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The growing threat to Mark Zuckerberg's power

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The growing threat to Mark Zuckerberg's power

Mark Zuckerberg, speaking at his firm's developers' conference, earlier this weekImage copyrightGETTY IMAGES
Image captionMark Zuckerberg, speaking at his firm's developers' conference, earlier this week

Nobody else in Silicon Valley has such absolute power over a technology giant.

Mark Zuckerberg is the co-founder, chief executive, board chairman and majority shareholder of Facebook, the most-populated social network in the world.


For years, few considered this a problem. But then, things started going rather badly.


“I know that we don’t exactly have the strongest reputation on privacy right now, to put it lightly,” Mr Zuckerberg said on stage this week at the firm’s annual developers’ conference in San Jose.


He smiled, awkwardly, but the audience was not laughing - because that reputation has left users upset, politicians seething, regulators plotting and investors on edge.


There are now growing calls for Mr Zuckerberg to look hard at whether he is capable of effectively holding all of the many positions under his name.


And, as the US rolls into its next election cycle, a desire to look tough on Silicon Valley has US presidential candidates calling for Mr Zuckerberg’s power to be heavily diluted, whether he wants it to be or not.

Record-breaking fine

Behind closed doors, Facebook and the US Federal Trade Commission are deep into negotiations. The FTC is understood to be planning a record-breaking fine, and Facebook, it told investors last week, has set aside at least $3bn to pay it. The question is: what else might the regulator demand?


"I think Facebook has consistently, aggressively violated consumer privacy,” Ashkan Soltani, former chief technologist at the FTC, told the BBC. He said he felt Facebook saw it as a necessary, affordable risk to take in order to build its business as quickly as it did.

Facebook has said Mark Zuckerberg has no intention of giving up any of his rolesImage copyrightGETTY IMAGES
Image captionFacebook has said Mark Zuckerberg has no intention of giving up any of his roles

"It’s akin to double parking - being comfortable with the fines of a parking ticket, because you make more on say, a package delivery. I think the company has prioritised growth at any cost.”


As a result of this prevailing sentiment, the FTC is under considerable pressure to concoct a punishment that represents more than what would amount to a financial slap on the wrist. Even if the fine is as high as $5bn, as Facebook has said it might be, that would still only equate to one third of what it earned in the first three months of this year alone. 


According to reports in the Washington Post and Politico, the key detail to look out for in the FTC’s judgement will be about additional oversight.


Politico reported on Wednesday that the FTC is considering a ruling that would demand Facebook appoint a government-approved privacy official at the company, and elevate “privacy-minded” executives to the highest levels at the firm. The report also said Mr Zuckerberg would be specifically appointed as the individual responsible for applying these changes, a move designed to make him personally liable for any failings to do so. 

Investor rebellion

And then there’s the question of pressure from the firm’s investors. While the share price has rallied since the significant drops seen during the immediate fallout from the Cambridge Analytica scandal, there are calls for Mark Zuckerberg to consider whether holding the position of both chief executive and chairman is simply too tall an order - particularly at a company in crisis.


A group of investors is calling for Mr Zuckerberg to be replaced with an independent chairperson, citing the firm's recent troubles as ample motivation for the move. The vote doesn’t stand a chance of passing, as Mr Zuckerberg personally controls the majority of votes - but those in support say that just serves to underline their point.


The vote, then, is being seen as an opportunity to give Mr Zuckerberg some food for thought on his roles, said Jonas Kron from Trillium Asset Management, which is leading the move. 


"I think he should be seriously thinking about [stepping down],” Mr Kron told the BBC. 

“He has examples in Larry Page at Alphabet and Bill Gates at Microsoft of what it can look like for a founder not to be the chairman of the board. 


"I realise that it may not be an easy step to take, but it's an important step that would be to his benefit, to his shareholders’ benefit, to employees… and to the users and the communities around the world that use Facebook every day.” 


Facebook declined to offer comment for this story, other than to point the BBC in the direction of its official response to the shareholders’ proposal. 


It said, in part: "We believe that our current board structure is in the best interests of our stockholders. Therefore, our board of directors recommends that our stockholders vote against this proposal.” 


In simpler times, back in 2015, Mark Zuckerberg had just had his first child with wife Priscilla Chan, and at the same time announced his intention to gradually step away from the day-to-day running of Facebook. 


With these issues swirling, that transition might need to happen sooner than Mr Zuckerberg would have hoped.





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Facebook and the ‘phenomenon of trust and ignorance’: La Trobe

Internet giants have too much control over society, economy, and democracy, a La Trobe Law School cybersecurity associate professor has said.


