Facebook’s recent crisis is just one of many
privacy issues that company has had to deal with in its relatively short
existence. Barely two years old in 2006, the company faced user outrage when it
introduced its News Feed. A year later it had to apologize for telling people
what their friends had bought. Years after that, the Federal Trade Commission
stepped in — and is now looking at the company again. Facebook has a history of
running afoul of regulators and weathering user anger.[i]

In 2004, when Mark Zuckerberg was a Harvard
undergrad working on a skunkworks project called The Facebook, a friend asked
him how he’d managed to obtain more than 4,000 emails, photos and other bits of
personal info from fellow students. He said, “They trust me”. Facebook’s
foundation is built on trust. Facebook users’ confidence in the company has
plunged by 66 percent as a result of revelations that data analysis firm
Cambridge Analytica inappropriately acquired data on tens of millions of
Facebook users — and CEO Mark Zuckerberg’s public mea culpa during two days of
congressional hearings last week did not change that.[ii] In this
paper we are exploring how Facebook’s culture and organizational dysfunction
not only contributed but also aggravated the crisis instead of resolving it.

Crisis Background – How It Happened

Several years ago, Facebook
allowed apps on its platforms, including ordering cakes, simple games, fortune
telling, etc. Interesting, convenient, and likable, many Facebook users
gradually relaxed vigilance against it. In 2013, there was a psychological test
online: this is your digital life, which could send $5 if the user finished all
the questions. More than 270,000 people completed it using their Facebook
account. However, all the testers’ and their friends’ information on Facebook,
such as liking someone’s posts, commenting somebody’s photos, was totally
sneaked, harvested by the behind-the-scenes developer: Cambridge academic
Aleksandr Kogan and his company Global Science Research­_­­.[iii]
 For this, Facebook did nothing but just got paid. After analyzing
millions of people’s personalities, Kogan sold the results to Cambridge
Analytic, a firm hired by campaigns to analyze voters and target them with ads.
For this, in 2014, Facebook just “asked” Kogan to delete all the data but did
not follow up.[iv]

In 2016, during the U.S. presidential election, Cambridge Analytica took advantage of Facebook users’ personality by helping the Trump campaign invest heavily and purposefully in Facebook fake ads. It worked like if your good friend said on Facebook the Mexican neighbor next door is noisy, and you liked it, Facebook would post a false ad that the presidential candidate, Mr. Trump, promised to refuse Mexican immigration if he took office. Similarly, if you forwarded and supported a charity news, then you would soon receive a fake push: cheeky and shameful, Hillary’s abuse of donations was revealed. Through accurate political advertising for each Facebook user through this improper propaganda, people would subconsciously support Trump when they voted. And Facebook, which received the money, was equivalent to the same involvement in the manipulation of public opinion.

In our opinion, this
irresponsible behavior can have something to do with Facebook’s organizational
structure as well as culture. Facebook organizational structure is
vertical-based, mainly including the departments: Information Security,
Business Development, Marketing Center, Finance Center, and Engineering.[v]
Ironically, there is no sub-sector in any department to ensure the security of
user’s information, even in the Information Security department, which is
mainly aimed at the company’s own information privacy. That shows they simply
did not take the protection of users’ information as their own responsibility,
because censoring every ad’s authenticity and every inserted applet’s purpose
would cost them ‘unnecessary’ time.

Also, in order to expand the
commercial sector rapidly, Facebook advocates flat management to strengthen
every department’s communication and finish tasks as quickly as possible. It
has corporate function-based teams, geographic divisions, and product-based
divisions, but every part has very blurry boundaries.[vi] For
example, some of these geographic divisions share resources and managers with
function-based teams, and people in a product-based division can also work in
one of the geographic divisions. But the problem is, employees, including
managers temporarily working in Asia geographic area, may not be familiar with
the situations in North America. So, it cannot incur such a big disaster to
insert a test game or push ads to Asian consumers. Unfortunately, if these
people then work in the North America sector, they would naturally relax their
vigilance and monetize user information in North America, causing a big
problem. I just think there should be a fixed competent leadership in every
geography, like Latin America, who has great insight into the political
direction, laws, and application requirements of the region. In that way, the
company will have more specific actions to a specific area.

