When Facebook announced a
record $6.9 billion profit for the final quarter of 2018, up 61% from the last
quarter of 2017, the company’s management could also boast of an estimated 2.7
billion users of Instagram, WhatsApp, Messenger and Facebook each month, 1.52
billion of whom used Facebook every day.[1]
This was particularly surprising at the time because the company had “earned
the ire of users and regulators [in the E.U. and U.S.] for a growing list of
privacy issues, including the Cambridge Analytica data scandal and a massive security
breach.”[2]
Cambridge had improperly used information on tens of missions of Facebook
users, and hackers had accessed the telephone numbers and email addresses of 30
million users. Even though Facebook’s CEO, Mark Zuckerberg “touted the steps
taken by the company [in 2018] to deal with the missuse of the platform,” his
company had been criticized on the eve of the announcement for being in
violation of the agreement with Apple regarding an iOS app (Facebook Research)
distributed to employees and customers
through Apple’s “Enterprise Development Program.”[3]
That program prohibited distribution to customers and accessing “information such as private messages, web searches
and location data.”[4] How
could users not have reacted
negatively, hence bearing on Facebook’s stock-price and profit-level? How could
a company’s unethical management—a point I had documented in Taking
the Face Off Facebook in 2015, prior
to the scandals—not be punished by the market?
Interviewing Facebook users
and industry insiders at the time, I learned that the evolving norm among
Facebook users was not to share so much personal information, including
opinions. Some went from active users to keeping the social network to keep in
touch with contacts, and of course business reasons still existed. In spite of
knowing that using Facebook could help my book sales, I kept away. It does not
seem that many other people walked away before or even during the scandals. So
it was difficult for me to comprehend the herd-mentality and thus why Facebook
numbers had improved in 2018. Why
should I continue to boycott Facebook? I asked myself at the time of the
announcement.
Moreover, if financial markets
do not take account of unethical conduct it could be expected to spread because
of the lack of financial accountability. Economic accountability may
necessitate that people have an active disgust
for excessively self-seeking, unethical managements, especially in cases in
which users or customers have been the primary victims. In the case of
Facebook, apparently billions of people did not care, at least enough to go
beyond protecting themselves by limiting the personal information they would
share on the site. Just as a viable republic requires an educated and virtuous
citizenry, according to John Adams and Thomas Jefferson of eighteenth-century
America, so too do markets that can act to weed out companies with unethical
managements. In other words, perhaps we get what we deserve.
[1]
Seth Fiegerman, “Facebook
Posts Record $6.9 Billion Profit Despite privacy Scandals,” CNN Business,
January 30, 2019.
[2]
Ibid.
[3]
Kaya Yurieff and Ahiza Garcia, “Apple
Says Facebook’s Controversial Market Research App Violated Its Policies,”
CNN Business, January 30, 2019.
[4]
Ibid.
