Do the Facebook papers spell doom for Meta – or is it too big to fail?

The explosive documents from Frances Haugen have renewed calls for legislation, but actually passing it is another story

People visit a sign for Meta outside Facebook headquarters in Menlo Park. Photograph: Noah Berger/AFP/Getty Images

Kari Paul in San Francisco-Sat 30 Oct 2021 

It’s been a rocky few weeks for the company formerly known as Facebook.

First came the Facebook papers, a series of blockbuster reports in the Wall Street Journal based on a cache of internal documents leaked by Frances Haugen, a former employee turned whistleblower.

The dam broke wider last week after Haugen shared the documents with a wider consortium of news publications, which have published a slew of stories outlining how Facebook knew its products were stoking real-world violence and aggravating mental health problems, but refused to change them.

Now the regulatory sharks are circling. Haugen recently testified before US and UK lawmakers, heightening calls to hold the company to account.

Facebook, meanwhile, appeared to be living in another universe. Its rebrand to Meta this week has prompted ridicule and incredulity that a company charged with eroding the bedrock of global democracy would venture into a new dimension without apologizing for the havoc it wreaked on this one.

But what do the Facebook papers actually mean for the future of the company? Experts are split on whether the damning reports spell doom for Meta – or if the trillion-dollar firm is too big to fail.

Facebook papers fuel calls to rein in the company

The explosive documents from Haugen revealed the extent to which Facebook knowingly allows toxic policies and business practices, and have prompted outrage from Congress, human rights groups and the public.

But while the revelations have renewed calls for legislation, actually passing it is another story, said Matt Schettenhelm, an analyst at Bloomberg Intelligence.

“It’s easy for lawmakers to haul Facebook into hearings, pound the table and complain about the company’s problems – it’s very hard to pass a law that fixes them,” he said.

While consensus has grown that major overhaul is needed, no meaningful attempts to put a dent in the tech behemoth’s massive empire have been passed.

“In my view, Frances Haugen’s testimony will certainly lead to more hearings and bad headlines,” Schettenhelm added. “It could move Congress closer to consensus in 2022 on some types of legislation, but probably not on the most disruptive measures.”

Several laws under consideration could begin to make a dent. A bill introduced this month by Senators Amy Klobuchar and Chuck Grassley would make it illegal for tech firms to engage in “self-preferencing”– in other words, giving their own products and services priority on their platforms over those of rivals. Facebook also faces antitrust lawsuits from a coalition of attorneys general as well as the Federal Trade Commission, the US agency charged with maintaining healthy competition and sound business practices in the markets.

We need lawmakers to actually take this seriously

Evan Greer, Fight for the Future

Another bill under discussion would update the Children and Teens’ Online Privacy Protection Act (Coppa) to ban tech companies from collecting data of users between the ages of 13 and 15 without explicit consent, and require the firms to delete data if requested.

A central problem the Facebook papers laid bare is that Facebook often conducts its own internal research into problems on the platform, then abandons them. In one damning example, researchers showed how Instagram has insidious effects on teenage girls, perpetuating mental health conditions like anorexia, but the company buried the results and did not change its policies in response.

A law introduced by House Democrats would address these concerns by requiring platforms to hand more data over to independent researchers who would then publish reports on exactly how it is impacting users.

But these actions do not do enough to address the issues central to Facebook’s massive power, said Evan Greer, the deputy director of digital rights non-profit Fight for the Future.

“We need lawmakers to actually take this seriously,” she said. “They should be moving forward with a real privacy bill that strikes at the heart of Facebook’s surveillance-driven business model.”

Facebook is also facing a number of potential class-action lawsuits, both from shareholders claiming it misled them and inflated the company’s share price, and users who claimed their biometric data was collected without permission.

“Those suits will take years, and Facebook will have a number of defenses,” said Schettenhelm. “Still, the company has to take them seriously: the damages could reach the billions of dollars.”

Will Zuck step down?

At a conference announcing the company’s rebrand this week, CEO Mark Zuckerberg all but ignored the mounting allegations, videoing in from his metaverse mansion, riding a fake surf board, and joking about buying virtual pets with cryptocurrency.

While the dissonance was uncanny, history indicates Zuckerberg is unlikely to pay for the transgressions.

Zuckerberg is seen during the keynote speech on the company rebrand on 28 October. Photograph: Meta Handout/EPA

Calls may be mounting for his resignation, but its not the first time Zuckerberg has been targeted. In 2019, many investors called on the CEO to step down as chair of the company following a year of problems, including the Cambridge Analytica scandal in which millions of users’ data was used to manipulate election results. 

Facebook appears to be playing by its usual strategy – deny and move on. Its leadership has remained largely silent, dismissing the Facebook papers as a “coordinated effort” to discredit the company, and sending a lower-level executive to testify before the US Congress about the platforms’ effects on children.

But even if the company is unlikely to hold itself accountable, it’s clear Facebook may be facing more aggressive pushback in the court of public opinion.

It has admitted in recent earnings reports it is losing teenage users in droves. Advertisers have boycotted it in the past. Meanwhile, some users are saying they plan to quit the platform. And while the company’s most recent earnings report indicates the platform still enjoys a vast user base, the latest revelations may only hasten a turning of the tide.

As the potential legal ramifications of the papers play out, advocates say harm to the global community is now irrefutable. They warn the company should not be allowed to simply abscond into the Metaverse.

“Mark Zuckerberg has made multiple appearances before Congress and nothing has changed,” said Jessica J González, co-CEO of the non-profit group Free Press Action. “It’s time for immediate action to hold the company accountable for the many harms it’s inflicted on our democracy.”