Protesters carrying an inflatable angry emoji plan to greet shareholders of Facebook Inc as they gather for the company’s annual meeting on Thursday, the latest sign of its struggle to shake off user privacy scandals and rein in fake news and hate speech.
The social media giant will again face demands for reform at Thursday’s meeting, including shareholder proposals that call for revamping the company’s voting structure and ousting Chief Executive Officer Mark Zuckerberg as chairman. The measures have little chance of succeeding, as a dual class share structure gives Zuckerberg and other insiders control of about 58% of the votes. And many investors have shrugged off the scandals swirling around the company, as it has beaten Wall Street’s estimates for revenue growth and continues to add users globally.
But even though the votes are largely symbolic, they are still seen as a useful barometer of investor sentiment about how well the social media icon is coping with unprecedented challenges to its hands-off approach to content. Last year, about 83% of shares held by outside investors voted for a proposal that would have the company move to a structure of one vote per share and do away with the supermajority shares. A coalition of activist groups have urged big investors to reject Zuckerberg’s nomination to the board this year, saying Facebook has failed to protect users, especially racial and religious minorities.
Led by consumer group Majority Action and civil rights advocate Color of Change, they gathered 125,000 signatures on a petition targeting BlackRock Inc, one of Facebook’s biggest outside investors. BlackRock’s funds backed all of Facebook’s director nominees last year, but also voted for two shareholder proposals that would have reorganized Facebook’s governance structure.
“Facebook has consistently proven its lack of care for its users and is ever more closely associated with the proliferation of racism and hate online,” said Lisa Lindsley, capital markets advisor at SumOfUs, another group in the activist coalition and the one responsible for the 8-foot (2.5-meter) inflatable angry emoji. “Its latest actions to limit the consequences are too little and far too late,” she said, noting the live-streaming on Facebook of the shooting that killed 51 people worshipping at two Christchurch mosques in New Zealand.
BlackRock declined to comment on the petition, with a spokesman saying it did not preview votes or comment on specific companies.
Under Scrutiny
Facebook has been under scrutiny from regulators and shareholders since last year, when reporting revealed that the data of some 87 million users had been shared with now-defunct political data firm Cambridge Analytica.
The company has also come under fire over Russian meddling in the 2016 U.S. presidential election, which used social media to spread disinformation, and its frequently shifting policies around which content is permitted on its platform. U.S. House Speaker Nancy Pelosi criticized the company on Wednesday, saying she was no longer willing to give Facebook the benefit of the doubt on Russia after it refused to remove a heavily edited video that attempted to make her look incoherent.
“I thought it was unwittingly, but clearly they wittingly were accomplices and enablers of false information to go across Facebook,” she said. The comments raise the specter of harsher action in Congress against Facebook. Pelosi has previously warned that Section 230 of the Communications Decency Act, which shields tech companies from legal liability for content created by their users, was a “gift” that had been abused and could be reconsidered. Investors do not seem worried.
The company’s stock jumped 10 percent after its last earnings report, even as it announced it was setting aside up to $5 billion for what could be the largest civil penalty ever paid to the Federal Trade Commission, which has been investigating Facebook over alleged privacy violations. One of Facebook’s largest fund investors, William Danoff of the $123 billion Fidelity Contrafund, did not mention any of Facebook’s privacy issues in his most in his most recent quarterly commentary to investors.
He wrote only that, as his portfolio’s second-largest holding, Facebook “appeals to us based on growth in its various apps and revenue from advertisers that want to reach the firm’s enormous base of daily active users.” Danoff has been a long-time backer of Facebook and previously indicated he was satisfied with the company’s reform efforts to date. Among other top Facebook investors, last year Vanguard Group Inc withheld support from Zuckerberg and Sandberg, and backed a measure to reform Facebook’s voting structure.
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