Facebook paid billions to spare Zuckerberg in data suit, shareholders allege

https://www.politico.com/news/2021/09/21/facebook-paid-billions-extra-to-the-ftc-to-spare-zuckerberg-in-data-suit-shareholders-allege-513456

by croes • 5 years ago

611 343 5 years ago

politico.com

throwoutway• 5 years ago

That doesn’t really help shareholders does it? Except Zuck has his own shareholder class so it really does!

This is another reason against multiple classes of share

avalys3• 5 years ago

FB's valuation is currently around $1T. Shareholders should be pretty happy with what Zuck has done with FB's business and this seems sufficient to justify protecting him from what would have been a major personal distraction.

But by all means, have sympathy for all those shareholders who were forced to invest their money in FB stock against their will and without any knowledge of the ownership structure.

CamelCaseName2• 5 years ago

Who exactly was forced to invest money into FB stock?

Why should we have any sympathy for them given the stock is up 200% over the past 5 years?

cool_dude853• 5 years ago

Where does this logic end? If Zuck shoots a guy in the middle of the street, is it fine for FB to finance his legal defense fund? Hire operators to bust him out of jail if he's convicted? Both of those "protect shareholder value" in the same sense as this.

lordlic3• 5 years ago

I'm not sure what you think minority ownership of a public company should entail, but surely you'd agree that it should protect them from the majority shareholder spending unlimited amounts of company cash to save themselves from personal inconvenience/embarrassment?

skeeter20202• 5 years ago

So if I buy a share today at the $1T valuation, I DON'T support Zuck in this case, but if I bought one ten years ago I DO, because he made me rich?

howaboutnope• 5 years ago

This wouldn't be a "distraction", this would be him owning his shit. The distraction from that is what he fills the rest of his life with.

sfg• 5 years ago

They bought under the condition of the ownership structure and also the law. If, as alleged, the law was broken, then there is nothing wrong with shareholders seeking redress.

A4ET8a8uTh03• 5 years ago

I would argue against that argument. Arguably, Zuckerberg was instrumental in getting FB to where it is today. It is not inconceivable that protecting him is protecting shareholder value.

Slartie• 5 years ago

From which alternate reality, where you were able to observe how a Facebook "fork" governed in a non-dictatorial fashion has turned out, did you learn this "arguable" information?

8note• 5 years ago

That was then and this is now. As they say, past performance is no guarantee of future results

bostonsre2• 5 years ago

Arguably, Zuckerberg was instrumental in getting FB to where it is today.

I agree that it would not be where it is today, but they are a troubled massive corporation beset on all sides by issues. They duck and dodge any issues and responsibility without fixing root causes. He definitely helped with the rise, but he will definitely also be responsible if it falls.

izelnakri• 5 years ago

He could have protected himself by making his shares the same voting rights as common class and not selling them, signalling his loyalty to shareholders. It should be illegal to issue shares to public with lower voting rights in my view. Our world would be a different place if google/facebook had only one type of voting class and I dont think what I view is strictly political.

dqv2• 5 years ago

If we’re talking about this from strictly the shareholders’ perspective, deposing Zuckerberg would do more than $5 billion in damage to Facebook.

pydry4• 5 years ago

Why do you assume that?

loeg6• 5 years ago

FB investors seem pretty happy with Zuck's leadership of the company, and it's pretty easy to see the argument that the additional cost was well worth it to keep him at the helm.

notRobot2• 5 years ago

So do we consider this a fine or a bribe? Either way it's someone who did (and continues to do) something terrible getting away with a slap on the wrist.

vkou• 5 years ago

If the director of the FTC uses it to buy herself a yacht, it's a bribe.

If not, it's 'fine'.

Ekaros2• 5 years ago

You can't bribe a government, you can bribe an official. Though I suppose executive position after year or two doesn't count...

alex_young2• 5 years ago

I don't follow, why can't one bribe a government? This actually sounds a lot like that.

eurasiantiger2• 5 years ago

You can’t bribe a government

Well, maybe we can’t, but Zucc sure can!

baby2• 5 years ago

I see this more as a mafia racket. If you don’t give us a lot of money we’re going to make your life impossible, asking you to testify again and again.

hellbannedguy• 5 years ago

"Zuckerberg, Sandberg, and other Facebook directors agreed to authorize a multi-billion settlement with the FTC as an express quid pro quo to protect Zuckerberg from being named in the FTC’s complaint, made subject to personal liability, or even required to sit for a deposition,” one of the suits alleged."

Don't even think about messing with Mark's personal assets.

drummer• 5 years ago

Two different classes of criminals made a deal with eachother. News at 11.

zestyping• 5 years ago

Disgusting.

gordon_freeman• 5 years ago

I don't understand how this kind of deal is even legally allowed? This is clearly against the Shareholders' interests to overpay the fine in order to protect the personal interests of some top FB executives.

eurasiantiger2• 5 years ago

It is not, but the FTC is the entity enforcing that. This is corruption, pure and simple.

rscoots• 5 years ago

Another thread mentioned that as a figurehead of Facebook, Zucc being named in this could conceivably lead to bad outcomes for shareholders via bad press.

My question is, if he was named would that lead to an investigation of his personal actions and dealings becoming public? If visibility into internal workings of the CEO is bad for shareholders then that's the way it ought to be I feel.

paxys3• 5 years ago

I'm curious how the FTC could make Zuckerberg personally liable in any lawsuit.

