Why is Facebook failing to follow the basic rules of crisis management?

Missing man.
Missing man.
Image: AP Photo/Ben Margot
We may earn a commission from links on this page.

The textbook way to handle a corporate crisis is so well established, there’s actually a textbook for it. Several, in fact.

But it appears no one at Facebook has bothered to study them. The tech giant’s reaction to the rapidly unfolding Cambridge Analytica scandal has been clumsy, defensive, and confused. The fumbling is all the more surprising given Facebook’s vast resources, its PR-savvy leadership, and its dependence on the continued goodwill of its 2.2 billion users and the governments around the world that allow it to flourish.

In other words, it really should get this right.

The model for managing a modern corporate crisis was written by pharma company Johnson & Johnson in 1982, after cyanide was discovered in capsules of Tylenol, killing seven people. J&J took immediate responsibility, recalled 31 million bottles, and the company’s leaders held press conferences and sat for interviews with reporters to explain its response.

Since then, companies from JetBlue to General Motors to Pepsi have tried to follow the J&J template in a crisis: Don’t delay, apologize, be transparent, and be accountable. Some companies do it better than others—it’s remarkably difficult for corporations or their leaders to actually admit error—but the principles are not complicated, and have been in place for decades.

Facebook seems determined to do the opposite.

On March 17, The New York Times and the Guardian broke the news that Cambridge Analytica, a voter profiling company, had unauthorized access to the data of 50 million Facebook users.  Alerted to the reports, Facebook tried to get ahead to the bad news with a blog post announcing it was suspending Cambridge Analytica and its parent company from its site, but as Bloomberg reported, Facebook’s PR strategy may have compounded its problem. Not only had the company not done its own investigation into the misuse of its data, but its lawyers sent bullying letters to the Times and Guardian, which became part of the story.

Subsequent blog posts explained the steps Facebook is taking to investigate the matter, but continued to frame the misuse of user data as the fault of a few rogue actors, not a systemic problem resulting from Facebook’s business practices.

Meanwhile, Facebook CEO Mark Zuckerberg and COO Sheryl Sandberg have been conspicuously absent from the conversation, even as lawmakers in the US and UK call for them to explain. The lack of clear direction form the top has discomfited investors, and Facebook shares have plunged 12% since the weekend.

The New York Times reports there are serious disagreements within Facebook’s leadership about how much to disclose. Alex Stamos, one of the executives pushing for more transparency, appears to have lost the debate and been sidelined.

Part of the calculation behind the silence, it seems, is protecting the reputations of Zuckerberg and Sandberg, both of whom have been discussed as potential candidates for elected office. If they can’t get ahead of the mushrooming scandal, their political prospects may be sinking as fast as Facebook’s share price.