Today’s Cache | Is Mark Zuckerberg a lone wolf among Big Tech CEOs?

What makes Mark Zuckerberg unique within the Big Tech bosses circle

Updated - November 08, 2022 12:55 pm IST

Published - November 07, 2022 03:24 pm IST

A file photo of Facebook CEO Mark Zuckerberg during a live-streamed  conference to announce the rebranding of Facebook as Meta

A file photo of Facebook CEO Mark Zuckerberg during a live-streamed conference to announce the rebranding of Facebook as Meta | Photo Credit: Reuters

(This article is part of Today’s Cache, The Hindu’s newsletter on emerging themes at the intersection of technology, innovation and policy. To get it in your inbox, subscribe here.)

Facebook, now renamed Meta Platforms, is not in the best shape. Since the start of this year, the company’s shares are down 73%, and its trajectory is pointing downward. The social media giant’s net worth is now around $260 billion, well below its September 2021 $1 trillion-plus valuation. CEO Mark Zuckerberg’s net worth has also fallen by over $100 billion to $36 billion last week, according to Bloomberg’s Billionaire Index.

The declines come on the back of two fundamental changes that has affected the social media platform. The first one was purely a function of externality. Apple deployed an opt-in feature for ads in its iOS update. This singular move dented Facebook’s potential to target ads. Several analysts predicted that Apple’s App Tracking Transparency (ATT) feature would cost Facebook $12 billion. And the company did suffer a major hit by the feature as its mobile ad revenue is heavily dependent on this type of tracking.

If that wasn’t enough misery at a time when the global macroeconomic backdrop was turning gloomy, the company shot itself in the foot. Mr. Zuckerberg took a costly bet to build a fantasy digital world called the metaverse. Through the company’s Reality Labs division, he plans to spend at least $10 billion this year in building the division tasked with creating AR and VR hardware, software, and content.

The metaverse is a nebulous idea and throwing money into it a high-risk business decision as there is no guarantee it will take off. And simply watching what has happened to the company in the past one year has not enthused investors. But Mr. Zuckerberg is tenacious.

During the company’s earnings call last week, he said “this [metaverse] is going to be a very important thing” even as several people disagreed. He added that “people will look back a decade from now and talk about the importance of the work being done here.”

That timeline would have cost most CEOs their job, but not for Mr. Zuckerberg. Unlike Apple, Microsoft, and Alphabet, Meta Platforms continues to be run by its co-founder. And he is not just the only Big Tech boss who is also a co-founder, he is also one of the few founders who has super-voting powers.

Mr. Zuckerberg architected his company’s corporate finance structure in such a way that makes it nearly impossible for the board to fire him. He can leave his role as CEO only if he wishes to. This makes him one of the most powerful CEOs in the U.S.

So, what is this structure? Facebook has two classes of shareholders: A & B. The former gets one vote per share, and the latter gets 10 votes per share. Mr. Zuckerberg owns 13% of the equity in the company, and controls 54.4% of the votes through this special class of shares.

In the past few years, shareholder frustration has increased, and a proposal to scrap Class B shares is gaining more support. At an annual shareholder meeting this year, the proposal received 28% votes, up from 17% received in 2014.

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