All Facebook sites were down once more yesterday, which coincides with Facebook shareholders calling for its founder to have less control over the company.
According to Bloomberg this marked the third time this year the social media giant has suffered a major outage. Not just Facebook, but Instagram, WhatsApp and Messenger were all affected by the outage, reminding everyone just how much social goodness is controlled by just one company. Facebook doesn’t seem to have said anything other than a brief, generic apology.
It has been widely observed that this increased incidence of outages coincides with Facebook’s decision to merge its various messaging apps onto one platform and put a greater emphasis on privacy a month or so ago. There is definitely some merit in that revised strategy and it wouldn’t be surprising if it caused some service disruption, but if so why not just come out and admit it?
One reason may be Facebook’s increasingly restive shareholders. In a recent filing ahead of its annual shareholders meeting Facebook listed a proposal calling for all stock to have equal voting power. The central issue is that Class B stock, which isn’t publicly traded, has ten times more voting power than regular Class A stock. By bizarre coincidence Founder Mark Zuckerberg owns enough, apparently, to have a majority in any shareholder vote.
“Since July 2018, Facebook value dropped as much as 40% due to management and Board decisions that have not protected shareholder value,” opened the supporting statement. “By allowing certain stock more voting power, our company takes public shareholder money but does not provide us an equal voice in our company’s governance. Founder Mark Zuckerberg controls over 51% of the vote, though he owns only 13% of the economic value of the firm.”
Facebook’s share price went down the toilet after it reported rubbish numbers in in the middle of last year. Having peaked $217 just before those earnings it plunged to a nadir of $124 by Christmas, but has since recovered to $179 – an 18% drop – which is close the pre Cambridge Analytica peak. So the claim that bad management decisions have diminished shareholder value seems weak.
And while the disproportionate influence of these Class B shares does seem unfair, they have been in place since the IPO and anyone buying Class A shares will have been aware of them, so it seems somewhat disingenuous for such stockholders to suddenly start crying now. Having said that if Facebook keeps dropping the ball we can expect to see such calls increase in frequency and intensity, however futile they may be.