Business / Corporate

Facebook staffers' gripes about 'unethical,' anti-competitive practices rejected by execs in 2012: leaked chats

by Sarah Frier

Bloomberg

Facebook Inc. employees repeatedly chafed at what they viewed as anti-competitive or unethical practices by the company, internal chats show. But their concerns, voiced in 2012 and 2013, were overruled by senior managers including Chief Executive Officer Mark Zuckerberg, who argued that the survival of the social network was more important.

The messages come from a roughly 7,000-page trove of leaked documents that were part of a years-old lawsuit in San Mateo County, California. The interactions are likely to be scrutinized further as Facebook faces ongoing antitrust investigations.

In multiple discussions found in the documents, employees, including some top executives, argued against policies that would cut off competitors’ ability to advertise on the platform and access Facebook’s audience and user information, which it provided to noncompeting companies.

Zuckerberg, in a November 2012 email, justified the decision to not provide services to competitors. Facebook software that helped app developers increase sharing “may be good for the world but it’s not good for us unless people also share back to Facebook and that content increases the value of our network,” Zuckerberg wrote. The company’s ultimate goal should be “to increase sharing back into Facebook,” he added. In later messages, Zuckerberg also argued against giving competing companies access to other Facebook services.

Some employees bristled at the decisions. In December 2012, one staffer wrote: “That feels unethical somehow … It just makes me feel like a bad person.”

A Facebook spokesman said that the messages paint a misleading portrait of the company.

“These old documents have been taken out of context by someone with an agenda against Facebook, and have been distributed publicly with a total disregard for U.S. law,” he said.

The documents, published in full by NBC News on Wednesday, show a variety of conversations about actions taken to limit some companies’ use of the platform’s data and services. The messages are surfacing as Facebook faces antitrust probes from the U.S. Department of Justice, the Federal Trade Commission and 47 state attorneys general. The probes are focused in particular on the company’s acquisitions and restrictions on competitors.

The internal communications take place mostly in the two years after Facebook’s 2012 initial public offering, a period in which the company’s stock had yet to take off and it was struggling to make revenue off of mobile phones. The documents show how Facebook considered itself to be a perpetual underdog fighting for survival, even after it was already the world’s largest social network, passing 1 billion users at the end of 2012.

As it designated which companies it believed to be competitors, Facebook specifically targeted messaging services. The documents show that in the months leading up to Facebook’s $22 billion acquisition of WhatsApp, executives were fearful that messaging startups would evolve into rival social networks.

David Fischer, an advertising executive at the company, said he thought Facebook should continue to allow ads from competitors. In a January 2013 email to Zuckerberg, Chief Operating Officer Sheryl Sandberg and other top Facebook executives, Fischer wrote that the company should counterbalance competing ads by showcasing its own products more effectively.

“We should be secure enough in the quality of our products to enable them to compete effectively in the open marketplace,” Fischer wrote. “It looks weak to be so defensive.” He also noted it would be a challenge to enforce the policy, because Facebook’s list of competitors would grow over time. Mike Schroepfer, who later became the company’s chief technology officer, agreed with him, as did Mike Vernal, a vice president.

Javier Olivan, the company’s head of growth, disagreed. “We will look like complete idiots if we lose our business to these messenger services and help them along the way for a couple of $s!”

In an email response to the same group, Zuckerberg gave the final directive. “I think we should block WeChat, Kakao and Line ads,” he said, referring to popular Asian messaging apps. “Those companies are trying to build social networks and replace us. The revenue is immaterial to us compared to any risk. And I agree we should use ads to promote our own products, but I’d still block companies that compete with our core from gaining any advantage from us.” Other emails show Facebook was already blocking Google from advertising some of its products, including rival social network Google+, on the service.

After preventing those competitors from advertising, Facebook soon entered the messaging market itself, acquiring WhatsApp in early 2014, and spinning out its own chat service into a separate application.

In the documents, Facebook’s employees also spoke up about the company’s policies regarding app developers. Facebook had encouraged outsiders to make apps on top of Facebook, thinking that more people would visit the site if there were more games to play or quizzes to take. But once Facebook saw some rivals gaining traction, it decided to limit advertising opportunities and access to the platform for some of the developers, unless they helped Facebook in turn, with data or advertising spending, according to the documents.

Facebook employees communicated mostly using Facebook itself, in online chats. Their hesitation about the strategy is clear.

“So the message is, ‘if you’re going to compete with us at all, make sure you don’t integrate with us at all?'” one engineer, Bryan Klimt, said in a chat to Ilya Sukhar, the head of developer products. “I am just dumbfounded.”

Eventually, Facebook cut off all developers from access to data on users’ friends. The documents allege that the company whitelisted certain partners, who were all major advertisers, so they could continue to have access despite the policy change.