By Deepa Seetharaman
Mark Zuckerberg gathered roughly 50 of his top lieutenants
earlier this year and told them that Facebook Inc. was at war and
he planned to lead the company accordingly.
During times of peace, executives can move more slowly and
ensure that everybody is on board with key decisions, he said
during the June meeting, according to people familiar with the
remarks. But with Facebook under siege from lawmakers, investors
and angry users, he needed to act more decisively, the people
said.
Mr. Zuckerberg's new approach is causing unprecedented turmoil
atop Facebook, driving several key executives from the company,
according to people familiar with the matter. At times, it has
created tensions with his longtime chief operating officer, Sheryl
Sandberg. The June meeting and strains with Ms. Sandberg haven't
been previously reported.
The 34-year-old CEO believes Facebook didn't move quickly enough
at key moments this year and increasingly is pressing senior
executives to "make progress faster" on resolving problems such as
slowing user growth and securing the platform, said people familiar
with the matter. Mr. Zuckerberg also at times has expressed
frustration at how the company managed the waves of criticism it
faced this year.
On Friday, that tension was on display when, during a
question-and-answer session with employees at Facebook's
headquarters in Palo Alto, Calif., he blasted a fresh round of
critical news coverage as "bullshit," according the people familiar
with the remarks.
One employee at the session asked if Facebook could deter leaks
by publishing an internal report about how frequently offenders are
found and fired. Mr. Zuckerberg said Facebook does fire leakers,
but the root cause was "bad morale" perpetuated by attacks in the
media.
Mr. Zuckerberg, who previously set annual goals such as to learn
Mandarin and read 25 books, said this year he would focus on fixing
Facebook. He believes this tougher management style is necessary to
tackle challenges being raised both internally and externally,
according to a person familiar with his thinking.
Mr. Zuckerberg's new posture could trouble those who feel his
"move fast, break things" mantra from Facebook's early days
contributed to many of the company's current problems. It also has
led to confrontations with some of his top reports, including Ms.
Sandberg, his longtime number two who has long had considerable
autonomy over the Facebook teams that control communications and
policy.
This spring, Mr. Zuckerberg told Ms. Sandberg, 49, that he
blamed her and her teams for the public fallout over Cambridge
Analytica, the research firm that inappropriately accessed private
data on Facebook users and used it for political research,
according to people familiar with the exchange.
Ms. Sandberg later confided in friends that the exchange rattled
her, and she wondered if she should be worried about her job.
Mr. Zuckerberg also has told Ms. Sandberg she should have been
more aggressive in allocating resources to review troublesome
content on the site, according to one person familiar with the
matter, a problem that the company still struggles to fix.
Mr. Zuckerberg is pleased with the improvement in recent months,
according to people familiar with the matter, and last week told
reporters that Ms. Sandberg is a "very important partner to me, and
continues to be, and will continue to be."
Mr. Zuckerberg had privately told his executives that some of
the reaction to the Cambridge Analytica controversy amounted to
"hysteria" and complained Facebook wasn't effectively managing the
response.
Mr. Zuckerberg doesn't remember using the word "hysteria"
regarding Cambridge Analytica, according to a person familiar with
his thinking, adding that he takes these issues seriously and that
Facebook has spent billions on safety and security to address these
problems.
The heads of some other key Facebook units didn't survive
conflicts with Mr. Zuckerberg.
Mr. Zuckerberg clashed with the co-founders of Instagram, the
fast-growing photo-sharing app, over his desire to share location
data on Instagram users with the main Facebook platform, which
would help better target ads, said people familiar with the matter.
The founders, who strongly opposed sharing the data, abruptly
resigned in September, and Instagram started testing the change
shortly after they left, the people said.
A Facebook spokeswoman said Instagram hasn't "introduced updates
to our location history settings" and the company would keep users
informed.
The co-founders of WhatsApp likewise left after disagreements
with Mr. Zuckerberg over how to generate more revenue from the
messaging-service, people familiar with the matter said. More
recently, Mr. Zuckerberg forced out Brendan Iribe, co-founder of
Oculus VR, in part because of a disagreement about the future of
the Oculus Rift virtual-reality headset, the people said. Facebook
and Mr. Iribe said his decision to leave in October was
"mutual."
