Joel Arbaje; Source Photos Getty Images
Facebook Chief Executive Mark Zuckerberg may have had it easy.
Twitter (TWTR) CEO Jack Dorsey and Facebook (FB) Chief Operating Officer Sheryl Sandberg could be in for a much-rougher go on Wednesday before the Senate Intelligence Committee than Zuckerberg faced this spring in Washington.
The sledding may be especially tough for Dorsey. After he and Sandberg field questions over how Russian operatives manipulated their social media platforms in the 2016 election and what preventive measures they have in place to avoid a repeat in the midterm elections and beyond, Dorsey goes solo before the House Energy and Commerce Committee to address a red meat issue for Republicans: the notion that Twitter is biased against conservatives.
Lawmakers, who have become increasingly ornery with the industry and have strongly hinted at regulatory action, are expected to press Dorsey, Sandberg and a representative from Alphabet’s Google (GOOGL) on several fronts. Those include their efforts to protect user privacy; the inner workings of their algorithms; whether their business practices violate antitrust concerns; and the industry’s overall willingness to engage with China. Another hearing, scheduled in early October by a Senate Judiciary subcommittee, will focus on antitrust matters.
Read our recent cover story: Jack Dorsey Is a Double-Duty CEO for Twitter and Square. Here’s How He Revived Them Both
What is especially troubling is that criticism is coming from both sides of the political aisle, and social media companies have yet to provide satisfactory answers — dating to hearings a year ago, and Zuckerberg’s five-hour marathon hearing in April. Polished as Zuckerberg was, Nevada Democratic Sen. Catherine Cortez Masto seemed to sum up the sentiment of many of her peers. “Stop apologizing and make the changes,” she told a visibly tired Zuckerberg.
“Senior leadership really needs to be forthcoming and give a sense they have good, effective transparency,” April Doss, lead Democratic counsel for the bipartisan Senate investigation into Russia’s alleged interference in the 2016 election, tells Barron’s. “Google is not sending the right message by not sending a top executive.”
Sufficiently explaining to Congress how they can effectively police objectionable content on their platforms could be a tall order for social media companies, whose very success is predicated on accumulating as many users — and their personal data — as possible.
This has not gone unnoticed by investors and Wall Street analysts.
Facebook shares were down 2.8% on Tuesday, to $170.74, following a report from MoffettNathanson that downgraded the stock to “neutral” from “buy” and slashed its price target to $175 from $200. Among the concerns: the impact of antitrust measures on Facebook’s dominant market power.
It all makes for a potentially contentious, if not downright bruising, day for social media on Wednesday.
If there is an silver lining for Sandberg, Dorsey and company, it’s the other divisive event roiling the nation’s capitol that might overshadow their testimony: the Senate Judiciary Committee’s hearings on Judge Brett Kavanaugh’s confirmation to the Supreme Court.
Sign up to Review & Preview, a new daily email from Barron’s. Every evening we’ll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.