With Trouble Comes Conflict, and with Conflict Comes Trouble

Facebook's meteoric growth and central role in revolutionizing social media have been overshadowed in recent years by its many controversies, such as the company's role related to influencing the presidential election in 2016, the improper harvesting and use of nearly 90 million user accounts by Cambridge Analytica, and the widespread concerns by users and regulators that the company insufficiently protects its more than 2.2 billion users' data and privacy. These issues are significant, as they can and have cost the company users, advertising revenues, damage to its reputation, and fines and restriction from regulators. Adding to the troubles, top-level executives like Mark Zuckerberg and Sheryl Sandberg's conduct has been questioned on ethical grounds for how they've responded.

PRECIOUS JEWELS, NOW COSTLY CONFLICT

However, the issues that grab fewer headlines but perhaps signal other significant troubles are the departures of key executives of companies Facebook has acquired, notably Instagram and WhatsApp. Facebook bought Instagram in 2012 for $1 billion when it had only a few employees and about 30 million users. It now has 1 billion users and an estimated value of $100 billion if independent. WhatsApp was purchased in 2014 for $19 billion when it had approximately 50 employees and about 450 million users. Just two years later, the number was over 1 billion users. These acquisitions have been central to Facebook's strategy and growth, but the founders of these two companies have all left in a few months, signaling conflict and trouble at the social networking icon.

HARMONIOUS AUTONOMY

The founders of both Instagram and WhatsApp stayed in place for several years after their companies were acquired, which is not the norm given many cash-out and leave. They, however, were allowed to run their companies much as they had, maintaining autonomy and the ability to realize their visions for the companies they created creatively. For WhatsApp founders, Koum and Acton, their passion was the privacy of communication. WhatsApp's encrypted messaging service exploded in parts of the world where messaging services were expensive or social networks like Facebook had not penetrated. Mr. Koum, in particular, valued secure communication due to his upbringing in the Soviet Union, where everyone was continuously monitored.

After the Facebook acquisition, the founders continued to develop WhatsApp's end-to-end encryption, avoided advertising, and maintained offices separate from Facebook's campus. WhatsApp's offices do not even bear the company's name; how about that for dedication to privacy? As for Instagram, System and Krieger also preserved considerable autonomy over the app and grew advertising revenues to $6 billion in 2018. The app is growing and is particularly popular with younger people. Despite the controversies consuming Facebook and Zuckerberg, the founders' relationship with Zuckerberg seemed harmonious. Zuckerberg and others often touted it as a model for acquiring and working with small tech companies.

ZUCKERBERG ASSERTS CONTROL

Facebook, fairly or not, is equated with its founder, Mr. Zuckerberg, who maintains control and largely determines the direction and structure of the company he founded. And therein lies the source of many of the conflicts. Zuckerberg envisions integrating Facebook's apps (Messenger, WhatsApp, and Instagram) which will require sharing user data between the products in ways not done previously. This effort has included reorganizing senior management and installing Adam Mosseri as VP of product design at Instagram, a previous role filled by the founders. But it didn't stop there. Zuckerberg also inserted Chris Cox, Facebook's chief product officer, between him and System and Krieger, which many internal to Instagram viewed as a move to put a trusted "Facebook first" person in place to control the direction and guard against the departure of

the founders.

CONFLICTS GROW, AND FOUNDERS EXIT

Instagram's founders increasingly disagreed with Zuckerberg and other Facebook executives during meetings, and although historically quite cordial, the disagreements became more severe and spilled over onto internal message boards. As for WhatsApp, Zuckerberg is determined for the app to start using advertising and making money, which requires

sharing user data between the apps. Koum had taken issue with how data was used by social media companies, especially by Facebook, and abruptly resigned. As one reporter said, "Instead of changing his values, Mr. Koum is leaving Facebook." His departure was further complicated due to his seat on Facebook's board of directors (he resigned).

In only a few months, all of the founders of these crown jewel acquisitions had left. Although some of the motives were unique to individual executives, they appeared to share a growing dissatisfaction with Zuckerberg and the company's direction. Power and decision-making were shifting away to others and becoming more centralized. The departing executives likely felt their objections would not prevail and resistance would be futile.

THE PROBLEM IS BIGGER, AND THE CONFLICTS MORE NUMEROUS

The problem is not just confined to WhatsApp and Instagram. Justin Rosenstein (creator of the "like" button), Chamath Palihapitiya (head of user growth), and Sandy Parakilas (platform operations manager) have all left. They, too, have taken issue with the protection of data and privacy, the use of the platforms to manipulate thought and behavior, and executives' lack of personal accountability. Their issues reflect a growing concern across the industry about increased growth and connectivity, but at what cost? Zuckerberg and other social media executives are being pressed to justify, if not alter, their values, or at least the practices of their companies, related to data protection, usage, and privacy.

Some view the conflicts and departures of key executives as pushback against Zuckerberg's mission for Facebook, to "make the world more open and connected." As the founder and face of the company, Zuckerberg is now forced to confront challenges and genuine conflict on many fronts, and how effectively he does this will determine the direction, path, and outcomes for years to come.

Assume you are Mark Zuckerberg, and you can go back in time before the departures of these key executives. Apply 3-Step Problem-Solving Approach to determine how you would deal with the conflicts described above.

Step 1: Define the problem.

Step 2: Identify causes.

Step 3: Recommend solutions.