Facebook’s (FB) shareholder meeting on Thursday was a heated affair, as investors vented their frustrations over the social network’s handling of recent scandals.
“If privacy is a human right … then we contend that Facebook’s poor stewardship of user data is tantamount to a human rights violation,” stated Christine Jantz, chief investment officer at Northstar Asset Management, which is a Facebook investor.
Facebook risked becoming a “corporate dictatorship,” James McRitchie, a Facebook investor, said to Zuckerberg.
“Mr. Zuckerberg, take a page from history,” McRitchie added. “Emulate George Washington, not Vladimir Putin.”
This is a good way to ‘hold us accountable’
Investors’ harsh remarks stemmed from recent controversies, including the Cambridge Analytica scandal that engulfed the company earlier this year. In mid-March, reports emerged that Cambridge Analytica, a political consulting firm that shut down earlier this month, had acquired Facebook user data sold by researcher Aleksandr Kogan. Kogan had developed a personality quiz app on Facebook called This is Your Digital Life that surveyed 270,000 users.
Because of the high level of access Facebook gave developers at the time, Cambridge Analytica was able to harvest the data of the friends of those 270,000 users, affecting up to 87 million individuals in all. The ensuing fallout from the controversy saw Facebook get hammered in the media and on Wall Street.
Mark Zuckerberg hammered by shareholders over scandals
Facebook's CEO faces the press, unhappy advertisers and frustrated lawmakers in the US and EU. Next up: shareholders.
Mark Zuckerberg, Facebook's CEO, is scrambling to contain fallout from the Cambridge Analytica scandal.
James Martin/CNETFacebook is being run like a "dictatorship." Its disclosures have been "inadequate." The scandals it's faced are "not good for the company's bottom line."
That''s just a sampling of the statements investors made during a shareholder meeting Facebook held Thursday, marking the first time that co-founder and CEO Mark Zuckerberg has taken public questions from investors.
"If privacy is a human right -- as stated by Microsoft's CEO -- then we contend that Facebook's poor stewardship of user data is tantamount to a human rights violation," said Christine Jantz, chief investment officer at Facebook investor Northstar Asset Management, in a statement during the meeting.
Shareholders were expressing their frustration with the 34-year-old billionaire who has been scrambling to contain a string of scandals. The wave of unrest was touched off by revelations that profile data on as many as 87 million Facebook users was leaked to a Trump campaign-connected political consultancy called Cambridge Analytica. It's left the social network's reputation in tatters and Zuckerberg trying to fix it.
"The big thing we're focused on is that we take a broader view of our responsibility to the community we serve," Zuckerberg said before taking questions from shareholders. He added that Facebook spent much of its first 14 years as a company focused on "the good" its service does, such as connecting people to help victims of natural disasters.
But he acknowledged that it's time for Facebook to work harder to protect its users from bad behavior as well. He noted that the company is amping up security so much that it will affect profitability. So be it, he said: "We believe that is the right thing to do for our community."
Though the proposals that shareholders will be voting on were sent out just a couple weeks after the first stories about Cambridge Analytica were published, they offer a timely opportunity for shareholders to express their frustration with -- or approval of -- Zuck and Co.
One proposal, for example, asked investors to consider changing the voting structure of Facebook's stock so that one share equals one vote. Currently, Zuckerberg and a small group of insiders have a special class of stock that allows them to control 70 percent of voting power at Facebook, even though they own just 18 percent of shares in the company. The result of the vote could be that shareholders are able to second-guess Zuckerberg and his management team more often.
Facebook shareholders ultimately voted against it.
Other proposals, which Facebook's shareholders also voted against, included creating a risk oversight committee, commissioning a report on Facebook's efforts to reduce the gender pay gap, and setting a simple majority vote on proposals so they can be approved more easily.
Amid all the criticism, Facebook did say it's trying to change how it's governed. Facebook COO Sheryl Sandberg said the company is planning to adopt a "diverse slate approach" to its board of directors, effectively ensuring that the pool of candidates is more diverse. The company has already begun using that approach in other parts of its business, though it's had questionable impact so far.
Asking to do more
Shareholder meetings are typically low-key affairs. Typically, some investors jostle for new ways of doing things, but overwhelmingly little actually changes and executives spend time answering offbeat questions.
This was not that type of meeting.
Even the civil rights icon Rev. Jesse Jackson came to speak, raising concerns about how Facebook's service was twisted by Russian propagandists to spread disinformation. Zuckerberg responded that he has confidence in Facebook's ability to prevent election meddling in the future.
Another shareholder pushed Facebook about fake accounts, which rose in the company's last quarterly report.
And another investor addressed Facebook's content policies. The company, like Silicon Valley more broadly, has been criticized for its primarily left-leaning politics, which some say leads to a silencing of conservative voices.
Zuckerberg pushed back on that assertion, saying that content reviewers are spread across the world, but added, "Having different voices is incredibly important."
"Engage with us on these issues," one of the shareholders pleaded near the end of the meeting. "We are on the same team. We're looking for win-wins."