A Revolt Against the Revolting

Facebook C.E.O. Mark Zuckerberg has a lot of control over the company he runs—and the tech giant’s investors aren’t happy about it. As Facebook continues to slog through a series of crises from the Cambridge Analytica scandal to looming antitrust investigations, shareholders signaled their displeasure with the C.E.O.’s outsized influence through a series of votes at a recent shareholder meeting. 

Public pension fund leaders from New York, Illinois, and three other states renewed their call for Facebook Chief Executive Mark Zuckerberg to abdicate his role as chairman, citing escalating support among outside investors in the company.

Shareholder acrimony is bound to only add to the intensifying pressure Zuckerberg already faces from lawmakers and federal regulators. The Wall Street Journal on Monday reported the Federal Trade Commission, which is on the verge of hitting Facebook with a multibillion-dollar fine for privacy violations, was granted the rights to launch a probe of the social-networking giant for monopolistic practices.

“Facebook’s insular boardroom must be cracked open because the company has no accountability to its users, its investors, or our democracy,” New York City Comptroller Scott Stringer, whose fund controls over $750 million of Facebook stock, said in a statement on Tuesday. “Naming an independent board chair is a necessary first step that is supported by shareowners who own the majority of Facebook shares, but whose voting power is not commensurate with their ownership.”

Illinois State Treasurer Michael Frerichs added “it’s time for the company to separate the Board Chair and CEO roles. Right now, Mr. Zuckerberg is both Board Chair and CEO, serving as his own boss, and clearly it’s not working.”

Facebook declined comment on the statements, as well as similar remarks from treasurers from Connecticut, Rhode Island, and Pennsylvania.

The Facebook investors’ growing frustration with Zuckerberg doesn’t exactly come as a surprise, as the Cambridge Analytica scandal has spurred a tidal wave of scrutiny against Facebook—and likely a hefty fine from the Federal Trade Commission. Facebook shares tumbled even further in the days after the shareholder meeting, as it was revealed that both the F.T.C. and House Judiciary Committee will be ramping up their antitrust oversight over Facebook and other tech companies. And things aren’t too rosy internally at Facebook either: Business Insider reported Tuesday that Facebook is conducting an investigation into the security firm it contracts from in Silicon Valley, which is related to allegations of financial irregularities and security workers creating a hostile work environment. 

Sources: Vanity Fair Hive – Story by Alison Durkee June 4 2019; Market Watch – Story by Jon Swartz June 5 2019