Zuckerberg response fails to quiet critics

The 33-year-old CEO waited several days to respond to news reports, even as the furore grew

By BLOOMBERG

SAN FRANCISCO • Facebook Inc CEO Mark Zuckerberg broke his silence on the crisis over political-advertising firm Cambridge Analytica’s access to user data on the social network, outlining concrete steps the company is taking to make sure such a leak doesn’t happen again.

Critics were underwhelmed.

The billionaire finally spoke in a series of media interviews, and a blog post, promising to probe the extent to which “rogue apps” are harvesting sensitive data on the social network. Zuckerberg told CNN that Facebook would inform every one of its two billion-plus users that may have gotten their personal data compromised.

Shares in Facebook were down 2.3% during pre-market trading at 7:04am yesterday in New York.

“I’ve been working to understand exactly what happened and how to make sure this doesn’t happen again,” Zuckerberg wrote in a post on his Facebook profile page. “I promise you we’ll work through this and build a better service over the long term.”

By pledging to investigate whether Cambridge Analytica still holds the information it obtained from a third-party app creator, and broadening the probe to other developers that may have run afoul of Facebook’s rules, Zuckerberg took a step in the right direction, according to lawmakers, investors and users. But it wasn’t enough to end the criticism — some remained sceptical the company is doing enough.

Lawmakers Still Want Zuckerberg to Testify
“This isn’t going to cut it,” David Cicilline, a Democratic US representative from Rhode Island, said in a Facebook post responding to the CEO’s statement. “Zuckerberg needs to testify before Congress.”

That sentiment was echoed by other lawmakers in the US and Europe, including Senator Amy Klobuchar, a Democrat from Minnesota, and Senator Richard Blumenthal, a Democrat from Connecticut.

“Mea culpas are no substitute for questions and answers under oath,” Blumenthal, a member of the Judiciary Committee, said. “Congress has failed to hold Facebook accountable, and legislate protections on privacy, which are manifestly necessary.”

Antonio Tajani, the president of the European Parliament, said in a Twitter post that many questions remain unanswered. “I look forward to him giving further explanations before the elected representatives of over 500 million European citizens,” he said.

German Justice Minister Katarina Barley said in an interview with German newspaper Funke-Mediengruppe that she will ask Facebook officials to provide an explanation in person. Speaking to UK media Matt Hancock, a senior UK lawmaker, said: “It shouldn’t be for a company to decide what is the appropriate balance between privacy and innovation. The big tech companies need to abide by the law and we’re strengthening the law.”

On Wednesday in Washington, Facebook officials met privately with House Energy and Commerce Committee staffers from both sides of the political aisle for nearly two hours, according to two people who attended the meeting. One main question was whether there might be others — including other “bad actors” — who might have had access to the same data that Cambridge Analytica obtained from more than 50 million Facebook profiles. Staffers, speaking on the condition they not be identified, said the Facebook officials acknowledged that the company doesn’t know how widely disseminated that information might be, or how many copies were made.

In interviews on Wednesday, Zuckerberg said he was “open” to testifying before Congress, if he’s the right person to provide the information lawmakers need. But he stopped short of committing to appear.

Misses Bigger Picture
Zuckerberg’s solut ions focused solely on the outside developers that have accessed Facebook user details through login tools.

“They’re not recognising that they have systemic problems,” Brian Wieser, an analyst at Pivotal Research, said in an interview. “These are just the problems we know about, but they have ongoing problems managing different parts of their business.”

The company came up with steps to resolve the developer problems, but “to garner full appreciation from the public and the market, there should be greater emphasis on why it occurred in the first place”, said James Cakmak, an analyst at Monness Crespi Hardt & Co.

Benefit of the Doubt
The 33-year-old CEO waited several days to respond to news reports, even as the furore grew. “Everybody is disappointed that he and Sheryl Sandberg didn’t come out with this right away,” said Ivan Feinseth, CIO at Tigress Financial Partners, also referring to the company’s COO.

Following the calls from lawmakers, there have been broader questions about how Facebook’s management is handling the fallout. “These are operational failures,” Weiser said. “On what basis can you say that management is great, let alone good? You can say they were able to generate a lot of users and a lot of revenue.

That’s not what makes a great management team.”

Facebook’s board followed up on Zuckerberg’s statement with its own, responding to critics.

“Zuckerberg and Sandberg know how serious this situation is and are working with the rest of Facebook leadership to build stronger user protect ions,” Sue Desmond- Hellmann, the lead director of Facebook’s board, said in a statement. “They have built the company and our business and are instrumental to its future.”

Some analysts were willing to give Facebook’s leadership the benefit of the doubt.

“They are great executives in that they’ve built a huge company,” Feinseth said. “And there is no competition, there is no peer, there is no alternative.”