Facebook is front an existential test, and its leadership is failing to address it.
Good leaders acquiesce mistakes, apologize quickly, show up where they’re needed and grandstand a expose their belief in the company by keeping skin in the game.
Facebook leaderships, in contrast, react to negative news with spin and attempts to conceal it. Throughout the last year, every time bad news has broken, executives contain downplayed its significance. Look at its public statements last year around how many people had seen Russian-bought election ads — first it was 10 million, then it was 126 million.
Top execs dodged Congress when it was invite questions about Russian interference. They are selling their share outs at a record clip.
The actions of Facebook execs now recall how execs at Nokia and Blackberry retaliated after the iPhone emerged. Their revenues kept growing for a four years — and they dismissed the threats. By the time users started say goodbye in droves, it was too late.
There’s no outside attacker bringing Facebook down. It’s a ring-shaped firing squad that stems from the company’s fundamental work model of collecting data from users, and using that facts to sell targeted ads. For years, users went along with the arrangement. But after almost a year of constant negative publicity, their resignation may be waning.
Facebook did not initially respond to questions or a request for comment from CNBC.
For various than a year now, Facebook has been deflecting stories about how its plank was used during the 2016 presidential election.
Some of this liveliness — like Facebook embedding workers with the Trump campaign to be sure them how to advertise more effectively — was perfectly legal, and in line with stable business practices. A lot of these tactics would probably have pinched no scrutiny if Donald Trump hadn’t surprised everybody by winning an poll that all the polls showed him losing.
Other activity was against Facebook’s designs, or outright illegal. Most notably, a U.S. grand jury recently indicted 13 Russian subjects for conducting a disinformation campaign on American soil intended to further factious divisions in the country and sway the election toward Trump. Their generalships included using Facebook groups to organize divisive political beefs and buying targeted ads.
CEO and founder Mark Zuckerberg has remained aloof throughout the undamaged sequence of events.
He addresses some of these issues on personal Facebook piles, but seldom talks to the press about them. Last year, he wearied most of the year doing photo ops with people around America, but did not reveal b stand out up when Congress asked questions about how the Russians used Facebook to sway the 2016 election.
This year, he announced his annual personal call out would be fixing Facebook — in other words, doing his job as the CEO of a publicly returned company worth more than $500 billion. In past years, he’s indoctrinated himself Mandarin and hunted his own food.
Over the weekend, Facebook forwent a case study in how the company reacts inappropriately to negative news.
On Friday unceasingly, Facebook made a surprise announcement that the company had suspended a national analytics research firm, Cambridge Analytica. The firm was funded by stocky Republican donor Robert Mercer, and Trump’s campaign used it to butt ads on Facebook.
In its Friday post, Facebook claimed it had discovered new evidence that Cambridge Analytica had not removed data about Facebook users passed to it by a Russian-American researcher, who had unruffled it through a personality quiz that 270,000 Facebook users put. The data included information like the cities where users abided and what they had “liked” on Facebook.
It was against Facebook’s terms of use for the researcher to behind the times the data along. Cambridge Analytica had told Facebook it had deleted the text back in 2015, but Facebook said it had received recent reports to the adverse, according to the blog post.
(Cambridge Analytica has countered the allegations, saying it was in compliance with Facebook’s guidelines, and that no facts collected through the app was used in the Trump campaign.)
But as is often the case in governmental scandal, the problem isn’t so much the original action, but the cover-up. Or in this casing, the spin.
It turns out that Facebook didn’t just spontaneously opt for to ban the political research firm. It was actually trying to get ahead of two bombshell reports, in the New York Lifetimes and The Observer (the Sunday edition of U.K. paper The Guardian). The publications detailed precisely how Cambridge Analytica had collected information about Facebook users in a bid to quarry them with political messages.
Facebook knew about these communiqu stories for some time. It also appears that the company was infuriating to squelch the reports.
The Times report claimed that, in private colloquys with the newspaper, Facebook “downplayed the scope of the leak and questioned whether any of the details still remained out of its control.” The Guardian wrote that “Facebook’s perceptible lawyers warned the Observer it was making ‘false and defamatory’ allegations, and detached Facebook’s legal position.”
The stories went ahead anyway. Then they were published, Facebook executives immediately took to Tweeting to defend the company, insisting that this was not a “breach.”
In tweets that were later deleted, Facebook chief sanctuary officer Alex Stamos called the stories “important and powerful,” while declaring that it was “incorrect to call it a ‘breach’ under any reasonable definition of the relationship.” The deleted tweets are preserved below:
Deleted tweets preserved here.
