Frustrated investors are unhappy about the spate of data scandals and controversies.
Facebook’s 34-year-old CEO Mark Zuckerberg ran the gauntlet of furious shareholders who vented their spleen yesterday (31 May) over scandals like Cambridge Anaytica.
The week the scandal broke in March, Facebook shares fell 9pc, wiping $60bn from its market value in just two days.
‘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’
– CHRISTINE JANTZ
In a shareholder meeting that appeared chaotic, Zuckerberg and his board of directors escaped unscathed from various votes aimed at changing the company’s governance, due to the voting structure.
Annual investor meetings are normally low-key affairs, but this one was different. Even civil rights icon Rev Jesse Jackson raised concerns about the scandals and fears that Facebook’s platform has been twisted by Russian propagandists to spread misinformation.
The investors are revolting
But the implication was clear: shareholders believe Facebook is being run like a corporate dictatorship. “Mr Zuckerberg, take a page from history. Emulate Washington, not Putin,” railed one shareholder, James McRichie.
Shareholders are unhappy about the Cambridge Analytica scandal that saw as many as 87m Facebook users’ data gathered by a political consultancy that may have used the data to drive outcomes such as the Brexit vote in the UK and the election of Trump in the US in 2016.
Trillium Asset Management executive Will Lana said that his firm had identified at least 15 distinct controversies facing the company.
“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.
Zuckerberg acknowledged that the company intends to invest more in privacy and security to such an extent that it is likely to affect the company’s profitability.
“We believe that is the right thing to do for our community,” he said.
A crucial aspect exposed by the shareholder meeting is that Zuckerberg and a small group of insiders own a special class of stock that allows them to control 70pc of voting power even though they own just 18pc of shares.
Unsurprisingly, this voting power was able to contain a number of proposals aimed at changing the company’s governance and introduce other reforms.
Even if they were unable to force change, investors used the opportunity to probe the board of directors on everything from fake accounts to content policies at the company.
“Shareholder democracy is already lacking at Facebook,” one woman said before her mic was turned off.
“Why is the list of controversies confronting Facebook so long and so serious,” asked Lana.
One shareholder, who didn’t identify herself, elicited a round of applause when she told the board of directors: “You’re not actually talking to your investors about these issues. Engage with us on these issues, we’re on the same team.”