From the beginning, there has been an "astonishing inattentiveness" about what could happen if global tech giants were "left alone to accumulate enormous amounts of power", the coordinator for the Masters of Cybersecurity at La Trobe Law School has said. 


Speaking at the Law and New Technologies conference in Melbourne, associate professor Sara Smyth said that while it is known the majority of the internet is controlled by a small number of global tech giants, with the four most influential being Facebook, Apple, Google, and Amazon, it is rarely clear how exactly they operate. 


"These organisations cultivate monopolies, they covertly influence our behaviour, they give some types of information preference over others, and they secretly disclose our information to other entities," Smyth said. 


"They've done this for many, many years with virtually no oversight, no transparency or informed consent, irrespective of what they choose to disclose to the public." 


Smyth argued that these internet pioneers have stifled innovation and hurt small business by bulldozing the competition and using people's private information for profit, describing Silicon Valley's penchant for creating monopolies and nurturing "rampant entrepreneurship". 


Saying that as many as 60% of Americans get their daily news from scrolling through Facebook, she said it is a "phenomenon of trust and ignorance". 


"In retrospect ... it's clear now that we have invested far too much trust in these high-tech giants like Facebook, and that we've given them too much power over our economy, over our society, and over our democracy," she said. 

Following the Cambridge Analytica scandal, Smyth said the public and governments have woken up to the privacy issues, and are finally beginning to discuss the consolidation of power among tech giants. 

Since then, Facebook founder and CEO Mark Zuckerberg appeared before almost half the US Senate a year ago, answering questions on data protection and privacy; "the first real public debate about these rampant data sharing and collection practices", she said. 


Of late, there has also been increased harmonisation and cooperation to combat cybercrime and data misuse, she said, pointing to the EU's GDPR as an example. 


However, she said this also means large, private corporations are simply relocating their headquarters to jurisdictions where they can evade such laws and regulations. 


"The most prominent online service providers are based in the United States, and this is in large part because of the lax privacy and data protection laws that have made the US a safe haven jurisdiction for those who want to provide a ready platform for controversial and political speech, and a legal environment that is freely open to free expression," Smyth argued. 


With Democratic candidate Senator Elizabeth Warren proposing for large companies such as Facebook to be broken up, Smyth told ZDNet that she did not know whether such an approach would work. 


"Breaking up monopolies is not a new phenomenon, but we've never seen it applied in this context," she said, adding that she has no doubt Warren would proceed with the approach should she be elected. 


However, she called Zuckerberg's argument -- that breaking up Facebook would only result in competitors from foreign nations taking hold -- "laughable", due to recent findings that Facebook and Twitter may have been responsible for the spread of misinformationfrom foreign entities during the 2016 US election anyway. 


Speaking on the spread of fake news and the dissemination of misinformation across social media, professor of cybersecurity at Deakin University Matthew Warren said that ahead of the 2019 Australian election next month, he has seen only fake news from two sources: The Labor and Liberal political parties while speaking about each other. 


"Fortunately, we're not a victim of fake news attacks from the other side of the world," he said. 


Also speaking on government involvement, Dr Andre Oboler, managing director of the Online Hate Prevention Institute and lecturer in cybersecurity at La Trobe Law School, said that such intervention has seen politicians become too focused on safety, which can result in them giving up civil liberties too readily. 


Oboler pointed to rushed laws and a lack of consultation, and even "sham consultations", where the government has not bothered to consult with its own local communities but only with foreign governments that have consulted with their people. 


"The government here [in Australia] is talking to the UK, the US, and elsewhere, and those governments are talking to civil society -- that's not the same as talking to our own civil society," he said. 


"Firstly, because that doesn't address the perception problem, but secondly, we actually have different values. The US and the UK have different values. If we're not talking to people here, we're not going to solve our problem." 


For instance, Oboler said that in the US, the general attitude has always been to distrust the government, and to view it as being ignorant about technology. 


Tech companies often feel disdain towards government inquiries because they don't have the technical knowledge to contribute to the discussion, according to Oboler. 


As a result, he said tech companies send their PR people or lawyers to these regulatory discussions, who are briefed to just say that "it can't be done". 


Such discussions are therefore more about lobbying and managing relationships between tech giants and governments rather than resolving security and privacy issues, he said. 


Emphasising the power civil society possesses over regulatory bodies to influence the discourse behind privacy and online safety, Oboler said that following Sunday's terrorist attack in San Diego, it was he who found and reported a related manifesto on 8Chan and PasteBin. 


"Sitting in Melbourne ... sitting in Australia, I was able to get those two things taken down. That's not government, that's not the e-safety commissioner, that's an NGO with a budget of I think we were under AU$30,000 this year," he said. 


"That's what civil society can do."




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