Yves here. This post has the point a bit backwards. Zuckerberg can do pretty much what he wants with Facebook, in terms of driving it into the ground, as long as he does not engage in securities fraud. The question is whether he ego is so out of control that he will continue to do that. Ad Age claims that Zuckerberg could easily throw COO Sheryl Sandberg under the bus, since many of the problem areas were under her jurisdiction. But he’s supposedly “fiercely loyal” to her.
By Josh Owens, Content Director at Oilprice.com. Originally published at SafeHaven
After losing $200 billion in value since its peak in July, with stock plummeting 40 percent in only four months, Mark Zuckerberg’s longevity as Facebook’s chairman of the board is under attack, but he’s holding all the cards.
The next shareholder meeting will vote on a proposal that would lead to an independent board chairman, and shareholders are increasingly disillusioned with the social media giant, which has dragged them through the murky waters of sinister manipulation and the spreading of false information.
The blowback has been big, and Zuckerberg’s responses, insufficient, most recently culminating in a damning investigative report by the New York Times.
And while some will point out that Facebook’s stock plunge is just part of a wider tech selloff, others will point out that the social media giants fall from grace began before this.
Faced with all of this scandal, shareholders are now bemoaning the fact that they don’t have any control over what happens next, now that things have gotten out of hand. Zuckerberg owns 60 percent of the voting power here.
And things are about to get even wilder …
Over the weekend, British Parliament did something it’s never done before: It seized internal Facebook documents that had been acquired by a startup that is suing the company and brought into the UK by an American businessman.
While the lawsuit itself relates to an app designed to find bikini shots among the photos of Facebook users and friends, for British Parliament, they are much more important.
On Tuesday, a British lawmaker alleged that the seized documents show that a company engineer identified a major data collection effort based in Russia. It had never been disclosed before, the lawmaker—Damian Collins—alleged. Collins chairs a parliamentary committee investigating disinformation and the use of people’s data, which is a huge concern in Europe.
Facebook claims those documents, by U.S. law, have to be kept under seal:
NEW: Facebook responds to UK parliament’s seizure of internal docs. It is getting its lines of attack out there. This is copy of its letter to @DamianCollins that it has just sent me… pic.twitter.com/lfSeoM1j2l
— Carole Cadwalladr (@carolecadwalla) November 25, 2018
And it isn’t helping that Zuckerberg refused to show up for a hearing of the Grand Committee of Disinformation, attended by international parliamentarians on Tuesday.
Facebook is getting attacked globally now, with parliamentarians from nine countries at the hearing—though all they got was Facebook’s policy VP, Richard Allan, to question. In South America, they’re worried about the use of WhatsApp to spread political disinformation. In Sri Lanka, they want to know why Facebook refused to remove anti-Muslim hate speech. Belgium wants to know how Facebook is tracking its citizens who don’t use the platform and how that violates Europe’s new GDPR privacy regulations.
And the list goes on …
The problem for Zuckerberg now is that Facebook “has lost the trust of its constituency and to get it back they will need to do something significant,” CNBC quoted Daniel Newman, principal analyst at Futurum Research, as saying.
“Their PR ploys so far have been empty and insufficient, and with growth already stalling they need to start changing sentiment now,” he said.
Changing sentiment might be replacing Zuckerberg as chairman of the board and separating the role of chair from that of CEO, which is also held by him.
The new proposal that will be voted on in the next shareholder meeting in 2019 was floated in October by Trillium Asset Management, which owns some 53,000 shares in Facebook.
Trillium VP Jonas Kron told CNBC that all the scandals make it “abundantly clear that an independent board chair is necessary”.
But the question then becomes this: Can shareholders force Zuckerberg to give up the chair when he has 60 percent control? The answer is: No. If he’s going anywhere, it will mean he renounced the chair himself. His challenge now is to decide whether staying in the chair will be a social media suicide.
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What would a US congressional committee chairman say if a British business wrote to him to say ‘you cannot use those documents you’ve subpoenaed as they are sub-judice in a Yorkshire court’? I think we’d hear the laughter from this side of The Atlantic.
