Zuckerberg asserts power at Facebook

In December, Facebook Inc.'s top brass gathered at Mark Zuckerberg's more than 700-acre beachfront estate in Kauai, Hawaii, for an unusual board meeting to discuss how to redirect the company after years of turmoil.

Changes came, but they weren't what everyone expected, according to people familiar with the gathering.

Within months, Facebook announced the departure of two directors, and added a longtime friend of Mr. Zuckerberg's to the board. The moves were the culmination of the chief executive's campaign over the past two years to consolidate decision-making at the company he co-founded 16 years ago. The 35-year-old tycoon also jumped into action steering Facebook into a high-profile campaign in the coronavirus response, while putting himself in the spotlight interviewing prominent health officials and politicians.

The result is a Facebook CEO and chairman more actively and visibly in charge than he has been in years.

It is far from certain that Mr. Zuckerberg's repositioning of Facebook, and his role at the top, will lead to a lasting turnaround in its reputation following more than three years of controversy over the spread of misinformation, loose oversight of user data and the company's competitive practices.

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The departure of long-serving directors, along with those of several longtime lieutenants over the past two years, means he is navigating this moment without key advisers who might be able to help him spot potential pitfalls.

Mr. Zuckerberg declined to comment for this article. A Facebook spokesman said: "The fundamental mission of Facebook is connection, and connection has never been more important."

In some ways, Mr. Zuckerberg is positioning Facebook along lines he laid out in a nearly 6,000 word manifesto in February 2017. He envisioned the social-media giant as a "social infrastructure" that could help battle global ills, including disease -- an ambitious vision that was overtaken by news of Russian manipulation of its platform, as well as improper access by Cambridge Analytica, the political analytics firm, to data on tens of millions of Facebook users.

Several federal and state agencies have been investigating Facebook, including the Federal Trade Commission, which began a probe over user data in 2018 that resulted in a record-setting $5 billion settlement last July.

Mr. Zuckerberg had long relied on Sheryl Sandberg, his chief operating officer and de facto deputy, to handle policy and operational issues, and on Chris Cox, chief product officer and a longtime friend, to oversee many of the biggest changes to the platform.

But as he tired of playing defense, Mr. Zuckerberg in 2018 took on the role of a wartime leader who needed to act quickly and, sometimes, unilaterally. He announced a series of products that took Facebook in new directions, starting with the March 2019 announcement that the company would emphasize private, encrypted messaging instead of the public posts that made it famous.

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The new focus would make Facebook more like a living room than a town square, he said. It also gave Mr. Zuckerberg new power over Instagram and WhatsApp, units he had promised to leave independent.

Shortly after the announcement, Mr. Cox, viewed as a potential successor to Mr. Zuckerberg, unexpectedly stepped down after 13 years.

Mr. Cox worried that the shift to encryption would impede detection of such criminal activity as terrorism and child trafficking, according to people briefed on the matter.

Last April, Facebook disclosed that two longtime independent directors would leave the board: Netflix Inc. CEO Reed Hastings and Erskine Bowles, a former investment banker and a Clinton administration official.

After his departure, Mr. Bowles privately criticized Facebook leadership for failing to take his advice on politics, his area of expertise, according to a person with direct knowledge of his remarks. Mr. Bowles declined to comment. A spokeswoman for Mr. Hastings didn't respond to a request for comment

In October last year, Facebook said Susan Desmond-Hellmann, who had served as its lead independent director since June 2015, was leaving the board. Facebook quoted her saying the departure was for health and family reasons. Ms. Desmond-Hellmann conveyed to some people that she left Facebook in part because she didn't think the board was operating properly, and that Facebook management wasn't considering board feedback, a person familiar with the matter said.

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This month, Ms. Desmond-Hellmann joined pharmaceutical giant Pfizer Inc.'s board. Reached for comment last week, she said Facebook's press release was accurate and disputed the person's characterization.

Take charge

Mr. Zuckerberg hosted the December board meeting at his Hawaii estate, hoping a change of scenery could help smooth over tensions, according to the people familiar with the gathering.

