Plan to sell Yahoo Messenger gives chatty oil traders the jitters

MELBOURNE — The world’s biggest oil traders take price slumps, trade sanctions and natural disasters in stride. Yet, the decline of a vintage Internet company has them quaking.

Yahoo’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 mark and 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 cannot be recorded and logged internally.

The biggest worry, say trading executives, 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 Mr Arzu Azimov, CEO of the Geneva-based trading arm of Azerbaijan’s national oil company.

Socar has set up a working group to find a solution, added Mr Azimov.

While it has 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 no one in the industry is using it,” he said.

In Geneva, the epicentre of Switzerland’s US$21 billion (S$28 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.

No one would speak on the record, but executives from firms including Trafigura and Mercuria Energy said they were searching for a platform to replace Yahoo in the event the old service were to disappear.

It is 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 Mr Olivier Jakob, managing director at consultant Petromatrix in Zug, Switzerland.

A former oil-products trader at Cargill, he said he has 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 Mr Jakob, who previously worked at Litasco, the trading arm of Russia’s Lukoil.

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 make lunch plans.

“It’s great to hear positive feedback around Yahoo’s legacy Messenger product,” wrote Yahoo spokeswoman Ana Braskamp in an e-mail in response to questions about the trading industry’s reliance on Yahoo Messenger and concerns about its future.

Commodity traders have long been criticised by organisations such as Switzerland’s Berne Declaration for being opaque and largely unregulated. But in recent years, 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.

Messenger transition

While Yahoo’s “legacy” Messenger service is recordable for compliance purposes, its new platform, launched in December, is not. 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 Ms 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,” said Yahoo’s Ms Braskamp.

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 Mr 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, one of the world’s largest independent oil traders, said the company is not worried about the potential demise of Messenger. The market will find a solution, he said — adding that if not, traders will just have to pick up the telephone. BLOOMBERG