Shareholder accuses Facebook of human rights violation at tense meeting

Frustrated shareholders lit into the social media company after a year of scandals

Facebook founder and CEO Mark Zuckerberg told shareholders that the business was thriving (Reuters)

Restive shareholders excoriated Facebook executives during an annual meeting, with one likening a data privacy scandal to a human rights violation.

It has been a rocky stretch of negative headlines for Facebook. It has been forced to explain how Russian-linked agents using the platform to influence the 2016 election and has been battered by revelations that a vast repository of user data ended up in the hands of now-defunct political consulting firm Cambridge Analytica. Its stock plunged after the privacy scandal came to light.

Judging by the testimony during a contentious meeting in Silicon Valley, the string of controversies has clearly angered and alarmed shareholders. A woman was escorted out of the meeting early on after talking over a presenter, and speaker after speaker warned of long-term damage to Facebook's reputation and bottom line.

“We’ve identified at least 15 distinct controversies”, William Lana of Trillium Asset Management said, and “accordingly the risk that the company and its shareholders face are profound and real”.

That criticism appeared tame compared to the charge leveled by Christina Jantz of Northstar Asset Management, who argued that Facebook’s structure had diluted the influence of outside shareholders.

“We do not like reading news that states ‘Facebook believes that the data of up to 87 million people was improperly shared with the political consultancy Cambridge Analytica’”, Ms Jantz said. “So if privacy is a human right...then we contend that Facebook’s poor stewardship of customer data is tantamount to a human rights violation”.

Warning of a gathering tsunami of “shareholder outrage”, Ms Jantz suggested that increased government regulation - a possibility CEO Mark Zuckerberg told Congress he welcomed - would not be enough.

“Government regulation is necessary, but it is not sufficient when management fails”, she said.

Echoing that demand for a change, investor James McRitchie advocated a proposal to move to a majority shareholder voting threshhold, saying it would allow shareholders to check Facebook’s “tremendous influence over our nation”.

“Will corporate dictatorships support a strong, democratic government in these United States of America, or will they continue to seek short-term power and profits for the few at the expense of conditions that favour the long-term broader interests of all their shareholders and users”? he said.

Shareholders also assailed executives for not doing enough to police abusive or misleading content, with Natasha Lamb of Arjuna Capital calling for a report on content governance.

“From political subterfuge, fake news, hate speech and sexual harassment, it is clear that content that violates Facebook’s own terms of service poses a risk to the company’s market value and brand”, said Ms Lamb.

Facebook executives later said the full raft of shareholder-proposed reforms had failed. Addressing the anger simmering beneath the meeting, CEO Mark Zuckerberg said the company had fallen short in guarding against people who “abuse these tools” and pledged to do more - even if it cuts into profits.

“The main thing that we need to do right now is make sure that we take a broader view of what our responsibility is to our community“, Mr Zuckerberg said. ”Not just reacting when issues come up, but being more proactive about going out and making sure that there’s less bad content in the system, making sure that it’s harder for any kind of nation-state to interfere in anyone else’s election, making sure that all of the app developers who sign up to use our system are getting reviewed“.

While Facebook has faulted Cambridge Analytica and a researcher who collected data through a third-party app for the privacy controversy, it has faced intense political scrutiny and a consumer backlash.

Hoping to capitalise on the latter, a newly launched group called Freedom From Facebook flew an aeroplane over the meeting carrying a banner that stated “You Broke Democracy”. Posters popped up editing Mr Zuckerberg’s famous admonition to “Move fast and break things” by replacing “things” with “democracy”.