In addition, this scandal is
also related to the culture of Facebook. From a culture model layer one:
observable artifacts and behaviors,[vii] we can
see a gym, washing machine, microwave, refrigerator, dining and more in the
company for employees to enjoy, making it easy for them to work late; there is
no cubicle in the office area between employees, so they can communicate
naturally; whenever there is a new idea, they would not spend time discussing
but just realize it, which sometimes makes it hard to expand the feature of
this newly developed application, leading to clumsy ways to modify or even
rewrite it. Based on these, the layer two value[viii]of
Facebook is speed, openness, act first and ask questions later, growth and
expansion as quickly as possible. Indeed, Facebook can move forward quickly,
but sometimes a company’s development should consider more than speed. In this
data breach case, we may first have to admit inserting some interesting applets
truly makes profits as well as brings joy to customers, but the company has
never thought about what if the people behind these small programs, in fact,
have ulterior motives? What if collecting and selling private data of unwitting
people would stir up the dissatisfaction? What if pushing fake ads to or even
indirectly manipulating every user who believes Facebook causes irreparable
damage to the accumulative reputation over years? So, we believe Facebook should
slow the pace of expanding, and look back to figure out how many hidden dangers
they have overlooked on the road of development.

Crisis Response – or Lack Thereof

In a crisis, it’s not the event itself that counts. It’s the response. The first few days or weeks of the Cambridge Analytica crisis were marked by mishandled responses. When the company got its act together considerable damage had been done. Zuckerberg did a decent job defending the company when he finally responded. But nearly every story was preceded by numerous questions regarding the silence of the company and its inept initial response—both to this and other recent crises—going back to questions regarding Russian actors’ use of Facebook to manipulate the 2016 U.S. presidential election. This clearly shows how unprepared the organization was and the lack of structure to handle the crisis even when the core business is affected. Effective crisis communications response requires proper leadership, structure, and technology. Organizations should have a permanent internal team tasked with continuous monitoring and management of crisis events and a crisis plan.[ix]

Poor handling of the crisis led to political
scrutiny by the public and governments across the world. As the spotlight grows
harsher, it affects investor sentiments and public trust. Facebook can no
longer resist government scrutiny without suffering major repercussions,
including:

• Lawmakers
  in the UK made it clear that they were extremely disappointed with Zuckerberg’s
  refusal to attend and answer their questions directly. UK Parliament’s decision
  to publish Facebook’s emails and other sensitive information will no doubt lead
  to further inquiries in the UK and abroad, embroiling Facebook’s partners along
  the way.[x]
• The Federal
  Trade Commission is looking into whether Facebook violated a consent decree by
  enabling third parties to access users’ information without their permission.[xi]
• Mark
  Zuckerberg appeared before the Senate’s Commerce and Judiciary committees to
  discuss data privacy and Russian disinformation on Facebook.
• The
  attorney general of Massachusetts, Maura Healey, announced that her office was
  opening an investigation. Facebook’s lack of disclosure on the harvesting of
  data could violate privacy laws in Britain and several states.[xii]
• Facebook
  has lost $35 billion in market value following reports that Cambridge
  Analytica, a data firm that worked with President Donald Trump in the 2016
  elections, had unauthorized access to 50 million Facebook user accounts in one
  of its largest breaches yet.[xiii]

Additionally, Facebook’s mishandling of the
Cambridge Analytica crisis has led to widespread lack of trust. In a column
Forbes notes that “the most valuable business commodity is trust”.[xiv] Trust
is an immeasurable currency, both externally and internally; once lost, a
company must climb a mountain of challenges to reestablish its integrity.[xv]
Facebook was challenged by a critical situation where it had to choose between
admitting to third-party access to consumer data or withholding information that
eventually became publicly revealed through other sources years later.
Facebook’s decision to choose the latter, led to loss in public trust, due to
lack of transparency. Jonathan Albright, a research director at the Tow Center
for Digital Journalism, said that he was disappointed that the CEO did not
address why Facebook enabled so much third-party access to its users’ personal
information for so many years. He also said:

