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Zuckerberg at center of new Facebook firestorm

Facebook’s leadership is facing a crisis following the company’s latest controversy.

The past year has given ammunition to the growing number of critics worried about Facebook’s size, business model and implications for democracy. But a recent report characterizing Mark ZuckerbergMark Elliot ZuckerbergMerkel named Harvard commencement speaker The Hill's Morning Report — Presented by T-Mobile — Congress to act soon to avoid shutdown Hillicon Valley: Zuckerberg denies selling 'anyone's data' | UK Parliament releases more Facebook docs | Canada reportedly arrests Huawei CFO | Fallout from Marriott hack | Cuba rolls out internet service for mobile users MORE and Sheryl Sandburg as slow or reluctant to respond to recent challenges is also raising questions about the judgment of the people running the network connected to more than 2 billion people.

Zuckerberg, who through his dual role as CEO and chairman wields most of the power over the company, is now facing calls to relinquish some of his control in order to bring in some fresh oversight.

He has resisted such pressure and continues to defend his chief operating officer, Sandberg.

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Natasha Lamb, a managing director at Arjuna Capital and a Facebook investor, attributes a lot of Facebook’s current problems to the amount of control over the company that Zuckerberg has consolidated.

"The dominant position that Zuckerberg holds has not been helpful in steering the company over the last few years,” Lamb said. “The stock's gone down over $100 billion twice this year, and you can directly link that to these platform issues.”

A New York Times story last week detailed Facebook’s early response to Russian election meddling attempts and its efforts to respond to a backlash in Washington, two of the platform's biggest challenges over the past year. The report revealed fractures at the top of the company.

Zuckerberg currently owns 60 percent of the company and serves as chairman of the board of directors in addition to his role as CEO — an arrangement that Facebook’s critics think allows for little dissent within the company or oversight from investors.

But the 34-year-old, who started Facebook in his dorm room, is standing by his leadership and Facebook’s executives and has resisted calls for him to relinquish his role as chairman.

“That's not the plan,” Zuckerberg said during an interview with CNN that aired on Tuesday. “I’m not currently thinking that that makes sense.”

He also said he hopes to work with Sandberg for “decades more to come.”

The latest controversy comes as Facebook’s standing among the public and political leaders has been devastated. The company has seen more than a quarter of its value wiped out this year amid data privacy issues, strict regulations in Europe, the threat of regulations in the U.S. and stagnant user growth.

The Times reported that Facebook had employed a Republican opposition research firm that was trying to smear the company’s critics by linking them to the billionaire liberal donor George Soros, who is often the subject of right-wing anti-Semitic attacks and was recently targeted with an explosive device in a mailbombing campaign aimed at prominent Democratic figures.

The group, Definers Public Affairs, targeted rival technology companies and Facebook critics through its work with journalists and conspiracy-minded blog posts from a sister company that runs a conservative news site called NTK News.

Zuckerberg and Sandburg have denied knowledge of the firm's work prior to the Times story, but the news has prompted calls for Facebook to hold someone accountable.

One of the groups targeted by Definers, the civil rights organization Color of Change, is demanding that Facebook fire Joel Kaplan, who runs the company’s Washington operations, and to release a promised audit of the platform’s effect on civil rights.

The group has long criticized Facebook and has urged the company to investigate how Russian trolls exploited race to sow discord among U.S. voters.

“While we were sitting across the table operating in good faith, they were trying to undermine us with anti-Semitic and anti-black tropes,” Rashad Robinson, the president of Color of Change, said on a call with reporters on Tuesday.

Despite the pressure on Facebook’s leaders, some analysts think that the latest controversy will do little to hurt the social network’s bottom line.

Ali Mogharabi, an analyst with the investment research firm Morningstar, says that unless Facebook suffers a serious dip in its number of users, the company will continue to be a cash cow.

“As long as the users stay on board, the advertisers will allocate their ad budget towards Facebook,” Mogharabi said. “In my opinion, what investors should focus on is more 'does this impact the users? Are users actually going away from Facebook or from Instagram?' That's not the case.”

Still, the public’s trust in Facebook has eroded after its string of scandals. Fifty-seven percent of U.S. adults say that social media platforms hurt democracy, according to a recent poll by Axios and SurveyMonkey. In November of last year, just 43 percent believed that companies like Facebook harmed democracy, while a slim majority believed they helped it.

And on Capitol Hill, every negative story about Silicon Valley helps fuel the growing political will to regulate the largest internet giants.

When the Times story broke last week, Rep. David CicillineDavid Nicola CicillineThe Hill's 12:30 Report — Trump defends 2016 Russia business dealings | North American leaders sign new trade pact | Clinton doesn't tamp down 2020 talk How Nancy Pelosi won more votes for Speaker than anyone expected Rihanna on US Border Patrol firing tear gas at migrants: ‘Terrorism’ MORE (D-R.I.), who’s in line to lead the House Judiciary Committee’s antitrust panel, tweeted, “Facebook cannot be trusted to regulate itself.”

And Lamb of Arjuna Capital says that despite some optimistic forecasts from analysts, Facebook’s leadership is jeopardizing its revenue stream with its response to the mounting scandals.

“At its core, the company has lost the trust not only of its investors and lawmakers but of its users, and that's the death knell. That's the biggest risk to the company because that's what pays the bills,” Lamb said.

“I think it's going to take more than an apology tour and a commitment to do better — I think it's going to take some kind of a structural shift at the company,” she continued. “The only question is if Facebook will do it.”