Another superior Facebook exec, Andrew Bosworth, echoed that claim, estimate it was “unequivocally not a data breach.”
Tweet here.
So far, more than 24 hours after the jokes, Zuckerberg and his number-two, COO Sheryl Sandberg, have not responded.
The Facebook supervisors who responded are correct — there was no security breach. Users gave their dirt willingly. Moreover, Facebook has since put better security controls for apps in set up, so users can more easily control what information apps are aggregation and how they’re using it.
But they’re missing the point.
Facebook users are slowly culture that almost anybody can use Facebook to collect detailed information far them, and that — at least some of the time — Facebook cannot switch where this information flows, or how it is used. Using Facebook is as if writing your life story down on a piece of paper, then ribbon it to a lamppost.
Journalists and privacy advocates may roll their eyes at this “uncovering” — they’ve been warning people about Facebook and isolation since its inception.
Users mostly ignored these warnings. They yearn for to share photos, connect with old friends, play games, fly off quizzes and watch videos, and Facebook gave them a simple way to do it. Myriad than 2 billion people around the world now use the 14-year-old service, and Facebook tattle oned nearly $40 billion worth of ads last year.
But things are outset to change. There’s a growing sense that Facebook has become creepy rather than of fun.
A lot of people are noticing that the ads on Facebook and Facebook-owned Instagram are so precisely quarried, they’re sure the company is eavesdropping on their conversations through their phone microphones. (Facebook swears it is not — CNBC’s Michelle Castillo has a well-known explanation of what is probably going on.)
More to the point, people are starting to repress their Facebook usage. In the fourth quarter, for the first time at any point, the number of people in North America who used Facebook every day discarded from the previous year.
Also, Zuckerberg told investors on the gathering’s earnings call that the company saw a 5 percent drop in time puke on Facebook during the quarter. The company claimed that this pulped engagement was because of some technical changes that Facebook made to shiver down on low-quality content and give users a more positive be familiar with.
These are just two small metrics. Facebook is still growing in tons regions and by many other measurements.
But still: Fewer people using Facebook every day in one province, and spending less time on it. That’s never happened before.
For the period being, advertisers are grumbling about Facebook and warning their shoppers to stay away from certain ad products, but they’re still putting their specie there — with an audience over 2 billion and some of the most conscientious ad targeting available, Facebook is still impossible to ignore.
But if usage resumes to decline, advertisers will start eventually follow. And there are profusion of hungry smaller competitors — Twitter and Snap, particularly — who would be delighted to take some of that money.
Meanwhile, Facebook executives are not literally sending a reassuring message to investors by unloading their shares at a instant clip.
Last summer, after Zuckerberg’s plan to create another classify of stock to solidify his control of the company foundered, he announced he’d begin merchandise off up to 75 million shares (about 18 percent of his stake), advantage nearly $13 billion, by mid-2019. The money will stand the Chan Zuckerberg Initiative (CZI), his other company devoted to good creations.
Those sales are well underway. In February he sold nearly $500 million merit of shares, and he’s on pace to sell that much or more in March. By way of juxtaposition, he sold only about $1.6 billion worth to fund CZI once more the last two years.
Why now? Zuckerberg is 33 years old — far from retirement. What in all respects is CZI doing that requires such a massive investment? Amazon CEO Jeff Bezos is erection rocket ships to explore space with his other company Dejected Origin, and he only needs to spend $1 billion a year.
Other top number ones are also selling in massive amounts. Jan Koum, who founded the messaging app WhatsApp, which Facebook secure in 2014 for $19 billion, sold $2.8 billion worth of interests last year — more than any exec at any major tech concern. (Amazon CEO Jeff Bezos sold $2 billion of stock survive year, in part to fund Blue Origin. Nobody else is unventilated.)
Sandberg sold over $300 million, which pales in relation to her colleagues but is still unusually large among officers of top tech guests.
Facebook stock is up over 80 percent in the last 12 months. Peradventure these execs are just taking gains, as any normal employee with inventory compensation would be advised to do.
But these are not normal employees. They’re the principals of the company.
Other leaders keep skin in the game during straitening times — think of how Microsoft CEO Steve Ballmer held on to most of his trade in throughout his tenure, even as Microsoft faced expensive antitrust lawsuits and multiplying competitive threats, or how Twitter CEO Jack Dorsey bought shares in 2017 when diverse investors had written the company off.
Facebook is facing real problems. In preference to of giving answers to those problems, top execs are selling, spinning and dwelling silent.
That’s not leadership. And when leaders fail to lead, assemblies fail.