ACEBOOK'S PREDICAMENTS: INCIDENTAL, INADVERTENT, OR INTENTIONAL?

"Facebook weakens our democracy, harms kids."2 This statement, made on October 4, 2021 by Frances Haugen, the whistle-blower for Meta Platforms, Inc. (Meta; formerly known as Facebook, Inc.), caught the attention of regulators like the US Securities and Exchange Commission (SEC). It raised their interest in policing potential risk arising from the actions of the company. In fact, Haugen told US senators about the severe damage Facebook had caused to society. It had encouraged divisiveness and hurt children through its products, including its flagship Facebook platform and its photo and video sharing service Instagram. Haugen and her lawyers reported that Facebook made multiple material misstatements and omissions about how the social media platforms Facebook and Instagram impacted teenage users.3 However, despite Haugen's meritorious claims, the regulators were unable to identify any traditional securities irregularities involving Facebook. The incidents Haugen was reporting did not directly fall under the SEC's purview, which normally concerned financial matters related to a business.4 However, the SEC faced considerable pressure to investigate Facebook's working model, right down to the company's foundation.5 Haugen was not the first person to accuse Facebook of wrongdoing. Previous testimonies from other Facebook employees supported Haugen's views that social media pulled people apart from each other with high speed and intensity.6 Facebook defended itself against such testimonies by stating that there was no evidence of the platform causing polarization. The company stated that the platform used artificial intelligence (AI) to identify and eliminate hate speech, calls to violence, bullying, and disinformation, and that the company did not benefit from propagating fabricated information.7 Facebook also stated that it did not want to referee the views and opinions of people, as this might impede their liberal democratic rights. It instead aimed to support "freedom of expression."8 Amidst the cloud of controversies, the company rebranded its image and changed its corporate name from Facebook Inc. to Meta Platforms Inc. on October 28, 2021. How should Meta respond to the crisis? Was there a need for Meta to assess how its platform influenced society and business? Would Facebook's new business model appeal to its stakeholders? FACEBOOK QUANDARIES Critics claimed that Facebook's algorithms were designed to boost user engagement on the most controversial subjects, such as hate speech, misinformation, bullying, and oratorical violence.9 Facebook was also accused of profiting from this kind of disinformation by helping global users become addicted to contradictory content.10 With extraordinary reach that spanned the globe, the social media giant had substantial impact on individuals and groups, and was accused of taking undue advantage of what some observers saw as "de-facto monopolistic" power (see Exhibit 1).11 Facebook denied any malpractice. In response to Haugen's accusations, the company claimed that it used AI technology to identify disinformation such as hate speech. Facebook also claimed that the company did not want to moderate content or become an arbiter of political truth, nor to act as a law enforcement agency or a biased corrected-opinion platform.12 The platform had prided itself on being unbiased and neutral, a place where people could voice their "personal" opinions and views, and vent their emotions. 13 Facebook's tepid response to the accusations implied a lack of concern about the platform's potential damage to society, although the company seemed to acknowledge the impact.14 To mitigate the effect, Facebook undertook specific technical initiatives such as its use of AI to detect suicidal tendencies.15 It also outlined the "good work" the company had done for the welfare of society.16 However, Facebook's initiatives were overshadowed by its algorithms, which enhanced user engagement. It seemed that the inherent issue was not technology but rather the company's business model.17 Facebook had faced controversies since its beginning, but the frequency of criticism had increased in recent years and expanded across the globe.18 The company's mission, "To give people the power to build community and bring the world closer," seemed to be contradicted by its actions.19 Even Facebook stakeholders agreed that the company's business strategy was more likely to push people apart than bring them together.20 Polarization A high amount of time spent on Facebook was reported as leading to the consumption of polarized content.21 The effect of time spent on Facebook on people's mental well-being was likened to a launching pad that spread misinformation more rapidly than any other medium and led to disintegrated users who existed in silos with varied ideologies.22 Facebook claimed that it did not cause polarization and that polarization was actually more prominent among people who avoided the Internet and social media.23 However, this claim was not supported by a report on social media use in 2021 showing that 50 per cent of US adults over the age of sixty-five were Facebook users, and that the elderly seemed more opinionated than younger users.24 In fact, temporarily