After Days of Silence, Zuckerberg Publicly Addresses Facebook Crisis -- 2nd Update

By Deepa Seetharaman 

Facebook Inc. Chief Executive Mark Zuckerberg pledged a far-reaching investigation into outsiders' handling of the company's user data, in his first public comments on a controversy that has shaken the social-media company and prompted renewed calls for governments to better regulate privacy.

Mr. Zuckerberg, in a post on Facebook Wednesday, said the company has already taking many steps to address user privacy in recent years, but he said "we also made mistakes, there's more to do, and we need to step up and do it."

Among the measures he said Facebook will take, the company will investigate and look for any potential abuses of personal data by developers on its platform that have had access to large amounts of user data. Facebook will audit any apps that display suspicious activity and notify any users affected, he said.

The comments come five days after a crisis that has prompted calls for him to testify before legislators in the U.S. and Europe, carved tens of billions of dollars off Facebook's value, and raised new questions about the leadership of one of the world's most powerful technology companies.

"Facebook is exhibiting signs of systemic mismanagement, which is a new concern we had not contemplated until recently," Pivotal Research analyst Brian Wieser said in a note Wednesday morning. Mr. Wieser has a "sell" rating on the stock.

Facebook says Mr. Zuckerberg and Chief Operating Officer Sheryl Sandberg have focused on addressing the concerns behind the scenes. "Mark, Sheryl and their teams are working around the clock to get all the facts and take the appropriate action moving forward, because they understand the seriousness of this issue," a Facebook spokesman said.

The current crisis began with its statement Friday that it was looking into reports that data-analytics firm Cambridge Analytica, which worked with the Trump campaign in 2016, improperly accessed and retained user data. That episode involved information on potentially tens of millions of Facebook users.

The Federal Trade Commission is now investigating whether Facebook's user-data practices violated terms of a 2011 settlement. Users have aired their anger over social media, using the hashtag #deletefacebook. Late Tuesday, Brian Acton, co-founder of WhatsApp, a messaging app that Facebook bought for $22 billion in 2014, appeared to join them, with a message on his Twitter account saying "It is time. #deletefacebook." Mr. Acton couldn't immediately be reached for comment.

"The entire company is outraged we were deceived," the Facebook spokesman said, saying the company would do "whatever steps are required" to protect user information.

The scrutiny has weighed on Facebook staff, with many questioning why Mr. Zuckerberg hasn't been publicly discussing the company's role, according to current and former employees. At a question-and-answer session for employees Tuesday about the episode, Facebook lawyer Paul Grewal presided. Mr. Zuckerberg and Ms. Sandberg weren't in the room.

There's been a lot of unhappiness internally," said one former employee who has been recently in touch with ex-colleagues.

Over the weekend and early this week, senior Facebook officials spent much of the time trying to nail down the facts of what happened with Cambridge Analytica, and contemplating whether and how Mr. Zuckerberg should respond, a person familiar with the matter said.

Facebook has been under fire for more than a year on a range of issues, but criticism intensified last month when special counsel Robert Mueller secured indictments against a group of Russians for manipulating Facebook and other social platforms to sow discord.

In the month since, Mr. Zuckerberg posted publicly on his Facebook page -- typically his main venue for disseminating his views -- only twice: once with photos of his family celebrating Chinese New Year, the other of them celebrating the Jewish holiday of Purim.

Publicly, Facebook has left it to other senior executives to make its case, often using posts on rival Twitter Inc. -- a strategy that has sometimes backfired.

Executives responded to the current uproar over the weekend by arguing that what happened didn't constitute a data breach -- prompting users, privacy advocates and others to say it was missing the point.

The company stumbled in its dealings with Congress, waiting nearly two weeks last September before deciding to turn over more details of Russian ads on its platform, and sending the company's lawyer Colin Stretch rather than Mr. Zuckerberg to testify in Washington. "Perhaps internally they felt that it didn't rise to the level of direct involvement by the CEO," said Rep. Adam Schiff, a California Democrat, "but I think they realize now that while the platform has immense positive impact in the world, that it has had some significant downsides."

Last month, Facebook's head of advertising, Rob Goldman, drew fire when he defended Facebook's handling of the Russia crisis and argued the Russians bought ads to exploit social divisions, not primarily to sway the 2016 U.S. presidential election -- a point that some in Washington interpreted as contradicting the indictment.

Internally, Mr. Zuckerberg has appeared to take the criticism in stride. During an employee question-and-answer session last month, Mr. Zuckerberg said Mr. Goldman's comments didn't reflect the company's thinking, people familiar with his comments said, but he still backed Facebook's strategy of having a select group of senior executives engage directly with critics, academics and journalists on Twitter and be more transparent about the company's process and thinking.

--Robert McMillan contributed to this article.

Write to Deepa Seetharaman at [e-mail]

(END) Dow Jones Newswires

March 21, 2018 16:22 ET (20:22 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.