May 20th, 2019
Open Letter to Major Facebook Shareholders
To Facebook’s Largest Shareholders: Including: Vanguard Group Inc, Blackrock Inc, FMR LLC, Price T Rowe Associates Inc, State Street Corp, Capital Research Global Investors, Capital World Investors, Capital International Investors, Geode Capital Management, LLC, Northern Trust Corp, Invesco Ltd., Norges Bank, Morgan Stanley, Goldman Sachs Group Inc, Bank of New York Mellon Corp
We, the undersigned shareholders and civil rights groups, write today asking you to withhold your votes of support from Mark Zuckerberg, as a member of Facebook’s board of directors, at the annual shareholder meeting on May 30. We are concerned that Mr. Zuckerberg’s excessive and unchallenged power at the helm of Facebook — as CEO, Board Chair, and the company’s controlling shareholder — has positioned him to persistently defy the demands of shareholders, civil and human rights groups, elected officials, and the global public to address deeply rooted problems that enable tremendous harm. As Facebook’s largest institutional investors, your vote “no” on Mark Zuckerberg will send a clear message that it is past time for new governance.
While Facebook’s embattled position is nothing new, the sheer avalanche of stories today speaks volumes about the consequences of Mr. Zuckerberg’s failure to lead. The daily headlines, long announcing Facebook’s latest failure, are finally confronting Facebook’s biggest failure: Mark Zuckerberg. As Mr. Zuckerberg’s inadequacy has consumed the media and invited scrutiny and fines by regulators, he has become a liability for Facebook. From NBC News (“Mark Zuckerberg leveraged Facebook user data to fight rivals and help friends”, April 16) to the Los Angeles Times (“Facebook shareholders are getting fed up with Zuckerberg but can’t do anything about him”, April 16), to the Washington Post “Facebook CEO Zuckerberg said to be under close scrutiny in federal privacy probe” (April 19), the story of Facebook is now a story of why Mark Zuckerberg must not be his own boss.
That story is justified: Mr. Zuckerberg has uniformly failed to confront significant financial, legal, regulatory, reputational, and civil and human rights risks until it is too late. Investors have been kept in the dark about controversy after controversy, jeopardizing shareholder value, diminishing Company oversight, and threatening the health of society. Many investors have already conveyed their disapproval; last year, over a third (35%) of outside shareholders withheld their vote of support for Board Chair Zuckerberg. Under his leadership, and with Mr. Zuckerberg controlling nearly 58% of voting shares, the company now faces investigations and litigation from U.S. states attorneys general and the Federal Trade Commission over privacy violations, with an anticipated “record-setting” fine of up to $5 billion. This may include penalties for Mark Zuckerberg’s personal mishandling of user data. Multiple Senators have urged regulators to hold Mr. Zuckerberg “personally at fault and liable” for ongoing violations, including via “significant and material penalties” to both Mr. Zuckerberg and the Company.
Among Mr. Zuckerberg’s ongoing violations is his heedless approach to protecting vulnerable and historically marginalized communities on Facebook. Despite nearly a decade of engagement by civil rights organizations that have pushed Facebook to uphold civil rights and protect consumers, Mr. Zuckerberg has refused to implement the structural changes necessary to stop Facebook from fueling dangerous hate speech and accelerating the spread of white supremacy online. For example, in 2016, Facebook resisted civil rights groups’ recommendation to create a portal for housing, credit and job ads to prevent racially discriminating advertising. Today, the Company is paying out settlements over racial discrimination in advertising, and is facing litigation from the Dept. of Housing and Urban Development over issues of digital redlining. New research indicates that regardless of advertisers’ targeting decisions, Facebook’s ad system may automatically discriminate based on race and gender.
In March, only after a white supremacist carried out deadly attacks at two New Zealand mosques, killing 50, did Facebook finally ban white nationalism on the platform. During the attacks, Facebook became the site of a “propaganda coup” of hate, as users unleashed clips of the violence for hours and even days, despite Facebook policies that prohibit hate speech. A month later, after deadly bombings in Sri Lanka killed 300, the government blocked access to Facebook to prevent the further spread of misinformation, a move that digital rights groups say may cause even more harm.
Like Facebook’s negligence, our dismay is not new. Last year, many of us wrote to you to express our concern that Facebook was failing to uphold its responsibilities, as outlined under the United Nations’ Guiding Principles on Business and Human Rights, to conduct a human rights impact assessment on the impact of its business operations, including in Mynanmar, where the military is accused of genocide against the Rohingya people. This year, a U.N. report on crimes against humanity in Myanmar stated: “Facebook has been a useful instrument for those seeking to spread hate...the response of Facebook has been slow and ineffective. The mission regrets that Facebook is unable to provide country-specific data about the spread of hate speech on its platform, which is imperative to assess the adequacy of its response.” A U.N. Investigator described Facebook’s actions as “passive” and “minimal,” saying: “It was as though the approach was apologize after the fact rather than try to prevent it in the first place.”
Many experts say that a motive to push harmful content is embedded in Facebook’s business model, since 99% of the company’s revenue comes from advertising that prioritizes the speed and volume of content shared — regardless of the social cost. In April, Facebook spokeswoman Ruchika Budhraja told Mother Jones that “the long-term effect of leaving hateful content up is that it has the potential to reduce profitability.” Meanwhile, human lives are at risk.
In addition to withholding support from Mr. Zuckerberg over the dangerous — and in some cases life-threatening — failures described above, shareholders have the opportunity to advance a more proactive and accountable climate of oversight at Facebook by supporting three shareholder resolutions that are up for a vote on May 30th:
A shareholder resolution filed by Trillium Asset Management and co-filed by the New York City Comptroller and the state treasurers of Rhode Island, Illinois, and Pennsylvania calls for an Independent Board Chair, citing the Company’s ongoing failures to address hate speech, misinformation and discrimination on the platform as a result of an inadequate governance structure lacking true oversight.
A shareholder resolution filed by Arjuna Capital and New York State Common Retirement Fund calls for Facebook to evaluate and report on the company’s strategies and policies governing content on the platform, “including the extent to which they address human rights abuses and threats to democracy and freedom of expression, and the reputational, regulatory, and financial risks posed by content governance controversies.”
A shareholder resolution filed by SumOfUs on behalf of individual shareholders requesting that the board bring on advisors and a committee of independent directors to study and evaluate “strategic alternatives” — such as the acquisition and cancellation of Class B shares, and the sale of one or more of Facebook’s subsidiaries — in order to exercise their fiduciary responsibilities to maximize shareholder value.
Apologies from Mr. Zuckerberg have proven untenable, and accountability now requires new leadership. We urge you today to join us in calling for new leadership at the highest level of the Company by withholding your votes from Mark Zuckerberg, to ensure a governance structure for Facebook’s future that prioritizes independent oversight, proactive transparency, and long-term accountability.
Azzad Asset Management
CREA: Center for Reflection, Education and Action
Center for Digital Democracy
Center for Media Justice
Demand Progress Education Fund
Dominican Sisters ~ Grand Rapids
Friends Fiduciary Corporation
Harrington Investments, Inc.
International Campaign for the Rohingya
Media Matters for America
Northwest Coalition for Responsible Investment
Ranking Digital Rights
Region VI Coalition for Responsible Investment
Reynders, McVeigh Capital Management, LLC
Seventh Generation Interfaith Coalition for Responsible Investment
Sisters of St. Francis of Philadelphia
Sisters of the Presentation of the BVM of Aberdeen SD
Southern Poverty Law Center
T'ruah: The Rabbinic Call for Human Rights
Tri-State Coalition for Responsible Investment
Unitarian Universalist Association