Facebook remains hugely profitable, with net income of more than
$5 billion in the third quarter, but its margins are under pressure
in part because of its increased spending on security. Mr.
Zuckerberg has said Facebook is in the midst of a three-year
turnaround ending in 2019 to strengthen its defenses against the
risks posed by having an open platform.
A Facebook spokeswoman said in a statement: "We were absolutely
too slow to identify a range of issues over the past two years, but
once we did we took strong action to address them and prevent
future abuse. We've made massive investments in safety and
security. While we know we have more work to do, we believe we've
made progress."
All told, roughly a dozen senior or highly visible executives
disclosed their resignations or left Facebook in 2018. In May,
Facebook announced a major reshuffling of top product executives in
a way that helped free up Mr. Zuckerberg to oversee a broader
portfolio within the company.
This turmoil at the top of Facebook has made it difficult for
the company to execute on some product decisions and shore up
employee morale, which has been sinking over the last year along
with the stock price, which has fallen 36% since its peak. Many
employees are frustrated by the bad press and constant
reorganizations, including of the security team, which can disrupt
their work, according to current and former employees.
Scrutiny of Facebook has only escalated in the past week after
the New York Times reported its use of opposition-research firms
tasked with exposing critical information about Facebook's
detractors, including one called Definers Public Affairs. Ms.
Sandberg and Mr. Zuckerberg both said the decision to employ the
firm was made by Facebook's communications officials.
Ms. Sandberg's comments in particular have angered many people
on those teams, according to people familiar with the matter, given
how closely she tracked and managed Facebook's media strategy,
sometimes getting involved in wording changes. In the internal
Q&A Friday, Ms. Sandberg said she took full responsibility for
the actions of the communications team.
As both chairman and CEO and with a lock on the majority of
Facebook's supervoting shares, Mr. Zuckerberg has few checks on his
power. Still, Facebook's board has taken a more active role of
late. In September 2017, Erskine Bowles, the head of the audit
committee and a former Clinton White House official, told Ms.
Sandberg and Mr. Zuckerberg that he felt they needed to take the
issue of Russian interference on the platform much more
seriously.
"This is going to be much bigger than you think," Mr. Bowles
said, according to a person familiar with the exchange. Mr. Bowles
also said the board should have been notified sooner as the company
realized the extent of the interference.
The board then requested more regular updates on the matter, at
times seeking daily briefings -- a much higher level of engagement
than is typical for the board, people familiar with the matter
say.
Later, after the Cambridge Analytica disclosure, the board urged
Mr. Zuckerberg to name an executive who would be in charge of
corralling Facebook's response to that matter and resolving other
issues before they metastasized, said a person familiar with the
matter. After that, he put Ms. Sandberg in charge of that
effort.
Mr. Zuckerberg also sought advice from a mentor, former
Microsoft Corp. Chairman and CEO Bill Gates. He recommended
Microsoft's model, which relies on Brad Smith to oversee its
corporate, external, and legal affairs. Mr. Smith wears the title
"president" and reports directly to the CEO.
As Mr. Zuckerberg looked for someone to fill that role,
Facebook's general counsel Colin Stretch announced his resignation
in June, according to people familiar with the matter, partly
because the new structure would have effectively demoted him.
Facebook ultimately decided against combining the jobs after
failing to find a suitable candidate. Mr. Stretch now plans to stay
through at least next summer, people familiar with the situation
said. Facebook is no longer searching for his replacement.
In October, Facebook hired former U.K. deputy prime minister
Nick Clegg as head of global policy and communications, the
company's most high-profile external hire since Ms. Sandberg joined
from Google in 2008.
But his predecessor, Elliot Schrage, still remains at the
company and reports to Ms. Sandberg. Friday, Mr. Schrage told
employees at the company Q&A to expect more negative coverage
of Facebook in coming months.
--Robert McMillan and Kirsten Grind contributed to this
article.
Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
November 18, 2018 17:08 ET (22:08 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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