Directors and executives reviewed the growing list of regulatory woes, including how Facebook would deal with the FTC agreement that involved complex requirements. They discussed company strategy, culture and governance, these people said. Some left the meeting with a sense that things could get better, one of the people said.

Yet in an earnings call the next month, Mr. Zuckerberg seemed done with apologies. Facebook in the past hadn't communicated its views clearly "because we were worried about offending people," he said. "My goal for the next decade isn't to be liked but to be understood."

Mr. Zuckerberg needed more board support. He had been sparring with one of his longest-serving directors, venture capital luminary Marc Andreessen, people familiar with the matter said. As Facebook worked toward complying with the FTC settlement, the two were "at each other's throats," one of the people said.

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Mr. Andreessen expressed his frustration to some about whether Facebook would be able and willing to comply with the terms and considered leaving the board, the people said. A spokeswoman for Andreessen Horowitz declined to comment.

The Facebook spokesman said Mr. Andreessen never doubted the company's ability or commitment to comply with the FTC settlement.

In February, Mr. Zuckerberg brought on more boardroom support, adding longtime friend Drew Houston, the 37-year-old CEO of cloud-software company Dropbox Inc. The previous spring, he had added Peggy Alford, a PayPal Holdings Inc. executive who had worked for him as finance chief at the Chan Zuckerberg Initiative.

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A spokeswoman for Mr. Houston declined to comment. Ms. Alford didn't respond to a request for comment.

As the coronavirus slammed into the U.S., Mr. Zuckerberg moved quickly to mobilize Facebook, calling a meeting on March 2 of his top business and product deputies to discuss a response.

Mr. Zuckerberg and other top leaders saw an opportunity for Facebook to play an important role, people familiar with the matter said. They asked executives to come up with a big idea that would "help change public opinion about Facebook," one of the people involved in the discussions said.

One result was a splashy advertising campaign showing people using Facebook and bearing the slogan, "We're never lost if we can find each other."

The company spokesman disputed that Mr. Zuckerberg had encouraged deputies to think of Facebook's response as a public-relations opportunity. "Any reputational enhancement would be a byproduct of that work, not the driver," the spokesman said.

Over an early March weekend, a group of 20 senior managers worked on a coronavirus information hub -- such as tips on social distancing -- with Mr. Zuckerberg weighing in from his compound in Palo Alto, Calif. It was rolled out within days.

Seat switch

In mid-March, days after coronavirus was declared a pandemic by the World Health Organization, Facebook announced Kenneth Chenault, the former American Express Co. CEO, would be leaving the board.

He and Mr. Zuckerberg had at one time been close. Before Mr. Chenault joined the board in February 2018, the Facebook chief called him sometimes weekly for advice and treated him as a "kind uncle" who also understood running a big institution, according to a person familiar with their relationship.

But Mr. Chenault had grown disillusioned. Soon after joining, he tried to create an outside advisory group that would study Facebook's problems and deliver reports to the board directly, circumventing Mr. Zuckerberg, according to people familiar with the matter. Others on the board were opposed, and the idea sank.

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Mr. Chenault and Jeffrey D. Zients, a former economic adviser to President Obama, had spearheaded a group of independent directors who last year started holding separate meetings, worried their perspectives were being dismissed as Facebook faced regulatory woes, people familiar with the matter said.

In Facebook's announcement of his departure, Mr. Chenault said he was leaving because of a once-in-a-lifetime opportunity to join the Berkshire Hathaway board.

About two weeks later, Facebook said Mr. Zients would leave the board so he could devote more time to his own business. Messrs. Chenault and Zients were both unhappy for months with executive management and how the company handled misinformation, people familiar with the matter said.

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During March, Facebook added Robert M. Kimmitt, a businessman and former deputy Treasury secretary, as its new lead independent director. Also joining the board were Nancy Killefer, a former McKinsey & Co. executive, and Tracey Travis, the chief financial officer of Estée Lauder Cos. The board now has 11 members, pending a shareholder vote scheduled for May.