Litigation is coming from different directions. One recent shareholder lawsuit alleges that Facebook’s board overpaid its $5 billion settlement to the FTC to protect Chief Executive Officer Mark Zuckerberg from liability. Another alleges insider trading by a handful of Facebook’s top executives. The suits were filed by two shareholder groups led by pension funds, including the California State Teachers’ Retirement System. A Facebook spokesman declined to comment.
More serious: the company may face criminal liabilities for some of the worst behavior on its site. The leaked internal documents include evidence that Facebook neglected to do enough to stop human trafficking, according to the Wall Street Journal’s report. That could make it liable under the U.K.’s Modern Slavery Act, according to Andrew Wallis, founder of the human trafficking charity Unseen.
Gretchen Peters, who runs an organization that tracks crime and terror activity on social media, has been lobbying the Justice Department to investigate if Facebook’s hosting of criminal content rises to the level of a RICO violation, referring to a law that was designed to help prosecute organized crime. A probe isn’t certain, however.
The boss seems to have checked out. Remember back in 2000 when Bill Gates stepped down as CEO of Microsoft? The company had been going through an antitrust nightmare with regulators, and Gates himself was often blamed for all that was wrong with Windows. Then he left to focus on the nonprofit Gates Foundation and became a philanthropic icon. That must sound pretty appealing to Mark Zuckerberg right now, and it almost shows in his behavior.
Last week, instead of publicly responding to some of the most damning internal leaks in Facebook’s history, Zuckerberg posted videos of himself fencing and talking about new hardware products. He also joked that the New York Times got details about his surfing machine wrong, in what was a serious story about how the company tweaked newsfeeds. A more sensible approach would have been for Zuckerberg to publicly address the leaks, or to at least stay quiet and focus on dealing with the matter.
His behavior instead should be troubling, particularly to anyone who wants to see the CEO manage his senior leadership team through yet another crisis. The leak to the Wall Street Journal contained insights from many varied areas of Facebook, suggesting it may have come from a person or people with senior responsibilities.
If Zuckerberg is replaced, that may be no bad thing for Facebook’s shares. A new boss who can more stringently fix the company’s issues, and appease regulators and lawmakers, could make the site a more attractive place for users who have left.
It is understandable if Zuckerberg is tired of apologizing for yet another controversy. But with the potential liabilities piling up, his approach feels out of touch at best, and at worst irresponsible. Facebook investors should take note.
Parmy Olson is a Bloomberg Opinion columnist covering technology. She previously reported for the Wall Street Journal and Forbes and is the author of We Are Anonymous.