Problems at Facebook

Jonathan Crystal
Jonathan Crystal
CFO, Crystal & Company

Facebook has been making headlines, for all the wrong reasons.

Days after The Guardian and New York Times exposed Cambridge Analytica’s use of 50 million Facebook customers’ data for purposes of political profiling, shareholders shaved nearly $60 billion in the company’s market cap and filed a class-action lawsuit.

According to The Independent, “The lawsuit alleges that...Facebook failed to disclose to investors that it had violated its own data privacy policies by allowing third parties to access the personal data of millions of users without the users’ consent.”

How does this situation compare to Equifax’s breach by hackers or Wells Fargo’s management and ethical lapses?

The release of a recent internal memo illustrates, in software terms, that problems at Facebook are “a feature, not a bug.” The aggregation and monetization of users’ personal data for purposes of targeted advertising is the engine that has driven Facebook’s valuation to $466 billion. That’s why Alex Stamos, Facebook’s chief information security officer, is leaving the company.

Bottom Line:

Understand your core risk issue:
We’d expect a trucking company to have a firm grasp of driver safety or a food company to have extraordinary focus on food safety. A data-driven technology company has no excuse not to have full command of the security and privacy of its’ customers’ data.

Words matter:
Facebook’s communications speak of “unauthorized use” of its customers’ data, not a “breach.” The semantic distinction may be relevant to Facebook’s attorneys and regulators but not to its customers: the “#deleteFacebook” hashtag is trending on social media.

Get out in front of the crisis:
#WheresZuck? Facebook Founder and CEO Mark Zuckerberg took nearly a week to put out a statement in response to the controversy. This is an inexplicable lapse in leadership, especially when this is no surprise. Facebook’s attorneys were aware of the specific allegations against Cambridge Analytica and pressuring The Guardian not to publish days before the exposé was released. The underlying question of Facebook’s role in politics has been a topic of media interest since summer of 2016.

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