This
problem is part of Facebook and cannot be split off as an unfortunate instance
of misuse. It was standard practice and encouraged. Facebook was literally
racing towards building tools that opened their users’ data to marketing
partners and new business verticals. So, this is something that’s inherent to
the culture and design of the company.[xvi]

In a recent survey by Pew Research Center, around
four-in-ten (42%) say they have taken a break from checking the platform for a
period of several weeks or more, while around a quarter (26%) say they have
deleted the Facebook app from their cellphone. All told, some 74% of Facebook
users say they have taken at least one of these three actions in the past year.
Just over half of Facebook users ages 18 and older (54%) say they have adjusted
their privacy settings in the past 12 months, according to a new Pew Research
Center survey. There are, however, age differences in the share of Facebook
users who have recently taken some of these actions. Most notably, 44% of
younger users (those ages 18 to 29) say they have deleted the Facebook app from
their phone in the past year, nearly four times the share of users ages 65 and
older (12%) who have done so.[xvii]

Being one of the “big tech
companies” with immense power that can shape the news for more than two billion
people worldwide, it was important for the CEO, Mark Zuckerburg to rethink his
goals. After an unintended role as a “ propaganda weapon for Russia” in the
2016 US presidential elections, he declared his new goal for the year 2018 as
to “fix Facebook”. Though he did not explicitly talk about his course of
action, he emphasized on making changes through enforcing policies that could
possibly prevent the misuse of their product. Although these changes were
initially not publicly visible, after the huge Cambridge Analytica scandal, these
changes became much more evident. The company has gone through the biggest
executive shakeup in its entire tenure of 15 years.

With its earlier organisational structure, where each of the acquired apps, Instagram and Whatsapp were independently functioning, Facebook was a mess. These independently operating arms lacked coordination among them, turning the  company into a tangle of overlapping products. This lack of synchronization has led to a great deal of redundancy, that was responsible for the miscommunication.

Today, the company has reorganised it’s product and engineering efforts into three broad areas, which include, the company’s family of apps, new platforms and infrastructure, and central product services. These changes are intended to provide better transparency ,ensuring improved communication. Along with appointing new leaders for each of the applications, new responsibilities were assigned to the executives, that include the new effort to incorporate blockchain technology.

The “family of Apps” group will now oversee Facebook, Instagram, Whatsapp and Messenger that together have a reach of about 5 billion users monthly. The “New platforms and infra” group will tackle the new growing features of Facebook that include Facebook’s AR, VR and artificial intelligence efforts. The upcoming efforts of Blockchain technology at Facebook will now be a part of this team. The intersection of these applications, that include the shared product features such as ads, security and growth will now be handled by the third division called the “Central Product Services”. It was mostly shuffling the teams, rather than bringing new people  into the company or kicking out people from the company. These new roles are intended to provide open lines of communication among executives without hurting the speed Facebook is known for.

Clearly, these changes bring all the independently functioning arms together and turn the efforts cohesively into one direction. Though it does not appear from the face of it, informally, this suggests a reduction of autonomy for each of these applications. Though this threat of interfered functioning might spook any possible future acquisition candidates, considering the overlapping functionalities of these applications, such as the stories, this makes better sense.  

Earlier it was assumed that being in different domains, with their own set of competitors, each of these apps need different strategies for acquiring the market growth. But with the increasing number of overlapping features, for instance the stories, this no longer hold true.It took until late 2017 for Facebook to realize it should synchronize Stories across Instagram, Facebook and Messenger so users could post once to their audiences everywhere. The new organisational structure will ensure the ability to formulate a coherent strategy. Instead of reinventing the wheel every time, the expertise of different executives who are skilled in these overlapping functionalities can be shared across multiple applications. For instance, achieving utter dominance over Snapchat in photo sharing, Instagram is putting its efforts in terms of enhancing its News Feed, hoping to ramp up monetization. Mosseri, a long-time member of Mark Zuckerberg’s inner circle, will now bring his experience turning News Feed in Instagram. Similarly, the reorg could prevent Facebook from haphazardly tripping over itself in an attempt to seize on emerging trends.

