Is Facebook too big to fail?

After the privacy invasion scandal highlighted by the Cambridge Analytica revelations, the one unspoken question seems to be: when will Facebook CEO Mark Zuckerberg resign? Or be charged?

After all, Uber’s bad-boy founder Travis Kalanick was forced by his investors to resign as CEO of the world’s most valuable start-up for a string of embarrassing scandals that, frankly, pale when compared to what has been uncovered about Facebook — not just last month, but in the past few years.

The difference is that Zuckerberg, who has built the largest social network in the world, with 2.2bn monthly active users, has also built himself an unassailable moat against such interference. He controls 60% of the company’s voting stock.

Last week Zuckerberg, who has embarked on a charm offensive with the media, held a conference call to which the Financial Mail was invited. Asked about investor concerns about corporate governance and if the board had discussed whether he should step down as chairman, he didn’t miss a beat in replying: "Not that I’m aware of."

Similarly, when asked if he was still the man to lead Facebook, he immediately answered: "Yes." By way of justification, he added: "I think life is about learning from the mistakes and figuring out what you need to do to move forward."

The story is that on March 18, after a year of investigation, British newspaper The Observer published the shocking confessions of Cambridge Analytica whistleblower Christopher Wylie, exposing how deeply Facebook users’ privacy had been compromised to ultimately help swing the elections for first, Brexit, and second, Donald Trump.

When psychologist Aleksandr Kogan convinced about 270,000 people to take his test about their digital personalities, he was able to harvest what became 50m people’s data that he then sold to Cambridge Analytica — because those were the ludicrously invasive privacy settings that Facebook itself imposed on its users. Last Wednesday Zuckerberg said it was more likely 87m users, based on Facebook’s own research.

In SA, the breach potentially affected 59,777 people — friends of those elsewhere in the world who would have installed the digital personality app. In all, only 33 South Africans downloaded that app, which is at the heart of this scandal.

With some understatement, Zuckerberg added: "It’s clear now that we didn’t do enough. We didn’t focus enough on preventing abuse and thinking through how people could use these tools to do harm as well. That goes for fake news, foreign interference in elections, hate speech, in addition to developers and data privacy. We didn’t take a broad-enough view of what our responsibility is, and that was a huge mistake."

As he has often done, he took ultimate responsibility: "It was my mistake".

But it’s been an immensely costly mistake. Since March 16, when it was valued at US$538bn, Facebook has lost about $71bn (R850bn) in market value. To put that into context, this 13% loss in market cap was much larger than Dell’s total annual revenue last year; or enough to buy FirstRand and Standard Bank, and still have R120bn left over.

It’s now worth $466bn, down from its five-year high of $561bn on February 1, bringing the overall losses to $95bn — though that extra $24bn loss, above the $71bn, can’t directly be attributed to the Cambridge Analytica scandal.

Still, it has been a shocking two-week period that has shattered the myth of social media’s good intentions for "connecting people" as Zuckerberg always says. As Zuckerberg prepared to answer the first of two days of questions by American lawmakers on Tuesday April 10, Facebook, Cambridge Analytica, SCL and Kogan’s Global Science Research were served with a class action suit in both the US and UK. At this point it seems unlikely that the social network will escape some form of regulation — at the very least, certainly around election advertising.

After the previous US election scandal, where Russian Internet trolls managed to reach 126m Facebook users, last week Zuckerberg’s company shut down 70 Facebook accounts and 138 pages run by the Russia-based Internet Research Agency (IRA).

Facebook will also bring strict privacy requirements of the European Union’s General Data Protection Regulation (GDPR) to all its users around the world, Zuckerberg said last Wednesday: "We intend to make all the same controls and settings available everywhere, not just in Europe." But he added: "Is it going to be exactly the same format? Probably not. We need to figure out what makes sense in different markets with the different laws and different places."

But it’s astounding that after such colossal losses and a string of controversies any CEO could retain that role. Then again, Zuckerberg isn’t just any CEO.

Two years ago, before the US elections exposé would rip apart any remaining innocence, The Economist likened Facebook to a "great empire with a vast population, immense wealth, a charismatic leader, and mind-boggling reach and influence".

Zuckerberg was depicted as a Roman emperor on its cover, under the headline "Imperial Ambitions". "Not since the era of imperial Rome has the ‘thumbs-up’ sign been such a potent and public symbol of power," the influential business magazine pointed out, referring to Facebook’s "Like" button.

But as is the case with all powerful rulers, Zuckerberg appears to inhabit the highest ivory tower and live in the ultimate filter bubble.

Last year he gave signs of political ambitions, embarking on a "listening tour" through various US states. Tavis McGinn was hired by Facebook to poll public perception of the company’s CEO, which he did for two years.

McGinn’s comments, about how much control Zuckerberg exerts, are terrifying: "Facebook is Mark, and Mark is Facebook. Mark has 60% voting rights for Facebook. So you have one individual, 33 years old, who has basically full control of the experience of 2bn people around the world. That’s unprecedented. Even the president of the US has checks and balances. At Facebook, it’s really this one person."

Asked if anyone had been fired over Cambridge Analytica, Zuckerberg told reporters on last week’s conference call: "At the end of the day, this is my responsibility. I started this place. I run it. And I am responsible for what happens here."

Addressing the issue of whether he should still run the social network, he added: "I still think that I’m going to do the best job to help run it going forward. I’m not looking to throw anyone else under the bus for mistakes that we’ve made here."

Given the geopolitical and economic impact of Brexit and of Trump, who is headed for a trade war with China and a showdown with North Korea’s dictator, it’s astounding that no heads have rolled. Only, perhaps, Steinhoff CEO Markus Jooste and the directors of SA Airways appear to have acted with comparable disregard for the consequences of their actions.