The world at large is waking up to the realization that these tech behemoths aren’t the benevolent giants out to “change the world” that they make themselves out to be. Facebook’s investors are very much to blame for this, they were so eager to get in on the game that they failed to foresee, or more likely ignored, the fact that a multi class share structure that leaves 60% of the voting power in the hands of one individual would lead to exactly this sort of quandary. Zuckerberg is no Kalanick, and will be far more difficult to dislodge, that much is clear.
My sense is that he will double down on the “we made mistakes and are learning from them” PR speak to placate the constituency, making “key hires” to change the optics of the situation by giving off the impression that FB is taking e.g. data security seriously while consolidating even more power behind the scenes to ward off any attempt to have his God-like status within the company challenged (the now-departed founders of all the unicorns acquired by FB I.e. Oculus, whatsapp and instagram, know more than most that Zuckerberg doesn’t take kindly to being challenged)…
Personally I have to time for Zuckerberg and his Mr. Data impression but I do wonder. Could it be that there are people looking at Facebook, which is worth hundreds of billions of dollars and basically does high-level surveillance of a third of the population of the planet, and are saying to themselves: “Why is this 34-year old punk kid getting to run this corporation? He should step aside and let professionals run it that can make real use of it.” That might explain a lot of the flack that he has been getting lately. Remember that not long ago he had to turn over the fact-checking of his newsfeed to organizations like the Atlantic Council. I bet that there are a lot of people associated with that Council alone that would love to be in charge of Facebook.
I think you’re on to something. All of the intense scrutiny of FB started after Zuckerberg went on his “listening tour” and had people thinking he was going to run for president. The Blob decided he needed to be cut down to size one and have watched his company shed billions of market cap ever since.
Kinda nice when TPTB have steel cage death matches amongst themselves rather than assaulting the rest of us all the time. Just wish they both could lose….
The problem is that as corporate governance is structured in the US, top execs can mostly do what they want, unimpeded. Dislodging them is a multi-year process with no guarantee of success. Usually it’s threats of regulatory scrutiny that get it done, but FB is barely regulated. The best bet might be those FTC consent decrees.
Its possible, but I sense FB as a glorified message board and Zuck’s individual celebrity doesn’t threaten other industry leaders. Facebook is big, but it isn’t that big. As targets go, its perfect especially if its a glorified fashion company.
How much is it really worth? If the ads aren’t working and the Federales are already doing metadata colleciton, what is the real market?
Huh? Facebook, with Google, has been a huge accelerant of the decline of the press. Google and FB together get 60% of online ad revenues. Their combined total is down a smidge due to Amazon going after this market.
I’m assuming “professionals” is referring to the intelligence community and associated powers in this comment, or?
If not, wondering if you have any examples of a CEO or public figure that you think would be morally and ethically suited to the role. Personally I’m drawing a blank on candidates… Everything really is run like CalPERS! I guess someone like Nader would at least sufficiently benevolent, but can’t see him ever wanting anything to do with FB.
Right now the only sliver of hope is that one can actually still live without being on Facebook.
A main thing that should be challenged are any type of livelihood access that may be denied if one is NOT on FB. Nothing I do should be affected by something happening on FB. Period.
That is what my guard is up about regarding any of this … trying to make these monsters of surveillamce “public utilities” in any way.
That people voluntarily use this service astonishes me in one way, but in another it speaks to the profound disconnect people feel from others, loneliness is what drives many of the people I know to facepalm, but for instance if you’re an artist they steal your images, but they’re the creatives, right? But this? How many bikini photos of my surfer niece and so many others like her and while she’s not underage now, there amongst the pictures are some where she certainly is underage. These are not good people, and I must note the irony that recently I have found myself here defending the morality of not paying a predatory loan, student or otherwise, when they are suing each other over THIS! ( pardon me for yelling)
“While the lawsuit itself relates to an app designed to find bikini shots among the photos of Facebook users and friends,”
Yeah thats totally moral…
oh and secret data mining pogrom, oops I mean program in RRR…Rooooshaaaa!
