'The most powerful person who's ever walked the face of the earth': How Mark Zuckerberg's stranglehold on Facebook could put the company at risk
Mark Zuckerberg, Facebook boss. Getty
Mark Zuckerberg, Facebook's CEO, owns 55% of the company's voting stock, which gives him majority power.
Experts say it is "a bad idea" when one person has so much control over a giant like Facebook.
The thought runs deeper as leaked documents showing Facebook rejects its societal harm.
Facebook CEO Mark Zuckerberg holds 55% of the company's voting shares, a former employee and whistleblower Frances Haugen told Congress last week.
This is important, she said, because it is "a very unique role in the technology industry". She added, "There are no similarly powerful companies that are so unilaterally controlled." Or in another part of the hearing bluntly: "There is currently no one holding Mark accountable except himself."
He is essentially the "keyman" of Facebook, a person who has the final say in business decisions and without whom the company would be badly affected.
Experts told Insider that there is cause for concern that a person is in control of a controversial family of platforms that affect hundreds of millions of people.
“I don't think it's an exaggeration to say that Mark Zuckerberg is the most powerful person who has ever walked the earth, and I think that this type of power wielded by a person is generally a bad one Idea is, ”said Whitney Tilson, a former hedge fund manager and CEO of Empire Financial Research.
The over-power of Zuckerberg has been debated for years
Company founders with a majority stake in a company are not uncommon. It is most prevalent in the tech world, where two-tier structures are common. Google founders Sergey Brin and Larry Page, for example, resigned from the giant in 2019, but remained on the board. Together they continue to have a majority over the company.
"Typically there are companies like GM, Ford or Bank of America that are controlled by a single investor," said Chris Haynes, associate professor of international affairs and political science at the University of New Haven. "That's not the rule."
Proponents of the arrangement often say that it allows business leaders to remain trained for long-term success without being distracted by short-term pressures.
"Having a company that is controlled by a single person, 'the idea' when it comes to tech companies, makes the company much more agile and they can really make a dime," said Haynes, since they don't have to many investors get on board to make a decision.
But it can also slow down a bit. Facebook lists Zuckerberg's excessive control as a potential risk factor for investors and says it will "delay, postpone, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that support our other shareholders could".
Critics say control can protect companies from concerns that can harm society and investors, and it can lead to volatility.
"I think you can see that in the case of Facebook," said Haynes.
Facebook had a rocky few weeks after documents leaked from Haugen to the Wall Street Journal showed that Zuckerberg and other insiders knew the company's platforms were having a negative impact on the public and rejected those concerns.
"Facebook is bigger than any religion in the history of the world and a man is 100 percent in control," said Tilson.
Joy Poole, a former Facebook employee who now works at consulting firm Emergence, said lawmakers should "absolutely" examine how regulation could determine how CEOs hold majority stakes in their companies. But maybe there are more pressing problems.
"Mark Zuckerberg has majority control over a company with tremendous influence in the world," said Poole. "However, I don't believe for a minute that if he had 49% control we would magically find answers to the complex questions we are faced with here."
But last week's hearing with Haugen and her disclosure of internal documents to the US Securities and Exchange Commission could change things, Tilson said, although it isn't likely.
If the SEC investigation reveals that Facebook has misled investors by, among other things, failing to disclose investigations into negative harm to teenagers, the agency could demand his resignation, Tilson said.
"That would be the only way I can think of to overcome his controlling voting rights," he said.
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