A former Facebook employee has come forward in an interview with 60 Minutes to express her disdain with the company’s policy of prioritizing profit over the consumer.[1] She is calling for lawmakers to make changes to prevent Facebook, along with other social media companies, from continuing along this path.[2] Frances Haugen, the woman who has come forward with these claims, worked for the company for two years before leaving and taking thousands of private company documents with her.[3] Before Facebook, Haugen worked for other social media platforms including Pinterest and Google.[4] Her claims are that Facebook’s business model, unlike that of her previous employers, purposely puts harmful images/posts on people’s feed in order to raise engagement, and in turn bring more traffic to their site and raise revenue, regardless of the effect such harmful content has on the average consumer.[5]
Facebook’s CEO, Mark Zuckerberg, fired back, claiming that their business model does not work in the way explained.[6] “The argument that we deliberately push content that makes people angry for profit is deeply illogical,” he wrote.[7] “We make money from ads, and advertisers consistently tell us they don’t want their ads next to harmful or angry content. And I don’t know any tech company that sets out to build products that make people angry or depressed,” explained Zuckerberg.[8]
This whistleblowing has brought to light a debate that has long existed in various legal circles, and this debate will continue both inside and outside of Washington D.C.[9] Republicans and Democrats alike are now calling for change regarding social media companies and their ethics, urging the Securities and Exchange Commission and Federal Trade Commission to investigate.[10] Supporters are hoping for regulations to keep internet moguls in check, including the strengthening of privacy and competition laws as well as toughening the platforms’ accountability.[11] According to lawmakers, not only does the company push harmful material to raise profit, but also they’re harming the mental health of young people using their sites. Haugen even helped the Wall Street Journal to release a series of stories related to the social media giant.[12] The Journal’s series was based on internal documents received by Haugen, showing that the company knew of the harm their platform was creating, especially for young girls, but continued to promote their product to drive profit.[13]
As lawmakers push to toughen the platform’s accountability, it can be said that the platform is already being held accountable for its actions by its shareholders in addition to the government. Facebook’s stock price has declined to roughly $330, compared to its record high of over $380 just one month ago.[14] The metric-driven Zuckerberg currently holds 58% of voting shares in Facebook, and the decline in price has already lost him millions of dollars.[15] This whistleblower confrontation, followed by a decrease in Facebook stock, shows that shareholders are not focused only on profit. It is the shareholders sending a signal to Facebook, and all public companies, to focus on projects under the Environmental, Social, and Governmental (ESG) umbrella, regardless of the wealth such projects bring to the company.
In recent years Facebook has shifted ESG efforts beyond profit.[16] Understanding shareholders’ interest in projects that go beyond money, the company has launched new projects through the years to appease these interests, including: a mission to become “water positive” by 2030,[17] setting a goal of using 100% renewable energy, and minimizing environmental impact through operations.[18] Facebook has widely publicized these goals and keeps shareholders up to date on how it is progressing on these goals and if it achieves them.[19] Shareholders should anticipate a similar type of reaction from the company on the newly raised social issues, as Haugen pointed out that her purpose for whistleblowing was for the company to be aware of the issues and fix them from within.[20]
[1] See generally Scott Pelley, Whistleblower: Facebook is Misleading the Public on Progress Against Hate Speech, Misinformation, and Violence, 60 Minutes (Oct. 4, 2021), https://www.cbsnews.com/news/facebook-whistleblower-frances-haugen-misinformation-public-60-minutes-2021-10-03/.
[2] See David Shephardson, Facebook ‘Operating in the Shadows’ Says Whistleblower, Lawmakers Demands Probes, Reuters (Oct. 6, 2021), https://www.reuters.com/technology/facebook-whistleblower-say-former-employer-an-urgent-threat-us-2021-10-05/.
[3] Id.
[4] Clare Duffy, Facebook Whistleblower Revealed on ‘60 Minutes,’ Says the Company Prioritized Profit Over Company Good, CNN (Oct. 4, 2021), https://www.cnn.com/2021/10/03/tech/facebook-whistleblower-60-minutes/index.html.
[5] Id.
[6] See Shephardson, supra note 2.
[7] Id.
[8] Id.
[9] See Allison Grande, Ex-Facebook Employee Urges Senators to ‘Stop the Harm’, Law 360 (Oct. 5, 2021), https://www.law360.com/articles/1428087.
[10] Id.
[11] Id.
[12] See Duffy, supra note 4.
[13] See Pelley, supra note 1.
[14] Wallace Witkowski, Facebook’s Very, Very, Bad Day: Services Go Dark and Stock Plunges in Wake of Whistleblower Revelations, MarketWatch (Oct. 4, 2021), https://www.marketwatch.com/story/facebooks-very-very-bad-day-services-go-down-as-stock-plunges-in-wake-of-whistleblower-revelations-11633365581; See also Facebook, Inc. (FB),Yahoo Finance, https://finance.yahoo.com/quote/FB/history/ (last visited Oct. 7, 2021).
[15] Naomi Nix, Facebook Board Rejects Proposals to Curb Zuckerberg’s Power, Bloomberg (May 26, 2021), https://www.bloomberg.com/news/articles/2021-05-26/facebook-board-rejects-proposals-to-reduce-zuckerberg-s-power.
[16] See Sustainability at Facebook, Facebook, https://sustainability.fb.com (last visited Oct. 7, 2021).
[17] Id.
[18] Paul Nastu, Facebook Hits 100% Renewable Energy Target, Environment + Energy Leader (Apr. 15, 2021), https://www.environmentalleader.com/2021/04/facebook-hits-100-renewable-energy-target/.
[19] See Sustainability at Facebook, supra note 16.
[20] Aaron Nicodemus, Lessons Learned from Actions of Facebook Whistleblower Frances Haugen, Compliance Week (Oct. 5, 2021), https://www.complianceweek.com/opinion/lessons-learned-from-actions-of-facebook-whistleblower-frances-haugen/30899.article.
