With Facebook at 'War,' Zuckerberg Adopts More Aggressive Style

By Deepa Seetharaman 

Mark Zuckerberg gathered roughly 50 of his top lieutenants earlier this year and told them that Facebook Inc. was at war and he planned to lead the company accordingly.

During times of peace, executives can move more slowly and ensure that everybody is on board with key decisions, he said during the June meeting, according to people familiar with the remarks. But with Facebook under siege from lawmakers, investors and angry users, he needed to act more decisively, the people said.

Mr. Zuckerberg's new approach is causing unprecedented turmoil atop Facebook, driving several key executives from the company, according to people familiar with the matter. At times, it has created tensions with his longtime chief operating officer, Sheryl Sandberg. The June meeting and strains with Ms. Sandberg haven't been previously reported.

The 34-year-old CEO believes Facebook didn't move quickly enough at key moments this year and increasingly is pressing senior executives to "make progress faster" on resolving problems such as slowing user growth and securing the platform, said people familiar with the matter. Mr. Zuckerberg also at times has expressed frustration at how the company managed the waves of criticism it faced this year.

On Friday, that tension was on display when, during a question-and-answer session with employees at Facebook's headquarters in Palo Alto, Calif., he blasted a fresh round of critical news coverage as "bullshit," according the people familiar with the remarks.

One employee at the session asked if Facebook could deter leaks by publishing an internal report about how frequently offenders are found and fired. Mr. Zuckerberg said Facebook does fire leakers, but the root cause was "bad morale" perpetuated by attacks in the media.

Mr. Zuckerberg, who previously set annual goals such as to learn Mandarin and read 25 books, said this year he would focus on fixing Facebook. He believes this tougher management style is necessary to tackle challenges being raised both internally and externally, according to a person familiar with his thinking.

Mr. Zuckerberg's new posture could trouble those who feel his "move fast, break things" mantra from Facebook's early days contributed to many of the company's current problems. It also has led to confrontations with some of his top reports, including Ms. Sandberg, his longtime number two who has long had considerable autonomy over the Facebook teams that control communications and policy.

This spring, Mr. Zuckerberg told Ms. Sandberg, 49, that he blamed her and her teams for the public fallout over Cambridge Analytica, the research firm that inappropriately accessed private data on Facebook users and used it for political research, according to people familiar with the exchange.

Ms. Sandberg later confided in friends that the exchange rattled her, and she wondered if she should be worried about her job.

Mr. Zuckerberg also has told Ms. Sandberg she should have been more aggressive in allocating resources to review troublesome content on the site, according to one person familiar with the matter, a problem that the company still struggles to fix.

Mr. Zuckerberg is pleased with the improvement in recent months, according to people familiar with the matter, and last week told reporters that Ms. Sandberg is a "very important partner to me, and continues to be, and will continue to be."

Mr. Zuckerberg had privately told his executives that some of the reaction to the Cambridge Analytica controversy amounted to "hysteria" and complained Facebook wasn't effectively managing the response.

Mr. Zuckerberg doesn't remember using the word "hysteria" regarding Cambridge Analytica, according to a person familiar with his thinking, adding that he takes these issues seriously and that Facebook has spent billions on safety and security to address these problems.

The heads of some other key Facebook units didn't survive conflicts with Mr. Zuckerberg.

Mr. Zuckerberg clashed with the co-founders of Instagram, the fast-growing photo-sharing app, over his desire to share location data on Instagram users with the main Facebook platform, which would help better target ads, said people familiar with the matter. The founders, who strongly opposed sharing the data, abruptly resigned in September, and Instagram started testing the change shortly after they left, the people said.

A Facebook spokeswoman said Instagram hasn't "introduced updates to our location history settings" and the company would keep users informed.

The co-founders of WhatsApp likewise left after disagreements with Mr. Zuckerberg over how to generate more revenue from the messaging-service, people familiar with the matter said. More recently, Mr. Zuckerberg forced out Brendan Iribe, co-founder of Oculus VR, in part because of a disagreement about the future of the Oculus Rift virtual-reality headset, the people said. Facebook and Mr. Iribe said his decision to leave in October was "mutual."

