Geneva: The world’s biggest oil traders take price slumps, trade sanctions and natural disasters in stride. The decline of a vintage Internet company has them quaking.
Yahoo! Inc.’s Messenger has for almost 18 years been the default communication tool for the men and women who each day move billions of dollars’ worth of crude oil and petroleum products around the planet. From Singapore to Rotterdam, daily deals are pitched, contracts negotiated and global price benchmarks assessed on the chat service, with its deep-purple colour scheme punctuated by Yahoo’s trademark exclamation point and dead-eyed yellow smiley emoticon.
Now the company’s core business, including its chat service, is up for sale and the future of Messenger is uncertain. Yahoo, meanwhile, is forcing new users to an updated platform that compliance officers at some trading houses have declared off limits because the chats can’t be recorded and logged internally.
The biggest worry, trading executives say, is that one day Yahoo will suddenly stop supporting the old service and shut it down altogether.
“Socar Trading is concerned with the changes to Yahoo Messenger and needs to ensure that all regulatory and internal controls are addressed," said Arzu Azimov, chief executive officer of the Geneva-based trading arm of Azerbaijan’s national oil company.
Socar has set up a working group to find a solution, he said. While it’s identified potential alternatives, the main issue is whether other oil traders will adopt them.
“There is not much sense in providing a product with great compliance functionality if none of the industry are using it," Azimov said.
In Geneva, the epicentre of Switzerland’s $21 billion commodity-trading industry, accounting for about one-third of the world’s daily oil transactions, compliance departments are also trying to figure out what to do. None would speak on the record, but executives from firms including Trafigura Group Pte and Mercuria Energy Group Ltd. said they also were searching for a chat platform to replace Yahoo in the event the old service were to disappear.
It’s a tall order. For starters, Yahoo Messenger is free and has been the chat tool of choice for nearly all those working in the sector for more than a decade. From traders to refinery managers, pipeline operators and harbour masters, many even have their Yahoo IDs printed on their business cards.
“Everybody uses it and you keep your Yahoo wherever you go," said Olivier Jakob, managing director at consultant Petromatrix GmbH, in Zug, Switzerland. A former oil-products trader at Cargill Inc., he said he’s had his Yahoo ID for “many, many years."
While there are no official market share figures, oil traders say Yahoo Messenger is by far the dominant platform and has been since the 2000s.
“There was no way you were not on Yahoo if you were trading oil," said Jakob, who also previously worked at Litasco, the trading arm of Russia’s Lukoil PJSC.
Even now, with dozens of instant-messaging apps available, from Facebook to Snapchat to WhatsApp, oil traders are still using Yahoo to bid for crude cargoes, gossip about colleagues changing jobs or to make lunch plans.
“It’s great to hear positive feedback around Yahoo’s legacy messenger product," Yahoo spokeswoman Ana Braskamp said in an e-mail in response to questions about the trading industry’s reliance on Yahoo Messenger and concerns about its future.
Bloomberg LP, the parent of Bloomberg News, includes an instant-messaging service in the Bloomberg Professional Service that competes with Yahoo Messenger.
Commodity traders have long been criticized by organizations such as Switzerland’s Berne Declaration for being opaque and largely unregulated. In recent years, however, some houses have taken steps to be more open and to improve governance and compliance standards. One innovation: monitoring and recording communications by traders in much the same way bank employees are overseen.
While Yahoo’s ‘‘legacy’’ Messenger service is recordable for compliance purposes, its new platform, launched in December, isn’t. Under pressure from shareholders, Sunnyvale, California-based Yahoo is conducting a sale process for its core assets including Messenger. Still, the Internet company, headed by Marissa Mayer, is making it clear that it wants everyone, including oil traders, to move to the new platform.
“We encourage all of our users to complete their transition to the new Yahoo Messenger as soon as possible. We intend to continue our focused efforts on the new Messenger," Yahoo’s Braskamp said.
The situation could create opportunities for rival services or for someone to create a new platform specific to the oil trading sector.
“The things that Yahoo chat offers are so important to traders," said Craig Pirrong, a finance professor at the University of Houston. “The technology is not that difficult to deal with, it is just a matter of coordinating the transition."
A senior executive at Gunvor Group Ltd., one of the world’s largest independent oil traders, said the company isn’t particularly worried about the potential demise of Yahoo Messenger. The market will find a solution, he said—adding that if not, traders will just have to pick up the telephone. Bloomberg