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Facebook Under Fire — CEO Daily, Monday 18th September

Good morning.

Facebook is #98 on the Fortune 500 list, #8 on our World’s Most Admired list, and #6 on our Fastest Growing Companies list. But it has recently catapulted to #1 on the list of companies sitting squarely in the political crosshairs.

Rep. Adam Schiff, top Democrat on the House Intelligence Committee, took aim at the company yesterday, calling on it to testify about Russian efforts to interfere in the 2016 election. That followed a Friday report in The Wall Street Journal that Facebook has given special counsel Robert Mueller detailed records about Russian ad purchases made during the election that go beyond what the company has shared with Congress.

“There are a lot of unanswered questions,” said Schiff, who said he was “distressed that it has taken us this long to be informed that the Russians had paid for at least $100,000 of ads designed to try to influence our electoral process.” Facebook and other Internet firms “need to be fully forthcoming… I think, frankly, they need to come and testify before Congress because there’s a lot we need to know about this.”

The anti-Facebook flak started earlier last week with BuzzFeed Editor-in-Chief Ben Smith penning a piece about the “bad new politics of big tech.” Mike Allen, whose daily newsletter is one of the best barometers of the zeitgeist in Washington, summed it up neatly on Sunday. Once the darling of both investors and users, Allen said, Facebook is now under fire from four different directions:

—Politicians, who fear it enabled corrupt actors to influence the election;

—Media companies, who fear it is destroying their business;

—The intelligence community, which worries it provides a platform for mischief by terrorists, Russia, and China;

—And Facebook fans, who are worried about the use of their data, and the quality of Facebook’s news algorithms.

Not clear where all this will lead, but it won’t be going away soon. All four concerns above are likely to increase in the weeks and months ahead.

Indeed, you can expect to hear more this week. UK Prime Minister Theresa May said Sunday she plans to confront U.S. tech companies during her visit to the UN General Assembly, which starts in New York tomorrow.

“One of the issues that we really need to be addressing—and I’ll be raising this when I’m at the United Nations—is the question of the use of the internet by terrorists for terror planning, but also using it for the spread of extremism, of hatred, of propaganda,” May said in a Sunday interview on ABC. Asked if Google and Facebook were doing enough to stop terror, the PM replied: “We’re talking to them about doing more.”

UN Secretary General Antonio Gutteres will be joining Fortune and 125 top CEOs for dinner next Monday, after the end of the UN’s deliberations, as part of The Fortune/TIME CEO Initiative. You can learn more about the initiative here.

News below.

Alan Murray
@alansmurray
alan.murray@fortune.com

 

Top News

Northrop Grumman Snaps up Orbital

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SoFi Faces Bank License Problems After Cagney’s Accelerated Exit

Online lender Social Finance changed its mind Friday about letting founder and CEO Mike Cagney stay on until the end of the year. The company had become the latest to underestimate the damage from a scandal arising from allegations that it tolerated or facilitated sexual harassment. Tom Hutton, who had already replaced Cagney as chairman earlier in the week, will take over as interim CEO. Former SEC chairman Arthur Levitt, an adviser to the company, said its application for a banking license is effectively toast. Fortune

Toys Were Us

Toys ‘R’ Us, the once-dominant retailer in its sector, is preparing to file for bankruptcy, according to The Wall Street Journal. The company is one of many that has failed to come to grips with how the retail business has moved online. Vendors have reportedly tightened their conditions for financing recently, fearing that they won’t be repaid. The company’s top priority is to get contingency financing in place so that it doesn’t miss out on the key holiday season. Fortune

Constructive Ambiguity on Paris Accord Pull-Out Ahead of UNGA

Secretary of State Rex Tillerson sparked a flurry of speculation that the U.S. may not pull out of the Paris Climate Accord after all, telling CBS’s Face the Nation that it could stay in “under the right conditions.” National Security Advisor H.R. McMaster also talked up the possibility re-entering the pact at a later date. However, The Wall Street Journal overnight cited officials close to Gary Cohn that the administration’s basic stance hasn’t changed. Quite how far this simply reflects the need to make conciliatory noises ahead of the UN General Assembly, where others will be lining up to castigate the U.S. for its withdrawal, is unclear. Fortune

Around the Water Cooler

California Joins Illinois in Defying Feds on Immigration

The battle lines between federal state authorities over immigration hardened as California lawmakers voted to bank police from asking for the immigration status of people who have been arrested, and limiting their cooperation with immigration officers. California follows Illinois, whose Republican Governor already signed a bill last month  protecting people from being detained simply because of their immigration status or because they are the subject of an immigration-related warrant. Fortune

Hulu Wins Big at the Emmys

Streaming service Hulu emerged as arguably the biggest corporate winner from the Emmys, picking up six awards for The Handmaid’s Tale. Big Little Lies generated five wins for Time Warner’s HBO, but HBO’s Westworld, which had received 22 nominations, failed to nail down any. At an individual level, there was distinctly higher recognition for women and minorities than at the Oscars back in February. Entertainment Weekly

The Real Ryanair Is Back

After a year in which it had appeared to make progress in ditching its reputation for treating customers like cattle, Europe’s biggest discount airline Ryanair appears to be reverting to type. The company is canceling hundreds of flights at short notice, a move that could affect up to 400,000 passengers, sabotage its own efforts to appeal to business flyers, and generally undermine its brand. The explanation is a bizarre one: having decided to change its internal vacation planning to a calendar year base from the current April-March timetable, too many of its staff are in a rush to use up their allotted vacation days by the end of the year, leaving the airline short-staffed. Fortune

GM Has a Recall in China and a Strike in Canada

Workers at GM’s CAMI plant in Ontario began a strike after failing to win guarantees on job security and future production commitments. The plant at Ingersoll had laid off 600 workers in July after the company moved production of the Terrain SUV to Mexico. The Unifor labor union wants GM to designate it as the company’s lead plant for the Equinox crossover to compensate. Elsewhere, GM launched a recall of 2.5 million cars in China to replace faulty airbag inflators made by Takata. Fortune

Summaries by Geoffrey Smith; geoffrey.smith@fortune.com

@geoffreytsmith