Not the latter, but somewhat the former. It was an FAA outage that induced the simulated total WAAS outage, but it wasn't an outage in their real-world SBAS service itself, rather the reporting systems that the FAA uses to publish the service's status to the public via the internet. It's this system that the Hot Start CL-650 relies upon to determine WAAS coverage, signal quality, availability, etc., according to sim aircraft location. Sure, we could have "failed safe" and kept the in-sim WAAS "operational" based on the last reported status, but where's the fun in that? I think the failure was a nice opportunity for sim pilots to learn a thing or two!