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Mar 21, 2018

'This isn't going to cut it': U.S. lawmakers call on Zuckerberg to testify before Congress

Breaking down Zuckerberg's response to the data scandal

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Facebook Inc. (FB.O) CEO Mark Zuckerberg broke his silence on the crisis over political-advertising firm Cambridge Analytica’s access to user data on the social network, outlining concrete steps the company is taking to make sure such a leak doesn’t happen again. Critics were underwhelmed.

The billionaire finally spoke in a series of media interviews, and a blog post, promising to probe the extent to which “rogue apps” are harvesting sensitive data on the social network. Zuckerberg told CNN that Facebook would inform every one of its two-billion-plus users that may have gotten their personal data compromised.

Shares in Facebook were down 2.3 per cent during pre-market trading at 7:04 a.m. ET.

“I’ve been working to understand exactly what happened and how to make sure this doesn’t happen again,” Zuckerberg wrote in a post on his Facebook profile page. “I promise you we’ll work through this and build a better service over the long term.”

By pledging to investigate whether Cambridge Analytica still holds the information it obtained from a third-party app creator, and broadening the probe to other developers that may have run afoul of Facebook’s rules, Zuckerberg took a step in the right direction, according to lawmakers, investors and users. But it wasn’t enough to end the criticism — some remained skeptical the company is doing enough.

LAWMAKERS STILL WANT ZUCKERBERG TO TESTIFY

“This isn’t going to cut it,” David Cicilline, a Democratic U.S. representative from Rhode Island, said in a Facebook post responding to the CEO’s statement. “Mark Zuckerberg needs to testify before Congress.”

That sentiment was echoed by other lawmakers in the U.S. and Europe, including Senator Amy Klobuchar, Democrat from Minnesota, and Senator Richard Blumenthal, a Democrat from Connecticut. “Mea culpas are no substitute for questions and answers under oath,” Blumenthal, a member of the Judiciary Committee, said. “Congress has failed to hold Facebook accountable, and legislate protections on privacy, which are manifestly necessary.”

Antonio Tajani, the President of the European Parliament, said in Twitter post that many questions remain unanswered. “I look forward to him giving further explanations before the elected representatives of over 500 million European citizens,” he said.

German Justice Minister Katarina Barley said in an interview with German newspaper Funke-Mediengruppe that she will ask Facebook officials to provide an explanation in person. Speaking to U.K. media Matt Hancock, a senior U.K. lawmaker, said: "It shouldn’t be for a company to decide what is the appropriate balance between privacy and innovation. The big tech companies need to abide by the law and we’re strengthening the law."



Earlier Wednesday in Washington, Facebook officials met privately with House Energy and Commerce Committee staffers from both sides of the political aisle for nearly two hours, according to two people who attended the meeting. One main question was whether there might be others -- including other "bad actors" -- who might have had access to the same data that Cambridge Analytica obtained from more than 50 million Facebook profiles. Staffers, speaking on the condition they not be identified, said the Facebook officials acknowledged that the company doesn’t know how widely disseminated that information might be, or how many copies were made.

In interviews Wednesday, Zuckerberg said he was “open” to testifying before Congress, if he’s the right person to provide the information lawmakers need. But he stopped short of committing to appear.

ZUCKERBERG MISSED THE BIGGER PICTURE

Zuckerberg’s solutions focused solely on the outside developers that have accessed Facebook user details through login tools. “They’re not recognizing that they have systemic problems,” Brian Wieser, an analyst at Pivotal Research, said in an interview. “These are just the problems we know about, but they have ongoing problems managing different parts of their business.”

The company came up with steps to resolve the developer problems, but “to garner full appreciation from the public and the market, there should be greater emphasis on why it occurred in the first place,” said James Cakmak, an analyst at Monness Crespi Hardt & Co.

IT MAY BE TOO LITTLE, TOO LATE

The 33-year-old chief executive officer waited several days to respond to news reports, even as the furor grew. “Everybody is disappointed that he and Sheryl Sandberg didn’t come out with this right away,” said Ivan Feinseth, chief investment officer at Tigress Financial Partners, also referring to the company’s chief operating officer.

Conversation about the issue, including a #deleteFacebook movement, had already been trending online. And when Zuckerberg did come out to address the public, some users weren’t reassured.

“It has become a recurring affair of reassuring PR in face of being caught,” Sukvheer Singh, who has used Facebook since 2008, said in a message. “I don’t think I trust them anymore so his post is meaningless.”

Cameron Koo, who has used Facebook since 2004 — the year the company was founded — said investigating the spread of information sounds good, but it will be hard for the company to fix what it already broke. “Banning rogue developers for non-compliance sounds great, but it’s a non-starter,” he said. Once information gets in the hands of people who shouldn’t have it, it’s “toothpaste out of the tube.”

INVESTORS CLOSELY WATCHING FACEBOOK'S MANAGEMENT

Following the calls from lawmakers, there have been broader questions about how Facebook’s management is handling the fallout. “These are operational failures,” Weiser said. “On what basis can you say that management is great, let alone good? You can say they were able to generate a lot of users and a lot of revenue. That’s not what makes a great management team.”

Facebook’s board followed up on Zuckerberg’s statement with its own, responding to critics.

“Mark and Sheryl know how serious this situation is and are working with the rest of Facebook leadership to build stronger user protections,” Sue Desmond-Hellmann, the lead director of Facebook’s board, said in a statement. “They have built the company and our business and are instrumental to its future.”

Some analysts were willing to give Facebook’s leadership the benefit of the doubt. “They are great executives in that they’ve built a huge company,” Feinseth said. “And there is no competition, there is no peer, there is no alternative.”