THE TRIALS AND TRIBULATIONS OF FACEBOOK – TECH

It’s always instructive to analyze a company during their continuous struggles, where things appear to be going wrong.  Facebook has been encountering unusual difficulties that suggest that things are not going as well as they could be, or as they have been during the previous decade.

For one, the number three man in the company, Chief Product Officer Chris Cox has announced his resignation.  In response to CEO Zuckerberg’s recent announcement that the company would switch away from pubic posts such as those on the traditional News Feed (which has experienced a rash of security and data breaches in recent months) to a different approach of private, encrypted messaging (see previous post on this topic).  Cox, who was one of Facebook’s early engineers having been at the company for 13 years, has tendered his resignation in what many believe signals his disagreement with Zuckerberg’s decision.  Cox has said that he “decided to leave to enable new leadership to pull off the shift in direction.”  Cox was promoted ten months ago to oversee the company’s three platforms: Facebook, Instagram and WhatsApp, which sounds like that, at the time, he was being groomed to one day move into the top slot.  And, another resignation, that of Chris Daniels, head of WhatsApp, has also fueled concerns over the well-being of the company, particularly since this is the second management shuffle in less than a year.  Cox rounded out his comments about his departure by saying, “This will be a big project and we will need leaders who are excited to see the new direction through.”  That about says it all – it will be interesting to see how many other highly-placed Facebook employees have the same sentiments about the dramatic change from public postings to private, encrypted ones.  Certainly, advertisers will have some concerns.  And, given that, it’s speculated that the shift away from public postings, which gave advertisers access to the public information and allowed them to target those Facebook customers, will now require that Facebook will need to find new ways of making money other than the advertising machine that currently generates 98% of the revenue.  New changes in the management structure will have Fidji Simo heading up the Facebook app, Will Cathcart, the WhatsApp, and Adam Mosseri, the Instagram app.  All will report to Zuckerberg directly.  The shift in direction for the company is a dramatic one, akin to starting the company anew.  Which likely means that there will be a number of additional departures – analysts have speculated that this might be the case, as well, commenting, “Facebook’s leadership was unusually stable for most of the first dozen years . . .but during the past 18 months, the company has been buffeted by a number of management changes that have one common denominator: a disagreement with Zuckerberg over strategic changes.”  Without a doubt it will be interesting to watch the continued movement toward change – At other companies, the Board of Directors, given this set of circumstances, would be looking at the need to replace the CEO.  This week, Facebook was ordered to pay out just under $5 million to settle five discrimination lawsuits that dealt with age, gender, and ethnicity targeting in some of their ads – the company is speaking defensively, saying, “There is a long history of discrimination in the areas of housing, employment, and credit, and this harmful behavior should not happen through Facebook ads.”  Indeed – all concerns that feed into the mix of current trials and tribulations surrounding Facebook.

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