deactivating Facebook accounts (referred to as "social media detox") was seen as helping individuals spend more time with family and friends and more time pursuing hobbies, reducing the polarization of views.25 Facebook did not challenge any of the studies cited against the company, acknowledging that damage had been done to individuals or society by engaging users on its platform; however, the company did not accept responsibility for the damage.26 Facebook increased the level of users in its databases by formulating algorithms that maximized customer engagement. For example, during the 2019 parliamentary elections campaign in India, a popular topic that added to the polarization of users was anti-minorities discussions.27 However, Facebook again refused to accept responsibility for any social damage. Changing Patterns of Individual Behaviour Facebook was seen by critics as a "mini social control room" for young adults by promoting online modes of communication among them. Its extensive use seemed to diminish thoughtfulness and understanding among adults, who were operating in virtual silos.28 Online communication was shown to lack emotional and enthusiastic behaviour and to promote inauthentic and rude behaviour among young adults.29 Facebook seemed to encourage people to thrive on a skewed self-image, adopt a sedentary lifestyle, and loosen family bonds and focus.30 Increased use of Facebook was viewed as giving rise to reduced face-to-face communication and boosting inappropriate social comparison.31 Over time, these issues had led to what critics saw as corrosion of an individual's self-esteem, which affected psycho-somatic health and lowered life satisfaction.32 Some users highlighted positive aspects of their life while snubbing less positive results, increasing individual comparisons, and promoting dissatisfaction.33 Filter Bubbles Facebook took advantage of the natural tendency of humans to socialize and remain surrounded by like- minded people. In fact, it relied upon this phenomenon to increase its customer reach. It constructed weighted algorithms that maximized human engagement and provided a personalized experience. Two ways to achieve this experience were by creating so-called "filter bubbles"34 and by creating "echo chambers,"35 and these could also cause intellectual isolation among users by reinforcing their own viewpoints and beliefs without factual support.36 Facebook became newsworthy when the company's main objective of attaining growth at any cost was revealed.37 A Facebook memo confirmed that growth mattered most to the company and that all work toward this goal was justified, regardless of the harm it might cause.38 Other internal Facebook reports reinforced this concept, which tied employee remuneration to a user engagement metric on the amount of time users spent on the platform. The metric was supported by Facebook features such as "likes," "shares," and comments made by each user.39 The Ugly Observers admitted that Facebook provided favourable features for users such as the ability of anyone with Internet access to join the platform and virtually visit friends anywhere in the world. Both the full website and accompanying mobile application were free and easy to use. Despite these clearly positive aspects of the platform, however, critics pointed to an extensive list of far less favourable and disturbing issues associated with Facebook including data privacy breaches, polarization, filter bubbles, nuisance, sex rackets (known as "honey traps"), human trafficking, drug trafficking, financial scams, cyberbullying, online stalking, verbal abuse, uttering threats, identity theft, defamation, harassment, blackmail, animal torture, and computer hacking.40 Holistically, Facebook was accused of having a vast network of human relationships that had become a complex web of potential harm. Environmental, Social, and Governance (ESG) Concerns The ESG framework created value for organizations in different ways; hence, it became important to have a strong ESG proposition to drive value for customers and stakeholders. The E stood for environmental criteria and included the use of energy and environmental resources such as water, as well as encompassing carbon emissions and climate change. The S stood for social criteria, which addressed relationships among stakeholders, and included diversity and inclusion. The G, standing for governance, elucidated the use of internal procedures and rules to govern the company in an effective way (see Exhibit 3).41 Facebook tried to use the ESG framework, taking many proactive measures for the betterment of the environment. For example, it achieved net-zero greenhouse gas emissions in its operations after lowering its emissions by up to 94 per cent. Facebook backed up its carbon removal projects and acquired 100 per cent renewable energy for its global operations, with 2.8 gigawatts of wind and solar projects online and 2.2 million cubic metres of water restored.42 However, the company's initiatives to support the environment did little to appease critics who highlighted the damage Facebook caused to society.43 Facebook's environmental actions were also ineffective in improving the company's ESG score, which actually dropped.44 Of the three ESG components, the social attributes of