No, I’ve never had a faceplant account, but they have my data, they have my picture. They are horrible.
Indeed they do steal your pictures. Which is why photographers should never post any of their images on Faceborg. Go ahead and post a link to your own portfolio site, but keep your images away from the Borg.
I think your psychological FB theory applies mostly to kids. They seem to quantify their peer social status with number of friends (often in the thousands) and likes. They are crushed if they get no likes relative to the number of friends. They are easy prey for advertising as how much stuff you have is also a status thing.
My posse uses FB because we are scattered all over the globe. I live in Florida. Thanks to FB I learned that: M in Alaska just got married at age 71, Mk in Arizona’s daughter in Washington got a new pooch, H in NY is in Israel on sabbatical, K is in Ryad this week training merchant seamen, W in CO sent me a great joke, K in Oslo is back from Shanghi, K in Chgo is pissed at Trump too, etc. AND, I get pictures of the new bride, the new pooch, the students, etc. FB also does something email sucks at; other “friends” see it too. That sort of service is convenient. So Zuck can go…
Yes, the KGB, CIA, ICE, MI6…. can see it all; so does Madison Ave. If they wish to waste their time monitoring and analyzing me it is no skin off my schnoz. Most of my friends are ad-proof anyway as we are cutting back on stuff in retirement. We are rarely fooled by fakenews.
Do any of us worry that FB will go away? Of course not. Why? Because the culture of the USA is so brainwashed about protecting free speech no matter how obscene or hateful that no politician dares to go there. Do we worry that FB enables the growth of fascism – absolutely. But for now, Twitter seems to be the fascists’ primary tool.
> After losing $200 billion in value since its peak . . .
What is “value” and why is it invoked here? I think it’s a mental tick, equating value with price. They are not the same. “Value” is what you get, “price” is what you pay.
To use a car analogy, invoking “value” when describing the stawk market suggests one is looking at the fuel gauge when you are looking at the speedometer.
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@ The Rev Kev
> . . . “Why is this 34-year old punk kid getting to run this corporation? He should step aside and let professionals run it that can make real use of it.” . . .
Yeah, now that you mention it, is likely the actual reason behind the Zuck putsch. He isn’t monetizing and exploiting enough to satisfy the “professionals”. It is delicious irony that the pros conflate price and value too and the best outcome from my point of view is that Zuck takes them on a rocket ride into the ground.
i.e. she’s got some serious dirt on him
No doubt. Perhaps Zuckerberg should stay and we the public should fire Facebook. All the world having this outlet for their innermost thoughts may have a “made you look” quality to it, but it is leaving a trail of victims. One of the most recent is film critic David Edelstein who has just been fired from NPR over a bad Facebook joke about the late Bertolucci’s Last Tango in Paris.
https://variety.com/2018/film/news/npr-fresh-air-fires-david-edelstein-following-rape-joke-1203038218/
I’m not particularly an Edelstein fan, but his falling afoul of the limits of online free speech merely illustrates the danger of Facebook’s voyeuristic seduction. Facebook started, after all, as a venue for ogling Harvard co-eds
I don’t know. A Fresh Air host should know better than to make tasteless rape jokes in a public forum. If they didn’t fire him for the contents of the post, they should have fired him on general principle for being an idiot.
In the film it’s not really a rape (and certainly not in real life as some believe) although Schneider subsequently said she felt a little raped because they didn’t tell her what was going to happen in the scene. Did Bertolucci “change the face of an art form” as Pauline Kael said or violate all “me too” norms. In retrospect it was probably not the former at least.
I’m not making a brief for Edelstein here. But as Phil Weiss keeps pointing out, Terry Gross can be very flexible when it comes to taking stands.
I’m not going to take a position on Edelstein’s firing, although I will say that he’s a idiot, but to say that forced, non-consensual sodomy (which is precisely what the movie scene shows) is “not really a rape?”
Come on.
You US guys seem to absolutely love the power of firing people – for anything, including offending your own standards of manners and “taste” – and you think you are on the side of labor and the left?