[i] Newcomb,
Alyssa. “A timeline of Facebook’s privacy issues — and its responses”, 2018,
https://www.nbcnews.com/tech/social-media/timeline-facebook-s-privacy-issues-its-responses-n859651.

[ii] Weisbaum,
Herb. “Trust in Facebook has dropped by 66 percent since the Cambridge
Analytica scandal”, 2018, https://www.nbcnews.com/business/consumer/trust-facebook-has-dropped-51-percent-cambridge-analytica-scandal-n867011.

[iii] Meredith,
Sam. “Facebook-Cambridge Analytica: A timeline of the data hijacking scandal”,
2018, https://www.cnbc.com/2018/04/10/facebook-cambridge-analytica-a-timeline-of-the-data-hijacking-scandal.html.

[iv] Aleksandr
Kogan, “The Link Between Cambridge Analytica and Facebook”, 2018, https://www.cbsnews.com/news/aleksandr-kogan-the-link-between-cambridge-analytica-and-facebook-60-minutes/.

[v] Nancy, “FACEBOOK ORGANIZATIONAL STRUCTURE: CHECK THE BIG FIGURE”, https://www.orgcharting.com/facebook-organizational-structure/.

[vi] Lombardo, Jessica. “Facebook Inc.’s Organizational
Structure (Analysis)”, 8 Sept. 2018,

[vii] Lassman,
David. “Note on Culture”, 16 Jul. 2017.

[viii]
Lassman, David. “Note on Culture”, 16 Jul. 2017.

[ix] Haggerty,
James F. “Commentary: How Facebook’s Response Ignited the Cambridge Analytica
Scandal”, 2018,
http://fortune.com/2018/03/27/facebook-cambridge-analytica-data-scandal-crisis-investigation/.

[x][x] Urbelis, Alexander. “Facebook faces major repercussions if it
continues to resist government scrutiny”, 2018, https://www.cnn.com/2018/12/07/opinions/facebook-resist-government-scrutiny-urbelis/index.html.

[xi] Chang,
Ailsa. “FTC Investigating Whether Facebook Violated Consent Decree”, 2018, https://www.npr.org/2018/03/27/597390569/ftc-investigating-whether-facebook-violated-consent-decree.

[xii] Granville,
Kevin. “Facebook and Cambridge Analytica: What You Need to Know as Fallout
Widens”, 2018, https://www.nytimes.com/2018/03/19/technology/facebook-cambridge-analytica-explained.html.

[xiii]
Shen, Lucinda. “Why Facebook Suddenly Shed $35 Billion in Value”,
2018,
http://fortune.com/2018/03/19/facebook-stock-share-price-cambridge-analytica-donald-trump.

[xiv]
Mankowska, Asha. “Why A Strong Brand Authority Will Transform Your Business
Into a 7-Figure Revenue Source”, 7 Jul. 2017, https://www.forbes.com/sites/forbescoachescouncil/2017/07/07/why-a-strong-brand-authority-will-transform-your-business-into-a-7-figure-revenue-source/#62f42dd745a7.

[xv] Fioravante,
Vanessa. “4 lessons from Facebook’s data crisis”, 2018, https://www.prdaily.com/Main/Articles/4_lessons_from_Facebooks_data_crisis_24255.aspx.

[xvi] Solon,
Olivia and Edward Helmore. “Mark Zuckerberg apologizes for Facebook’s
‘mistakes’ over Cambridge Analytica”, 2018, https://www.theguardian.com/technology/2018/mar/21/mark-zuckerberg-response-facebook-cambridge-analytica.

[xvii]
Perrin, Andrew. “Americans are changing their relationship with
Facebook”, 2018,
http://www.pewresearch.org/fact-tank/2018/09/05/americans-are-changing-their-relationship-with-facebook/.