Facebook (FB) has another crisis on its hands, and former employees are glad that they recently sold their shares, while others are thinking about following their lead.
Since news broke late Friday that Cambridge Analytica, a firm that aided Donald Trump in the U.S. presidential election, harvested and abused the data of 50 million Facebook users, the social network has taken a pummeling on Wall Street. The social network’s stock has dropped by as much as 11%, erasing roughly $60 billion in market value.
In light of recent events — as well as criticism following Facebook’s inadvertent role in the U.S. presidential election — three former Facebook employees Yahoo Finance spoke with under the condition of anonymity, disclosed that they felt their decision to sell the majority of their stock over the past 12 months was a smart one. They would not disclose any details of their stock sale.
“I had been thinking about it [selling my stock] for months when I saw the climate around what was happening with Facebook externally,” one ex-Facebooker told Yahoo Finance. “We’re looking at a company that’s facing a backlash over the fact that, throughout their history, it has somewhat disrespected privacy. They have treated their users as a commodity and been somewhat arrogant towards their users and not gone to enough lengths to protect them.”
Another former Facebook employee, recently sold his remaining stock in the company partly because he was unsure how much Facebook’s stock would recover in the short-to-medium term. The other reason was he just needed the funds to purchase his first home in San Francisco — a notoriously expensive real estate market.
“The timing of it was definitely lucky, but in my opinion, Facebook will survive this,” that ex-employee said. “Putting into context what’s happened recently with all the other sh*t Facebook has pulled, this looks bad but not orders of magnitude worse.”
Over the years, Facebook has rolled out tools and features that have brought on unintended and unwelcome consequences, dating all the way back to 2007, when Facebook rolled out an ads system called Beacon that let outside websites publish stories to a user’s News Feed about their browsing behavior, sometimes without the user’s knowledge or consent. The social network also faced backlash in 2010 when it introduced new privacy controls that changed the default setting of sharing status updates to “public” rather than just friends — an action that resulted in Facebook signing a settlement with the Federal Trade Commission in 2011 requiring the social network to get user consent first over such changes. Even Internet.org, Facebook CEO Mark Zuckerberg’s attempt to bring internet access to emerging markets, received criticism that forced the company to withdraw the app from India.
Facebook has adjusted course and, in many instances, apologized, in the wake of those controversies. But it also speaks to a longer-term pattern that trickles down from its chief executive and has disillusioned some.
In February, comedian Jim Carrey tweeted he was selling his Facebook stock and deleting his Facebook profile because the social network “profited from Russian interference.” Just this Monday, early Facebook investor and Elevation Partners co-founder Roger McNamee, who has been sharply critical of the social network in recent months, told CNBC that Facebook users are “finally starting to recognize that this is not the fun and games, innocent place they thought it was.” On Tuesday, WhatsApp co-founder Brian Acton joined the call for users to drop Facebook. Acton left WhatsApp, which was acquired by Facebook in 2014 for a reported $19 billion, in September.
Idealistic as Zuckerberg may be — “Mark has always had a good, positive vision for Facebook and connecting the world,” one of the ex-employees recalled — that idealism appears to be sidelined time and again at the expense of financial growth.
“I’m disappointed.” adds another former employee. “I think Facebook is a company that truly believed in the goodness of what it could be. But in order to get to that level — that huge scale — it pursued whatever means necessary.”
That same philosophy could very well evolve as Facebook faces increased scrutiny from lawmakers in the U.S. and abroad over its actions.
The social network will survive
All of the former Facebook employees who spoke to Yahoo Finance believe the company will fare just fine in the long-term. But it may be months, if not years, before the social network puts the bad taste left by Cambridge Analytica’s unsavory tactics behind it. Given that, and Facebook’s immediate stock performance, former employees who still own stock are mulling over selling at least some of their Facebook shares, as well.
“I believe in management,” one former employee who still owns Facebook shares explained. “I believe in Mark and Sheryl. They’ve taken Facebook to incredible heights and changed the way people talk to one another. There’s no denying the impact Facebook has made, but I also can’t shake the feeling that, at least for time being, Facebook’s stock may have peaked.”
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