community welfare and stakeholder health and safety were particularly being compromised,45 while multiple governance issues such as the company's whistle-blower policy and its business ethics remained unaddressed.46 In the operating process, Facebook violated its own mission "to give people the power to build community and bring the world closer."47 Facebook tried to incorporate ethics into its workflows to develop an ethical brand. It incorporated the process of ethical questioning for researching the user's data in the normal workflow of researchers. It also came out with suicide prevention and support tools to bring ethics into practise.48. A robust ESG program could open up access to large pools of capital, build a stronger corporate brand, and promote sustainable growth. Data Privacy Issues A billion user accounts on the Facebook platform held and shared data from varied domains including politics, art, humanities, science, and culture.49 The company managed user accounts as data points connected to other data points to be monetized and materialized in its pursuit of organizational growth. Facebook's databases were warehouses of informationboth positive and negativethat were ready to be mined and fed back into the business to generate data intelligence.50 The company had been collecting user data at a rate of 500 terabytes per day.51 That data could be quickly turned into money by being sold to various organizations for big data analytics and other related applications.52 As a modern cutting-edge technology, big data had gained recognition as a highly valuable asset that giant companies were willing to buy and sell for profit.53 Facebook had exposed the data of 87 million users to a researcher who worked at the consulting firm Cambridge Analytica.54 In fact, Facebook was fined US$100 million by the SEC in 2018 for failing to disclose how its user data had been compromised by Cambridge Analytica.55 FACEBOOK AND ITS COMPETITORS Facebook gave all of its users the ability to connect to others and unrestricted access to its social media platform anytime, anywhere, and had become a leading social media platform.56 Users generated and shared content such as viewpoints, opinions, and images. Essentially, social networking sites (or social media platforms) had become popular by facilitating the spread of personal and professional relationships among like-minded people. Facebook's major competing platforms (e.g., LinkedIn and Twitter) were equally prominent with users, but Facebook remained the leading platform due to its reach across countries and languages, and the specific features that appealed to most users.57 From its humble start as a personal directory (named The Facebook) for university students, the platform eventually reached an active user base of 2.5 billion per month (see Exhibit 1).58 The company monitored user needs from all demographics and continuously provided new products that interested and engaged users, such as Instagram, Messenger, WhatsApp, and Oculus (see Exhibit 2).59 However, critics pointed to negative aspects of Facebook's offerings, as well as of the platform itself, such as the premise that Instagram negatively affected the mental health of teenagers,60 and that WhatsApp addiction led to personality disorders.61 Facebook's major competitors kept pace with the company in terms of new features but Facebook's popularity and user base was difficult to match, giving the company's de-facto monopolistic power in an intensely competitive social media market, with the freedom to adopt any means for customer retention and overreach (see Exhibit 3).62 FACEBOOK IN TROUBLE Despite numerous accusations throughout its existence, Facebook consistently denied allegations of harm done to society and individuals. However, the negative publicity was taking a toll on the company's corporate image, so it decided to confront misconduct such as the bullying and harassment that took place on its platform.63 Facebook considered deploying corrective and transparent security measures.64 In 2021, the company went further by rebranding its image and changing its corporate name from Facebook Inc. to Meta Platforms Inc. The new company aspired to make a virtual world where users acting as avatars could walk, meet with friends, and play games together online. In other such virtual worlds, virtual stores facilitated shopping and the purchase of virtual real estate using cryptocurrency.65 Would Facebook's new business model appeal to its stakeholders? How could Facebook determine the impact of its activities on society and business amid a cloud of controversy? Would Facebook's rebranding help the company regain the trust of users and stakeholders? Please read the case study as above and answer the question

Question 1 (Words 1000) Facebook is dealing with several issues. Identify at least three, present them in rank order. Issue Why this ranking? Issue #1 Issue #2 Issue #3

Question 2 (Words 1000) Facebook stakeholders (identify at least three) What do these stakeholders want from Facebook?

Question 3 (Words 500) Do you see any conflicts between the various stakeholders based on their wants from Facebook?

Question 4 (Words 500) Can Facebook's transition from a social media giant to a metaverse platform reduce its issues? Yes, or no? Why?