Wednesday, December 1

Has Mark Zuckerberg’s full control over Facebook become a liability? | John naughton

For devotees of C-Span, the public service media network that covers the United States Congress, Tuesday was an interesting day. The Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights held a hearing on social media companies, which for most of the cases concerned Google and Facebook. It was intriguing in a number of ways. On the one hand, senators were concerned, skeptical, and at times angered by the evasive verbiage of the corporate executives they had summoned. More importantly, the perceptible anger was bipartisan (rare in Congress today). And finally, some of the more aggressive questioning The unfortunate Facebook rep came from Senator Josh Hawley of Missouri, who is believed to be PayPal co-founder Peter Thiel’s preferred candidate for president in 2024. And Thiel is Member of the Facebook board of directors!

This wrath of Congress was provoked by a excellent scoop at Wall street journal, who had gotten his hands on a treasure trove of internal Facebook documents. These exposed the huge gulf between Facebook’s public versions of its stance on various contentious issues and its internal discussions about it. Specifically, the treasure showed that: at least 5.8 million high-profile users had been allowed to bypass the normal running processes of the company; research by Instagram (owned by Facebook) had revealed the risk that the platform poses to adolescent mental health (“We made body image problems worse for one in three teenagers” was a catchy phrase); the company knew its algorithms rewarded outrage; and it had been slow to prevent drug cartels and human traffickers from using its platform.

These revelations were so stark that they even moved the ridiculous supervisory board for publish a blog post on the matter. “In light of recent developments,” he stammered, “we are looking at the extent to which Facebook has been fully forthcoming in its responses regarding cross-checking, including the practice of whitelisting. The board has contacted Facebook to request that they provide more clarity on information previously shared with us. We expect to receive a report from Facebook in the next few days … ”Note the words“ request ”,“ wait ”and“ clarity ”, which provide a clear illustration of the mendicant state of this ridiculous team that points out the virtues.

Facebook is one of the most toxic corporations on the planet. Its toxicity has two roots. The first is its business model: intrusive and comprehensive surveillance of its users to compile profiles that allow advertisers to target them. This business model is powered by machine learning algorithms that build those profiles and determine what appears in the news for the company’s 2.85 billion users. To a large extent, it is the output of these algorithms that is the focus of Congressional ire and investigation.

The company’s other source of toxicity is its government. Essentially, Facebook is a dictatorship totally controlled by its founder, Mark Zuckerberg. This full control is ensured by a two-tier stock ownership structure that gives you unlimited power. The regular regulator of the company filings describe it like this: “Mark Zuckerberg, our founder, president and CEO, can exercise voting rights with respect to the majority of the voting power of our outstanding capital stock and therefore has the ability to control the outcome of matters presented to our shareholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. This concentrated control could delay, defer or prevent a change of control, merger, consolidation or sale of all or substantially all of our assets that our other shareholders back, or conversely, this concentrated control could result in the consummation of said transaction that our other shareholders do not support ”.

Of course, Facebook has a board of directors, but it has as much agency as the ethics committee of a gun manufacturer. They are all appointed by Zuckerberg and serve to his liking and are therefore ultimately his creatures. The importance of this submission has been underestimated to date, but it has simply been dramatically highlighted by a lawsuit, filed in Delaware by the Rhode Island State Pension Fund, which names all board members as plaintiffs.

The background is that in 2020 the US Federal Trade Commission (FTC) ruled that Facebook had violated a “consent decree” on protecting user privacy that it had signed in 2012 after the Cambridge Analytica scandal. The planned fine – $ 5 billion – was huge, and the commission found Zuckerberg a guilty party, due to his full control of the company. But Facebook’s board of directors resisted, arguing it was the company’s responsibility, not Zuckerberg’s, and accepted the fine as corporate liability, saving the boss $ 5 billion. As shareholders, the pension fund is not amused by this ruse and the casual appropriation of shareholder funds; hopefully one day the court won’t be either. Stay tuned.

What i’ve been reading

There and back Again
CS Lewis 1937 review from The Hobbit. From the Times Literary Supplement October 2, 1937, courtesy of Literary Hub.

The wages of destruction
Along the, thoughtful blog post by Adam Tooze on the challenge for a historian who writes about (and tries to make sense of) continuous events.

Shock and amazement
September 11 was a warning of things to come insightful reflection by George Packer in the Atlantic about the September 11 attacks. It was the first sign that the 21st century would be a period of shock and disaster.

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