Facebook remains hugely profitable, with net income of more than $5 billion in the third quarter, but its margins are under pressure in part because of its increased spending on security. Mr. Zuckerberg has said Facebook is in the midst of a three-year turnaround ending in 2019 to strengthen its defenses against the risks posed by having an open platform.

A Facebook spokeswoman said in a statement: "We were absolutely too slow to identify a range of issues over the past two years, but once we did we took strong action to address them and prevent future abuse. We've made massive investments in safety and security. While we know we have more work to do, we believe we've made progress."

All told, roughly a dozen senior or highly visible executives disclosed their resignations or left Facebook in 2018. In May, Facebook announced a major reshuffling of top product executives in a way that helped free up Mr. Zuckerberg to oversee a broader portfolio within the company.

This turmoil at the top of Facebook has made it difficult for the company to execute on some product decisions and shore up employee morale, which has been sinking over the last year along with the stock price, which has fallen 36% since its peak. Many employees are frustrated by the bad press and constant reorganizations, including of the security team, which can disrupt their work, according to current and former employees.

Scrutiny of Facebook has only escalated in the past week after the New York Times reported its use of opposition-research firms tasked with exposing critical information about Facebook's detractors, including one called Definers Public Affairs. Ms. Sandberg and Mr. Zuckerberg both said the decision to employ the firm was made by Facebook's communications officials.

Ms. Sandberg's comments in particular have angered many people on those teams, according to people familiar with the matter, given how closely she tracked and managed Facebook's media strategy, sometimes getting involved in wording changes. In the internal Q&A Friday, Ms. Sandberg said she took full responsibility for the actions of the communications team.

As both chairman and CEO and with a lock on the majority of Facebook's supervoting shares, Mr. Zuckerberg has few checks on his power. Still, Facebook's board has taken a more active role of late. In September 2017, Erskine Bowles, the head of the audit committee and a former Clinton White House official, told Ms. Sandberg and Mr. Zuckerberg that he felt they needed to take the issue of Russian interference on the platform much more seriously.

"This is going to be much bigger than you think," Mr. Bowles said, according to a person familiar with the exchange. Mr. Bowles also said the board should have been notified sooner as the company realized the extent of the interference.

The board then requested more regular updates on the matter, at times seeking daily briefings -- a much higher level of engagement than is typical for the board, people familiar with the matter say.

Later, after the Cambridge Analytica disclosure, the board urged Mr. Zuckerberg to name an executive who would be in charge of corralling Facebook's response to that matter and resolving other issues before they metastasized, said a person familiar with the matter. After that, he put Ms. Sandberg in charge of that effort.

Mr. Zuckerberg also sought advice from a mentor, former Microsoft Corp. Chairman and CEO Bill Gates. He recommended Microsoft's model, which relies on Brad Smith to oversee its corporate, external, and legal affairs. Mr. Smith wears the title "president" and reports directly to the CEO.

As Mr. Zuckerberg looked for someone to fill that role, Facebook's general counsel Colin Stretch announced his resignation in June, according to people familiar with the matter, partly because the new structure would have effectively demoted him.

Facebook ultimately decided against combining the jobs after failing to find a suitable candidate. Mr. Stretch now plans to stay through at least next summer, people familiar with the situation said. Facebook is no longer searching for his replacement.

In October, Facebook hired former U.K. deputy prime minister Nick Clegg as head of global policy and communications, the company's most high-profile external hire since Ms. Sandberg joined from Google in 2008.

But his predecessor, Elliot Schrage, still remains at the company and reports to Ms. Sandberg. Friday, Mr. Schrage told employees at the company Q&A to expect more negative coverage of Facebook in coming months.

--Robert McMillan and Kirsten Grind contributed to this article.

Deepa Seetharaman at [e-mail]

(END) Dow Jones Newswires

November 18, 2018 17:08 ET (22:08 GMT)

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