Even though high-profile figures like Elon Musk have joined the #DeleteFacebook movement by taking down Tesla and SpaceX’s Facebook pages, Zuckerberg said last week the social network hadn’t observed "any meaningful impact".

But even though Facebook may be too big to fail, it has certainly failed society.

Social media comes at an intolerable cost to privacy and people’s social lives and mental health; it is also thought to have distorted democratic processes in the US and UK.

Social networks, including Twitter, SnapChat and Instagram, are filled with cyber-bullying, misogyny, racist rants, anti-Semitism and hate speech; while YouTube has been exposed for disinformation and fuelling conspiracy theories, which are often shown to youngsters.

All of which means social media is at a tipping point. Even before these latest revelations, public opinion – and medical health bodies – had turned against the way society has been sucked into it.

Last year, a study by the Royal Society for Public Health said these social networks were bad for young people’s mental health, creating fear of missing out (Fomo) and are "more addictive than cigarettes and alcohol".

The study called for "checks and balances [to be put] in place to make social media less of a Wild West when it comes to young people’s mental health and wellbeing".

Instagram, which is owned by Facebook, was the worst of the five networks surveyed in the study, with Facebook itself ranked third.

In December, Facebook appeared to concede some of this when it admitted that "when people spend a lot of time passively consuming information — reading but not interacting with people — they report feeling worse afterward". A shorter word for that would be "depression".

Already, former Facebook executives are flagellating themselves for what they helped create, calling it the "bright dings of pseudo-pleasure" and saying that "dopamine-driven feedback loops we’ve created are destroying how society works".

The UN has even moved to declare that "Facebook has now turned into a beast" because of the hate speech and violence against Rohingya Muslims in Myanmar, for instance. In other words, the social network is a pivotal player in human rights violations.

These are damaging allegations at perhaps the worst time for Zuckerberg. This latest salvo comes as the world has fallen out of love with Silicon Valley and its inventions, a similar shift in sentiment to Wall Street in 2008, after the fallout in housing derivatives sparked the global financial crisis.

Though Zuckerberg last week called his 2.2bn-strong network "unprecedented in the world" and admits to making "mistakes" over the past few years, the Cambridge Analytica scandal is just the latest privacy imbroglio that has rocked the network.

Throughout its 14-year history, Facebook has been notorious for pushing the boundaries of privacy, then retreating after user outcries.

Infamously, back in 2010, Zuckerberg declared: "People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people. That social norm is just something that has evolved over time."

Now, after the Cambridge Analytica scandal, multiple other infractions have come to light – none of which can be blamed simply on "bad actors".

For example, Facebook used lax security and privacy settings to hoover up Android call and text data; while people who opted to let Facebook’s Messenger send and receive messages similarly had their data compromised.

Then it emerged that Facebook was storing videos that had been uploaded but never posted, which it quickly told TechCrunch was just a "bug". "We discovered a bug that prevented draft videos from being deleted. We are deleting them and apologise for the inconvenience," it said.

Also hidden in last Wednesday’s mea culpa was a more alarming statistic about Facebook’s inability to keep its 2.2bn users’ data secure, with implications for South Africans.

Here, Zuckerberg admitted that a service to look up people using their e-mail addresses or phone number could have been compromised. "It is reasonable to expect that if you had that setting turned on, that at some point during the past several years, someone has probably accessed your public information in this way," he said.

Earlier in the day, chief technology officer Mike Schroepfer conceded in a blog that "malicious actors have also abused these features to scrape public profile information by submitting phone numbers or e-mail addresses they already have through search and account recovery".

It’s a remarkable crash for the company meant to lead the world into a bright new future. Some saw it coming, though.

In 2014, Apple CEO Tim Cook pointed out the obvious in an open letter that seemingly also referenced Google’s ad-driven business model: "When an online service is free, you’re not the customer. You’re the product."

Last month Cook, echoing comments made by Apple’s founder Steve Jobs years ago, added: "We’re not going to traffic in your personal life. I think it’s an invasion of privacy ... privacy to us is a human right."

At the time, Zuckerberg called Cook’s words "extremely glib".

He said: "If you want to build a service which is not just serving rich people, then you need to have something people can afford. I think it’s important that we don’t all get Stockholm syndrome, and let the companies that work hard to charge you more, convince you that they actually care more about you. Because that sounds ridiculous to me."

There is a backlash against social media and its power over our lives

—  What it means

At the D8 Conference in 2010 Jobs told Zuckerberg, sitting in the audience, about Apple’s policies: "Privacy means people know what they’re signing up for, in plain English, and repeatedly.

"Ask them. Ask them every time. Make them tell you to stop asking them if they get tired of your asking them.

"Let them know precisely what you’re going to do with their data."

On the back foot from these user-manipulation revelations, Facebook is finally doing something: it is simplifying its privacy settings, as well as limiting what data apps can access and what can be searched.

But as technology journalist Casey Newton warned: "Facebook is making it easier to find your privacy settings. Simply arrange five burning candles into a pentagram and yell ‘privacy’ beneath the glow of a blood moon."

The truth is that Zuckerberg doesn’t have a good reputation when it comes to privacy, nor when it comes to how he views his users.

The now 33-year-old who famously created "thefacebook.com" for Harvard students in his dorm room, before dropping out, infamously explained to a friend in an early instant message that 4,000 people had given him their e-mail addresses and other personal information.

"How’d you manage that one?" his nameless friend asked.

"They ‘trust me’," Zuckerberg replied, before describing them in a way that still seems eerily true: "Dumb fucks."