutsche Telekom, a German telco, is Microsoft’s data custodian in the country.

Learning from Microsoft

Microsoft Corporation (NASDAQ:MSFT)’s strategy to leave data custody in the hands of trusted local third-parties could help the likes of Facebook deal with the kind of problems it faced in Brazil. WhatsApp’s nearly 12 hour outage in Brazil came as a result of refusal by the mobile messaging service to implement wiretaps in its network. Brazilian courts demanded wiretaps in the service.

Perhaps the burden of having to cooperate with the authorities of user data would not have fallen on Facebook’s shoulders had the company offloaded the responsibility to a local third-party. Because U.S. technology companies are battling mistrust in foreign markets in the wake of Snowden revelations, they can sidestep many pressures overseas by following Microsoft’s path.

Encrypted system

However, in the case of Facebook and WhatsApp in Brazil, perhaps Microsoft Corporation (NASDAQ:MSFT)’s third-party data custodian measure couldn’t apply. The reason WhatsApp refused to comply with the court order on wiretap was that the service claimed it doesn’t have access to subscriber accounts. WhatsApp is an encrypted service that even the provider cannot break into, and that leaves the authorities with only one option – to pursue suspects directly.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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