Nonsense.
Edelstein still has his day job at NY Magazine. The NPR thing was just a side gig where he would do comments on a radio show.
She made the company important enough that Zuck felt confident enough to visit the White House in a hoodie. Its like Jon Stewart and John McCain. Stewart’s slavish devotion to McCain was the only media love letter I could handle (was Stewart at the funeral or has he become fully deprogrammed?) as McCain inviting Ed Helms and Colbert (or was it Mo Rocca?) on the campaign bus in the 2000 season (maybe 1999) radically changed the nature of the show and its reach.
Many of the failures came to light soon after Sheryl Sanberg’s husband died in a freak accident in May, 2015. However, those problems — especially playing fast and lose with data — were caused by decisions made before that. Despite being rich and powerful she was still a widow with two kids in her 40’s. I can see how Zuckerberg would be unwiling to throw her under the bus for events that happened soon after she came back from that traumatic event, even if those things were caused by her (among other people, including and especially Zuckerberg) before then.
Everything you speculate about Zuckerberg presupposes that he feels and acts upon the same human emotions as the majority of the human race, but there’s been precious little evidence of that, ever.
Until reliably demonstrated otherwise, I’m going to go on believing he’s an evil cyborg, programmed to enslave humanity.
Perhaps the evil cyborg Zuckerberg and the James Bond villain Bezos will link their companies together somehow to bring us the wonders of . . . Face Bookazon.
Yes, and let’s add Peter Thiel (Germany’s worst export, ever) and get PalanFaceAzon…
While we may or may not deserve to have these Bond villains control the world, they certainly deserve each other.
It appears that investors are attempting to shame Zuckerberg out of his dual roles of CEO and chairman of the board of Facebook.
History shows that Mark Zuckerberg has no shame.
QED.
There is a three page article on facebook in the Economist this week. For them this is an in-depth study. The biggest problems with the business of facebook and for people who want to invest in facebook stock:
facebook has a record of consistently lying to customers;
the business of facebook is advertising which is very tricky and there isn’t anybody who works there with a track record of performing in the advertising business over the long haul;
other various problems and pitfalls but the first two are >=90% of what worries. NEVER lie to a customer. They always find out. NEVER trash-talk a customer. It always gets back to them. These are very basic stuff every successful business in the history of the universe knows.
(invest is their word; I would classify facebook as a speculation or a bet)
This is all way simpler than many are making it. Zuckerberg followed in the footsteps of Larry and Sergei, the Google twins, who when they structured Google (now Alphabet) set up a multi-tier stock structure that meant that they, and Eric Schmidt, could do anything they wanted and the common stock owners couldn’t do squat about it.
BTW1, these weren’t the first capitalists kings to do this: the Ford family used the same structure when they took Ford public in the mid-50s, and the more I read about the omnipresent figures of the DuPont family in the development of American capitalism (think Alfred Sloan created GM? Nope, he was the DuPont’s man overseeing their auto investments). the more I am sure there is some DuPont family trust that only blood relatives have shares in.
What makes all this more than a little nauseating is that Google was treated as a “Don’t Do Evil” paragon in its first decade, all the while this nasty reality of, pardon the expression, naked capitalism was sitting in plain sight. Now Zuckerberg is getting heat because Facebook has lost market capitalization? There is nothing even Facebook’s biggest shareholders can do about it. Lawyers being what they are, I doubt even securities fraud could loosen his control.
BTW2, I read something the other day about Z that shocked even a hardened Silicon Valley cynic like me. Apparently Zuckerberg has been telling his intimates that he may have to do brutal things now and then to establish his empire but that this was to be expected, since Caesar Augustus had had to do this when he was setting out to build the Roman Empire. Step back and think about the comparison that Zuckerberg feels he and Facebook merit. Most of what we call Western civilization comes down from ancient Rome, if only as a conduit for Greek art and thought. The historical figures who have reached for the Augustan laurels include Charlemagne and Napoleon. Thank god Zuckerberg is Jewish, otherwise I’d be afraid he was going to show up in Rome some day soon and demand the Pope crown him in St. Peter’s.
