The window for Facebook to make amends with the public is quickly closing

The window for Facebook to make amends with the public is quickly closing

This time it’s different.

The Facebook-Cambridge Analytica scandal has the potential to shatter business models and permanently shake up Silicon Valley.

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When Facebook COO Sheryl Sandberg came to Washington, D.C. last fall and said, “We’re a tech company ... we don't hire journalists,” then subsequently sent in the company’s lawyers for hearings, it didn’t sit well with Congress and institutional Washington — but elected officials and regulators had little to plant a flag in. Now they do.

 

I spent last Friday evening after Facebook’s tumultuous week flying back from California with a senior FAANG (Facebook, Alphabet, Apple, Netflix, Google) executive. She said it was time to “entirely reimagine their relationship with Washington.” She was right. But I’m not sure how many other tech executives appreciate this moment.

The March 27 announcement that Mark ZuckerbergMark Elliot ZuckerbergFacebook removed over 22 million posts for hate speech in the second quarter Hillicon Valley: Trump order targets TikTok, WeChat | TikTok fires back | Chinese firms hit hard in aftermath Female lawmakers pressure Facebook to crack down on disinformation targeting women leaders MORE, Facebook’s reluctant-warrior CEO, has agreed — in principle — to testify before the Senate Judiciary Committee’s hearing next month on fears that our data privacy has been shredded gives him and his company a chance to begin the long-overdue process of “reimagining” their relationship with federal legislators and regulators.

Keep in mind, however, that the elusive Mr. Zuckerberg has not yet confirmed with any of the three congressional committees that he will appear. Pressure is simultaneously building on Google CEO Sundar Pichai and Twitter CEO Jack Dorsey to appear, as well. One of them should take the steering wheel now if Zuckerberg refuses.

Convincing Congress, the Federal Trade Commission (FTC), the state attorneys general, European regulators, and, of course, users and shareholders, is a big hill — but they’ve got to start climbing it sometime. It will only get harder.

Zuckerberg has a long list of imperatives he needs to accomplish if he is going to testify (leaving his hubris in Menlo Park might be a good place to start), but, above all, he’s got to do what he has so far failed to do in this crisis that threatens to de-monetize much of his financial model: Assert. Inspire. Convey Leadership.

Right now, he looks all of his 33 years.

Sen. Mark WarnerMark Robert WarnerElection security advocates see strong ally in Harris Democrats ramp up warnings on Russian election meddling Hillicon Valley: Facebook removed over 22 million posts for hate speech in second quarter | Republicans introduce bill to defend universities against hackers targeting COVID-19 research | Facebook's Sandberg backs Harris as VP pick MORE (D-Va.), the ranking Democrat on the Senate Intelligence Committee and a technology entrepreneur in his own right, is a measured legislator not prone to hyperbolic language. So, when the centrist Warner declares, “I am ... flabbergasted that the CEOs of these companies seem to be happy to answer questions from their shareholders, but not from the lawmakers who represent all Americans,” Silicon Valley moguls should pay close attention.

“Companies like Facebook and Twitter and Google are American icons,” Warner continued. “I don’t have any interest in regulating them into oblivion. But as they’ve grown from dorm room startups into media behemoths ... they haven’t acknowledged that that kind of power comes with responsibility.”

Warner's comments happened to come on the same day that Senate Judiciary Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyThe Hill's Morning Report - Presented by Facebook - The choice: Biden-Harris vs. Trump-Pence Trump grabs 'third rail' of politics with payroll tax pause On The Money: McConnell says it's time to restart coronavirus talks | New report finds majority of Americans support merger moratorium | Corporate bankruptcies on pace for 10-year high MORE (R-Iowa) extended his invitation to Zuckerberg, Pichai, and Dorsey to the panel’s April 10 hearing on “the future of data privacy in the social media industry and how to develop 'rules of the road.’”

Let me decipher that: “rules of the road” is how a conservative Republican euphemistically says “tough new regulations.” In today’s hyper-partisan climate, it’s nothing short of remarkable that prominent Republicans and Democrats are so united on a hot-button issue. In today’s Washington, when an issue commands bipartisan support, a company’s general counsel had better have the wherewithal to get the CEO, the executive team, and the board of directors on the same page.

After more than two decades, we are all starting to realize that the web has its dark side, from cybercrimes and bullying to privacy evisceration and election tampering. In capitals like Washington, Brussels, and London, where no one wants to be first but everyone wants to be second, this latest Facebook crisis is known as “cover.” There will be new regulations and perhaps new financial models. Why not get in front of it?

Washington’s scrutiny of Facebook extends beyond next month’s hearing. On March 26, the FTC confirmed a probe into Facebook’s privacy practices. If the FTC finds that Facebook has maliciously impinged on consumer privacy, it can exact significant fines.

State officials are also alarmed. A bipartisan group of 37 state attorneys general this week sent a no-nonsense letter to Facebook, demanding information about the company’s business practices and seemingly anemic efforts to protect privacy.

All this is happening against the backdrop of Facebook and other Silicon Valley giants having to adapt to the European Union’s sweeping new privacy constraints that take effect this spring.

In crisis there is opportunity. While this may look like a lynch mob, it is really a platform. Why continue to keep the committee chairs waiting? Confirm your appearance with clarity. Set out the agenda. Envision a near future where privacy and access can be balanced. Why slowly parse out news with quasi-commitments and half-hearted apologies? They haven’t fooled anyone and have only made Facebook look uncertain and, dare I say, frightened.

For Mr. Zuckerberg and his FAANG partners this is an opportunity to lead. Enough of the "we want to get it right" (even though we have known about this for three years) and "we promise to do better next time." How about stating clearly a Silicon Valley-wide approach to privacy? That would be called leadership and help regulators and politicians get onside. It’s what the bankers did a century ago when they helped form the Federal Reserve in 1907. It’s what Bob Carr did after the Heartland data loss, which was the largest of its time when it occurred in 2009. It is what Jim Burke did in the Tylenol crisis of 1982. You don’t wait for the regulators and lawmakers, you lead them.

When the crisis hit nerves in Menlo Park early last week and Facebook employees gathered to hear their leadership, well, lead, neither Mark Zuckerberg nor Sheryl Sandberg thought it critical that they attend. Instead, they sent Paul Grewal, their vice president and deputy general counsel.

Let’s hope they recognize the fallacy of that approach. Such passivity may be an acceptable strategy in peacetime; it is reckless in crisis. The question Mr. Zuckerberg must now answer is, “Are we the customer or the product?” If we are the customer, then privacy is paramount. If we are the product, then data harvesting is.

Facebook may be a free service, but it has no more right to play fast and loose with its users’ privacy than house guests do in stealing family photos or rummaging through financial records. If Washington chooses to follow Brussels’ lead in tightening privacy rules or intensifying regulations, Silicon Valley’s business model is at stake. So is its integrity.

Richard Levick (@RichardLevick) is chairman and CEO of LEVICK, a global communications and public affairs agency specializing in risk, crisis, and reputation management.