Facebook Needs a Contract With America
Facebook is the perfect storm for the commonwealth. When firms have become a threat to US economic growth, let alone national security, there have been numerous parties to step in to ensure the great experiment, the US, remains the beacon of the free world. However, I see no evidence any group is stepping into the void here. Democracy is taking body blows one Like at a time. Who should, could, might, or will step into the black-hole vacuum of leadership here?
Firms and CEOs often demonstrate leadership and a general sense of gratitude toward the system that’s provided them the opportunity to make these decisions (the US). Whether it was James Burke, CEO of Johnson and Johnson, who cleared every shelf in America of Tylenol, or Edward Stack, who decided Dick’s didn’t want to be a part of the school shooting story — these leaders risked job security and wealth to do the right thing. I see no evidence Facebook leadership will do this — it’s not in their DNA. We have a CEO with the power of Rob Gronkowski and the gross motor skills of a three-year-old.
Two years ago, Mr. Zuckerberg proposed a three-class shareholder structure that would allow him to sell all his shares, and still maintain control over the firm. This is the equivalent of an information-age autocrat. Putin, Trump, and the Kardashians are bad for America. Putin will be gone in 20 years or less, Trump a max six years, and the Kardashians can take a stock down $1.3B in a day, but don’t really have global power. Mark Zuckerberg is the most powerful person on the planet. Neither Putin nor Trump can (directly) change the mood and the views of a third of the world with tweaks to an algorithm. The Zuck will likely be around for another 60 years … and can’t be removed from office.
Imagine Castro, who took power at 33 (same age as Zuck) as dictator of Cuba, and add South America, North America, and India (2.3 billion) … and we begin to understand the influence of a 33-year-old college dropout, who’s had one job, and got his start with a site asking people to rate women’s physical appearance.
What. Could. Go. Wrong?
In Steps Sheryl
Only she hasn’t. Ms. Sandberg found time to give an interview to the NYT marking the fifth anniversary of Lean In. But in this crisis, she’s retreated to the caves of Kandahar and is penning a book, Lean Out: Avoiding Leadership When It’s Needed Most. Rumor is Ms. Sandberg is positioning herself to be the Democratic nominee for president in 2020 and likely sees this whole “breach” thing as the third rail of her brand. Regardless, she’s missing that history anoints leaders based on the risks they take, not avoid. What a disappointment.
Advertisers could have an impact if they stopped, well … advertising. But they can’t. Facebook has 5M advertisers. Advertisers have just two platforms to market their products online. Advertisers need Facebook much more than Facebook needs any one, or thousand, advertisers. If Ford Motor announced they were concerned with the subterfuge of our democracy and were no longer going to advertise on Facebook, the Detroit firm would be commended for their actions in the media, and the market would promptly cut 10%+ off their share price. So far, only Commerzbank and Mozilla have pulled their ads — that’ll show ’em. This is more evidence of why the Four need to be broken up.
Consumers appear outraged by what’s happened. To express this outrage, they go on Facebook and Instagram. #DeleteFacebook hasn’t trended up in the last several days, despite the controversy. Bottom line: consumers don’t seem to care. We’ve outsourced war and national security, and these breaches don’t have a huge impact on any one Facebook user, but an incremental effect on all of us. In addition, it’s easier to fool someone than to convince them they’ve been fooled. Consumers don’t want to acknowledge they’ve unwittingly become Putin’s / Trump’s / Dr. Kogan’s / Cambridge Analytica’s bitch. In addition, consumers don’t have meaningful options. “I’m leaving Instagram for Snap,” said nobody in 2017 or 2018.
The White House, House of Representatives, and Senate are controlled by Republicans. The Republican Party is the party of Trump, and the President views Cambridge Analytica and Russia as his allies. Notice he hasn’t weighed in on this? There will be a series of weak and whiny Democrats stomping their feet on a cement floor that registers little sound and no movement.
Maybe, but the stock would have to decline a lot further. That’s unlikely, as the business will continue to accelerate (see above: consumers and advertisers not going anywhere). After recent declines Facebook is beginning to look like a tobacco stock … which have been great stocks to own.
Brussels or an Attorney General from a Red State?
Our best hope.
Contract with America
Just as it was a better business model for manufacturers to let mercury flow into rivers, we’ve witnessed Facebook opt for unfettered growth over national security, teen depression, and the good of the commonwealth. Regulation could happen, if not in the US, in Europe — where nations register a fraction of the upside of big tech, with most of the downside. Regulation can be ham-handed and expensive.
We are in a moment where Mark Zuckerberg and Sheryl Sandberg have an opportunity to lead or continue cementing their reputations as the stewards of the worst-handled crisis in modern business history. There has been important and substantial coverage of the wrongdoing and damage. But what should Facebook’s board be counseling Mr. Zuckerberg and Ms. Sandberg to do in this seminal moment in history?
Facebook should enter into a “Contract with America.” This agreement would put national security and the well-being of our children above all else, but recognize that Facebook, Inc. is a corporation charged with growing stakeholder value. The contract needs to address the short-term threats while ensuring this engine of capitalism continues to fire on 2.1B cylinders — the size of the Facebook community.
- Facebook will immediately cease all advertising from entities advocating a political candidate, issue, or orthodoxy;
- Facebook will shut down Messenger Kids until more is known regarding the impact of social platforms on children and their emotional and mental well-being; and
- The chairman and CEO roles will be separated. The board will create a special committee charged with naming a chairman whom Facebook management can learn from regarding the tension between revenue growth and the well-being of the commonwealth.
In Sum, What to Expect
- Facebook: delay and obfuscation
- Advertisers: powerless at hands of duopoly
- Consumers: continue to post
- Investors: Facebook is the new tobacco stock
- DC: barking at the moon
- Brussels / red state AG: maybe
And What of Facebook Employees?
At Stern, we have a fantastic program that provides scholarships to veterans. We have a couple dozen young men and women who risk life and limb to defend our way of life. Are the 25,000 Facebook employees connecting the world, or undermining the efforts of our men and women in uniform to protect the nation that saved the world (twice), created the most robust force of good in history (the US middle class), and brought us Elvis? Facebook employees, now what? Do you have an obligation to the commonwealth, or are you an agent of the perfect storm?
Life is so rich,