So when thinking of what ol’ Zuck might do next, just remember he is probably trying to channel his past incarnation as Octavian-cum-Augustus. I swear you can’t make this stuff up.
P
Don’t be too sure Zuckerberg won’t show up in Rome to be crowned. After all, all he has to do is reference St. Peter and his boss. ;-)
there’s a tweet by Elon Musk about hanging out with ‘the little Zucker’ at a corporate event, and how they had a competition about who could invent the most fun thing to do. Musk had a thing with flying gyrocopters and a water fight while a band played, or something. The Little Zucker had organised for the two of them to bash a waiter from the event into unconciousness in a back lane behind the building where the event was, in exchange for paying his student debt. The poor guy was actually there, shaking, when Musk came back. This is a long form tweet by E.Musk describing this, is still able to be found (couldn’t find it in a quick search but I have tried to post here before, in a rush now ;-)
https://www.reddit.com/r/dankmemes/comments/87ez2n/elon_and_mark/
Here it is!
@Savita
November 29, 2018 at 1:41 pm
and November 29, 2018 at 1:45 pm
——-
That link the single most disgusting and enlightening thing I have heard about Zuckerberg.
Given the power and influence he holds through Faceborg, as well as his wealth, he may be more of a long-term threat than Trump is. (I think Trump is a bigger short-term threat, but YMMV.)
After all the mishigas about the Russians (maybe) spending a miniscule amount on advertising and, what, a few hundred bots “sowing divisiveness” prior to the 2016 election, we are, perhaps, beginning to see where the real threat lies. If Zuck continues to hook up with groups like the Atlantic Council to screen for and remove bad actors, we are in deep trouble.
@Phichibe
November 29, 2018 at 1:07 pm.
This: “I read something the other day about Z that shocked even a hardened Silicon Valley cynic like me. Apparently Zuckerberg has been telling his intimates that he may have to do brutal things now and then to establish his empire but that this was to be expected, since Caesar Augustus had had to do this when he was setting out to build the Roman Empire. Step back and think about the comparison that Zuckerberg feels he and Facebook merit.”
Kill me now.
Zuckerberg survive? Who cares? He was never the boy genius he was made out to be. Friendster- dead, gone and forgotten. MySpace- dead and gone. Facebook- looks like a dead man walking to me. Different scale, more diversified business model but Facebook is hemorrhaging users and it couldn’t be deemed more uncool than it is at the present moment. The bubble stock has nowhere to go but down. People have finally realized the creepiness of Facebook’s business model and its corporate culture. People are less inclined to share and use Facebook these days, the remaining content is primarily bad political content, pictures of people’s kids, and sad lonely people who overshare the painful daily minutiae of their lives. Add government and media scrutiny to the mix and it looks a lot like a death spiral to me. Instagram is another story but by the time Sandberg and money-hungry nerds like Zuckerberg “monetize” it, it will be as every bit as repugnant and uncool as Facebook. I really hope Facebook dies a painful death, the sooner the better.
Isn’t it likely, though, that FB and the other large surveillance-gathering corporations
are well-entwined with our “intelligence community”, and as a result, are probably
well protected?
Probably yes, the protective embrace of the deep state can help with meddlesome politicians and regulators, but I see Facebook’s primary problems being more structural and nearly impossible to fix. Rejected by the young and hip, uncool people creating less content, overall logins, and screen time dropping, other users deleting in mass. Facebook now has a creepy reputation to match its creepy business model. It’s like the cops just pulled over a speeding driver with terminal cancer. The cops are about the find out the terminally ill driver is the Judge’s teenage son if they don’t know already, but big daddy can’t magically heal cancer. I could be very wrong of course, I thought Facebook was going to flame out years ago.
Reality is FBs days are numbered with or without Zuckerberg.
Zuckerberg driving Facebook into the ground is the best possible outcome. Is there a way for somebody to injure and offend his pride over and over again, in such a way that he is driven to do exactly that?
Maybe Facebook is what you’re asking for?