Facebook’s Mark Zuckerberg will testify before Congress this week. At issue is not just Russian interference in the election, but the broader question of how Facebook gathers and shares data–making this a potentially pivotal moment in the evolution of the data economy.
Zuckerberg’s history on data protection is challenged…which may explain why he has resisted Congressional testimony until now. Those of us who watched him break out in a profuse sweat and remove his hoodie at the Wall Street Journal’s All Things D Conference back in 2010 got a sense early on of just of how personally dug in he has been on these issues. But the signs last week are he is finally beginning to recognize, under duress, that his approach needs to change.
Two things you shouldn’t expect to result from this week’s testimony:
First, that Zuckerberg will step down or be replaced as CEO, as some are now arguing. Facebook’s two-class share structure gives Zuckerberg control over 60% of the company’s voting shares, and he made clear last week he has no intention of ceding his leadership post.
Second, that Congress will pass what Apple CEO Tim Cook has called “well-crafted privacy regulations.” That’s not because there isn’t broad bipartisan support for such regulation. Rather, it is because Congress in recent years has a proven inability to craft much of anything–with the tax bill a rare exception. Betting that nothing will happen in Congress almost always wins the money.
That leaves us pretty much at Facebook’s mercy, which is why we should all hope Zuckerberg’s contrition is real. Harvard’s Jonathan Zittrain did a nice job laying out what the Facebook CEO could and should do in Sunday’s New York Times. Start by recognizing that simply gathering consent doesn’t absolve him from responsibility. Facebook needs to act as a fiduciary for the information sharing it enables.
The bigger issue, of course, is whether we can expect Facebook—or any company—to take such measures if revenue and profit are at stake. At Fortune, we’re encouraged by evidence that enlightened leaders are increasingly answering that question with a “yes.” In part, that’s because they recognize it is all a matter of time frame. Yes, Facebook’s revenues and profits may suffer for the next couple of years if Zuckerberg does the right thing. But the company has a greater chance of being around 100 years from now if he does, as well.
More news below.
Deutsche Bank’s New CEO
Deutsche Bank has a new incoming CEO: Christian Sewing, the senior head of its retail bank. John Cryan will leave at the end of April. This reportedly increases the likelihood of Deutsche Bank merging with a European rival, possibly another German bank. It also signals a more low-profile Deutsche Bank, after years of trouble recovering from the financial crisis. Wall Street Journal
Analysts are hoping that Chinese President Xi Jinping will use his speech tomorrow at the Boao Forum for Asia to announce a serious market reform push. If Xi does signal that China is opening up to great access by foreign firms, that could help heal the growing trade rift between the country and the U.S. President Donald Trump tweeted that Xi would take down barriers “because it’s the right thing to do.” CNBC
United Co. Rusal, the aluminum producer owned by Russian oligarch Oleg Deripaska, lost half its value in Hong Kong trading today. Why? Rusal and seven other companies linked to Deripaska were hit with U.S. sanctions on Friday. The sanctions stop U.S. entities from doing business with the firms. Rusal’s share price also dropped 47% in Russian trading, though it made back some of the losses. Bloomberg
Facebook has shut out two more data analytics firms in the wake of the Cambridge Analytica scandal: AggregateIQ and CubeYou. The latter company was running “personality quizzes” in order to harvest Facebook users’ data—as with the data that ended up going to Cambridge Analytica, the goal was allegedly academic research, but the data was being sold commercially. AggregateIQ, meanwhile, reportedly has very close ties to Cambridge Analytica and played a significant role in the Brexit campaign. Fortune
Around the Water Cooler
When a fire on the 50th floor of Trump Tower killed a 67-year-old art dealer on Saturday evening, some suggested that sprinkler systems might have put out the blaze. However, the building’s upper floors does not have such systems, and that’s partly because Donald Trump in the late 1990s successfully lobbied against the retrofitting of existing New York buildings with sprinklers. Washington Post
The International Maritime Organisation will meet in London this week to figure out how to cut carbon emissions from the shipping industry, which is currently unregulated on that front. The organisation, which is part of the United Nations, has proposed halving emissions by 2050, but some island nations say that doesn’t go far enough. Countries such as Panama and Brazil, which are heavily dependent on shipping, are pushing in the other direction, opposing hasty action. BBC
AI and AML
HSBC, which has a troubled history with money laundering, is bringing in artificial intelligence to combat the problem. The bank has signed up to use software from a firm called Quantexa, to automatically sift through transaction data for suspicious activity. The move reportedly provides potential savings for HSBC’s compliance department. Financial Times
Two Turntables and a COO
Reuters has an entertaining piece on David Solomon’s DJing activities. Solomon, who performs under the name DJ D-Sol, is also co-president and co-chief operating officer of Goldman Sachs—and the bank’s likely next CEO, after Lloyd Blankfein steps down. Apparently DJ D-Sol opened his set on Saturday night with the Pink Panther theme tune. Reuters