NEW YORK (Reuters Breakingviews) - Mark Zuckerberg could learn from Jamie Dimon. In the decade since the financial crisis, JPMorgan’s boss has regularly confronted issues and explained the firm’s strategy. Social networks, like banks, rely on confidence to survive and thrive. With Facebook facing a crisis of its own, its founder would do well to recognize that.
Facebook is a middleman, using its detailed knowledge of customers to sell targeted advertising. Its reputation was already suffering from a series of revelations on how the network was used to sell dodgy goods and spread fake news. Last month’s disclosure that a British consultancy used improperly obtained data on millions of Facebook users to influence voters in the 2016 U.S. presidential election created a political furor, and wiped more than $70 billion off the company’s market valuation. Bigger losses may lie ahead if it loses the confidence of advertisers or customers.
JPMorgan faced a similar threat during the financial crisis. Dimon saw that off in part by making the bank’s case in public early and often. He uses his annual letter to shareholders to explain the group’s strategy and give his views on everything from the economy to banking regulation. In 2015, he explained how rules on bond trading had reduced market liquidity. If anything, he opines too much. He used his latest letter, out Thursday, to discuss diversity, healthcare reform, trade wars, and jobs for ex-prisoners, among other issues. But Dimon speaks in a straightforward manner. This makes him a credible advocate for the company.
Zuckerberg rarely speaks except in carefully constrained formats. When problems arise, he has a long history of apologizing for privacy missteps, and promising to do better. That creates skepticism that anything will change. Delay hasn’t helped: he took four days to respond to press allegations that user data was harvested for political purposes.
The company offered some clear remedies at Wednesday’s press conference. Facebook will boost its staff of security and content-vetting employees by a third by the end of the year, to 20,000. But much remains opaque. Zuckerberg says the firm intends to make European Union data-protection controls and settings available worldwide, but the format may vary by region. Also unclear is why Facebook didn’t go public in 2015 when it learned that customer data had leaked, and whether its admission Wednesday that 87 million customers had been affected is really the bottom line. Being vague, delayed and elusive is no way to regain trust.
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