Editor: Puneet Bhatia
Camera: Nitin Chopra
At a time when Mark Zuckerberg is struggling with criticism over a plethora of issues at Facebook, his investors now appear united in a chorus for his ouster as chairperson.
The past month has seen Facebook navigate choppy waters with complaints pouring in from various quarters – be it lawmakers in US Congress, shareholders in the company, activists, or even other countries.
The call for Zuckerberg to step down from his position as chairperson of the board, made by investors in the company, has come in the wake of reports about Facebook’s relations with the Definers Public Affairs, the controversial PR company.
Both Zuckerberg and COO Sheryl Sandberg denied knowledge of the Republican firm’s relationship with Facebook.
Shareholders’ loss of faith in Zuckerberg caps a stormy two years, which have witnessed a torrent of criticism related to weak data privacy protections, Russian influence over the US Presidential elections and the Cambridge Analytica scandal. So why have the last couple of months been especially turbulent?
Facebook’s stocks tumbled nearly 20 percent on 30 October, despite the company posting a revenue of $13.7 billion in the quarter, 33 percent higher than the same quarter in 2017. According to a Washington Post report, despite the growth, the revenues fell short of industry expectations by $40 million.
This below-par quarter, combined with stalled growth of users in the US and Canada and a drop of 3 million users in Europe, sent stocks diving.
Facebook – a $40 billion company – has experienced a meteoric rise since its launch in 2006. However, according to a New York Times (NYT) report, its slowdown has led to criticism from advertisers for its tactics in handling controversies.
Investors Want Separation of CEO and Chairman Role
The Daily Telegraph reported that investors in the company were unhappy after the report of Facebook’s relation with Definers surfaced.
What complicates matters and makes it a sensitive issue is the claim that apart from discrediting competitors, Definers allegedly encouraged the depiction of Facebook’s critics as anti-Semites.
Accusations of attempting to encourage journalists to report that anti-Facebook groups were linked to billionaire investor and philanthropist George Soros have also surfaced.
In the wake of the Definers controversy, the spotlight has returned on the control that Zuckerberg wields over Facebook as its Chairman as well as CEO. NYT reported that several shareholders had filed a joint resolution to remove Zuckerberg as board Chairman.
The report quoted Jonas Kron, a senior vice president at Trillium Asset Management, a US investor, which owns an £8.5m stake in Facebook, as calling on Zuckerberg to step down.
“Facebook is behaving like it’s a special snowflake. It’s not. It is a company and companies need to have a separation of chair and CEO.”Jonas Kron, Senior Vice President, Trillium Asset Management
Zuckerberg, however, in a press conference with reporters on 15 November, said he was not willing to step down.
“I don’t particularly think that that specific proposal is the right way to go. But I am quite focused on ways to get more independence around our systems in different ways,” he told reporters at the conference.
Republicans and Democrats Blast Facebook
At a time when America’s two political behemoths have agreed on little inside Congress, both sides appear to be united in their criticism of Facebook. In an interview to CNN, Republican Senator from Kentucky, Rand Paul expressed concern over Facebook’s power as a monopoly.
According to a Reuters report, Democrat from Minnesota, Senator Amy Klobuchar on Thursday, told the Senate judiciary committee that Facebook’s engagement with Definers raises campaign finance issues. Klobuchar said that she plans to send a letter to Facebook seeking details of the NYT report that names her as a target of Definers campaign.
“This is a pretty serious matter for those of us on the receiving line,” Klobuchar told the committee. “If they in fact were taking actions against critics, this could be a campaign finance issue... It could also have other legal ramifications.,” she said.
Zuckerberg had appeared before Congress over two days in April and testified on a range of issues in the wake of the Cambridge Analytica scandal. Senators had grilled him regarding Facebook’s monopoly as well as expressed concern about the fact that the company can regulate itself.
International Pressure to Testify
Ever since Zuckerberg testified before US Congress and the EU Parliament in April this year, a number of other countries have been trying to get the CEO to testify before them as well. The UK has extended multiple invitations to him, all of which the 34-year-old has declined.
The UK and Canada had invited Zuckerberg for a joint hearing in London in October, which was turned down. A week later, the coalition grew to five countries – Ireland, Argentina and Australia joined – which pressed for a joint testimony, but has been declined again.
Ravi Shankar Prasad, minister of electronics and IT, had delivered a similar message to Facebook through a stern warning in March that “abuse of social media that too by using foreign firms will not be acceptable.”