What will happen to Facebook Inc. when a former employee of the US Senate testified that the social-media company repeatedly paid profits to its users.
Well, probably not too much. Executives and directors of publicly traded companies are expected to generate shareholder value or profit at the top of their list as part of their fiduciary responsibility to investors. Often seen in such debates, it is the actions of executives that do not produce reconsideration, but to cover up the lies they tell.
Former Facebook FB,
Product manager Frances Hausen told a Senate subcommittee on consumer protection, product protection and data security on Tuesday that the social media giant lied to investors and the public about its practice and that it would work.
News coverage: Facebook whistleblower says company ‘promotes division, extremism and polarization’
“The documents I provide prove that Facebook has repeatedly misled us about their own research on child safety, the role of spreading hateful and polarizing messages, and much more,” Hausen said in his testimony on Capitol Hill.
Hausen was the main source for The Wall Street Journal’s recent investigation, a document in The Facebook Files, and his identity was revealed during a 60-minute speech for a part aired Sunday night before he testified before senators on Tuesday. The integrated rollout coincided with the biggest drop in its stock in almost a year, with Facebook services shutting down for an unprecedented six hours on Monday.
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Facebook and its investors should be concerned about the collapse. Hausen has filed a number of complaints with the Securities and Exchange Commission, outlining the company’s previous congressional testimony and the company’s misleading statements in conference calls with investors, including “how it misled investors about 2020 and its role in perpetuating violent extremism. The January uprising.
Stephen Diamond, an associate professor in the law department at Santa Clara University, said Hausen’s submission should trigger an investigation by the SEC into whether Facebook made misleading statements or omitted investors’ material information.
“The real question is whether Facebook is releasing a balanced picture of the impact of such activity on their investors,” he said.
The senators were preparing to ask Facebook exactly thatSome at least have been suggesting an invitation to CEO Mark Zuckerberg, following a great performance last week by Antigone Davis, the head of global security and less of Facebook executive, before the same committee.
Facebook attacked Messenger on Tuesday instead of seeking justification for its actions. A Facebook executive called the information provided to the authorities and the media a “theft”. In a television interview, And the company issued a statement that sought to discredit Hausen, stating that he had worked for the company for less than two years, had no direct reports, and did not attend C-level executive meetings.
“We do not agree with the nature of the many things he has testified,” Lena Pietes, director of policy communications, said in a statement.
This kind of reaction is not going to play well. During the hearing, many senators praised Hausen for his courage in coming forward and compared him to Jeffrey Wigand, a former executive in the tobacco industry, who whistled at the industry about interfering with information on the nature of nicotine addiction. Smoking.
If Facebook continues to follow a whistle blower and try to avoid big questions about its actions, it will persuade lawmakers to take more dramatic action. Hausen’s testimony, for example, could lead to some practical reform of Section 230, a law enacted in 1996 that protects Internet platform companies from exposing third-party content from litigation. During the hearing, Sen. Amy Cloboucher (D., Min.) Noted that Congress has been frustrated for the past two years about taking any action.
“Now is the time to act,” he said.
Earlier this year, Rep. Tom Malinowski (D., NJ) and Rep. Anna G. Issue (D. Harmful, fundamentalist content that leads to offline violence. The bill would remove the impunity of a platform if its algorithm expands the content of civil rights interference and international terrorism. An earlier version of the bill was introduced a year ago and in Congress) Went.
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Facebook could see further impact beyond the SEC investigation, and recharged legislators are seeking to establish new guidelines for the Internet. Shareholders may be next, with misleading statements from investors alleging class-action lawsuits. Diamond further noted that criminal liability could be another potential problem, if the SEC investigation finds that there was a deliberate violation of the Securities Act.
The last few years have created wave after wave of negative news about Facebook, but nothing has come to the company, which was বাজার 1 trillion at market value two weeks ago. Investors who have held stock in the debate should understand that this time, the company’s Teflon ieldal could eventually crack.
“There’s a momentum here that indicates that Facebook has some serious problems,” Diamond said.