Facebook today got a damning portrait, through a batch of its own documents acquired by British investigative journalist Duncan Campbell and shared with multiple outlets, in this case NBC News reporters Olivia Solon and Cyrus Farivar. (Disclosure: I regularly write for NBCNews.com, though generally on economics and finance.) Here's a telling paragraph (although read the whole thing):

The documents, which include emails, webchats, presentations, spreadsheets and meeting summaries, show how Zuckerberg, along with his board and management team, found ways to tap Facebook's trove of user data -- including information about friends, relationships and photos -- as leverage over companies it partnered with.

And yet, at the same time, Facebook developed a strategy to claim that it was actively protecting user privacy.

That Facebook might indulge in bare-knuckle fights while trying to cultivate a different public persona should hardly come as a surprise at this point. The company's history is replete with personal data and privacy issues. The difference here is documentation that apparently shows intent.

I've asked Facebook for comment and will add it when I get something.

There are always some CEOs who garner criticism for the way they handle business. But Facebook has grown into a category of itself, with CEO Mark Zuckerberg and COO Sheryl Sandberg potentially doing more long-term harm to the company and its brand than Elon Musk ever has to his during a Twitter rant on a bad day.

Facebook has fundamentally undercut the trust consumers want in a company and that other businesses want in a partner, according to a recent NBC News/Wall Street Journal poll. At this point, 60 percent of Americans don't trust Facebook with their personal information.

So far, the social media giant has been able to do what it wants because users don't walk away in high volume and government fails to take significant action. But that seems to be changing. Here are just some of the most recent actions and revelations affecting Facebook:

  • Facebook had to change its terms of service in the EU so people know it makes money off their data. Which would suggest--I know, big shock--that it makes money off everyone's data.
  • The EU has strengthened copyright protections so Facebook will have to filter out protected content when it doesn't have a paid license for material passed around.
  • The U.K. has proposed social media regulations that could require companies like Facebook to protect users from a variety of problems, including suicide encouragement, disinformation, and terrorism.
  • Apparently, Facebook did know about the Cambridge Analytica data use months earlier than it has previously said.
  • More governmental bodies have demanded that Facebook and some other companies like Google testify about their practices.

And still Facebook's revenue and user numbers have continued to grow. But, increasingly, shareholders have begun to criticize the amount of power held by Zuckerberg, who holds 57.7 percent of voting rights.

The amount of control Zuckerberg exerts is nothing new and was baked into Facebook's IPO paperwork. That may have been fine when everything seemed to run smoothly, but apparently isn't under the negative attention the company is getting. The stock dropped sharply between a record high in July and December 2018. Shares have seen a comeback but remain down 17 percent from the peak. That's the type of action that grabs the attention of investors.

Technically, Zuckerberg can bat away any demands placed on him because of the votes he controls. Technically, so could Travis Kalanick of Uber--until things got so bad that board members finally convinced him to step down from his official role. I won't pretend to know the type of pressure brought to bear that finally worked, but suspect it was significant and, who knows, could be brought to bear in this case.

Sometimes, a CEO needs to step down for the good of the company. In the case of Facebook, it looks like it should be the entire management team, and maybe the board to boot.

Published on: Apr 16, 2019
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