OldHand2018• 5 years ago

Not letting you know that was worth $4.9 billion

paxys3• 5 years ago

The FTC also said in court that Facebook’s fine would have been closer to $106 million, but the company agreed to the $5 billion penalty to avoid having Zuckerberg or Chief Operating Officer Sheryl Sandberg deposed and any liability for the CEO, the suit alleged.

This is bizarre. I get throwing in a little extra to shield executives, but $5 billion?

paulcarroty• 5 years ago

This is crazy money, yeah, for us.

ctvo2• 5 years ago

It's not the amount. It's the ratio. They overpaid by over 47 times. A company filled with world class lawyers and business executives, as well as an experienced board does that? Why?

klyrs2• 5 years ago

I believe the term "fuck you money" has never been more apt.

autokad2• 5 years ago

well zuck basically has full decision rights over FB shares. If I am not mistaken, only he has voting rights, no FB common share holder holds any voting rights

jdsully• 5 years ago

Minority and even non-voting shareholders still have rights, the majority cannot arbitrarily deprive them of the benefits of ownership. The legal doctrine is "shareholder oppression".

If Zuckerberg really did pay more than he had to solely for his benefit at the expense of minority holders then it would be an example of this.

mgiampapa• 5 years ago

Common shares vote, insider shares just vote 10x more per share. He isn't the only one that has them, but the way things are structured he has control of the company and more than half the total votes.

gorbypark• 5 years ago

The latest figures seem to indicate he has about 58% of the voting shares.[1]

1. https://www.bloomberg.com/news/articles/2021-05-26/facebook-...

vineyardmike3• 5 years ago

I get throwing in a little extra to shield executives, but $5 billion?

If i had singular control of a company the size of FB and the ability to spend it's money to avoid any sort of liability, i'd take the offer too.

rebuilder• 5 years ago

It’s a hell of an upsell, though. That’s 50 times the initial price. Zuckerberg must have been really worried, or really, really unwilling to take any personal risk.

unyttigfjelltol• 5 years ago

Minority shareholders aren't just supposed to be along for whatever frolic you whimsically decide to send them on.

pydry4• 5 years ago

There's still a myth floating around that companies are legally obligated to make the maximum amount of profit for shareholders.

https://skeptics.stackexchange.com/questions/8146/are-u-s-co...

dado32122• 5 years ago

The magnitude is so large as to make me doubt this in its entirety. There must have been some other benefits that were gotten from the deal, or there wasn't clarity that the number wouldn't swell beyond the $106 million number, right? How else do you possibly justify paying roughly 50x what was asked?

Justsignedup• 5 years ago

unless there was a criminal potential, and these billionaires don't like sitting in cages for any amount of time.

tyingq• 5 years ago

If the liability of what would have been revealed by deposing Zuck is even higher than 50x.

The math is "potential damage from a deposition + fine" vs "paying 50x the fine up front".

samstave• 5 years ago

What pisses me off is -- WHERE exactly is that $5B going to be spent.

We hear about fines and such going into the "general fund" -- I think this is BS - the public should be specifically the ones to benefit _directly_ from such corporate overreach fines and such.

Housing fines should buy houses.

Financial fraud should pay those defrauded - directly.

Cyber [crimes?] should be paid to directly protect users

etc....

We have heard of so many fines in the past, but no real transparency on exactly how they are spent.

And it shouldnt be in some obtuse web/budget location to determine...

There should be a dedicated fines.gov or some such that lists every single company fined, how much and how it was spent.

boplicity2• 5 years ago

Apparently most of the fines go straight to the "US Treasury." Basically, congress decides how to spend the money. That makes some sense: at least it is being spent by people who are elected, so that there is a chance at accountability.

However, it also doesn't make sense, because it doesn't seem "fair." The money from fines should be used to compensate victims.

That being said, compare this to the common practice of civil forfeiture: The money often goes back to the very same government entities who took the money. This is very bad because it incentivizes government agencies to be way too aggressive.

On balance, I think it might be better for the money to go back to the general fund. That way the temptation for corruption is severely mitigated. Though, I'm not sure about this, as I haven't spent much time thinking about it. There could, perhaps, be a more nuanced approach, based on each unique agencies needs/situation. That would require a lot of legislation, though.

Tarq0n• 5 years ago

Earmarking money at a too granular level is a great way to lower the efficiency of government. I also don't see why it should be the case that this money gets spent in the same domain it was levied, the whole point of democratic institutions is to be able to set priorities dynamically.

xpe4• 5 years ago

Many excellent points -- and this is a key part of the discussion when it comes to fine.

The post above has emotion -- and I'm personally ok with that -- but I think it would be better received without the two letter abbreviations for swear words.

odiroot• 5 years ago

Maybe they can now get sued for securities fraud? (Per Matt Levine)

spoonjim3• 5 years ago

Zuckerberg is worth vastly more than $5 billion to Facebook.

zie• 5 years ago

Well, we don't actually know that. Can a different CEO do a better job with Facebook? We haven't any idea as we have never had the opportunity to find out. But I agree that it's generally bad for shareholders if your CEO ends up in prison.

brudgers4• 5 years ago

A Google side panel says last quarter Facebook doubled it's net income to $10 billion.

So year over year, Facebook made that money back last quarter.

If the lower settlement might have slowed year over year growth, five billion would likely be money well spent.

Particularly if there wasn't an obviously better return for the cash. When you have billions of cash on hand finding investments that size is a hard problem.

Keep in mind that the fine is an operational expense. Right off the top, there's potential double digit return from reducing taxable income. In addition, the company better maintains the book value of goodwill assets without the depositions and can borrow money at more favorable rates.

On top of that, executives and staff aren't spending time in depositions and answering tough questions from the press.

The interesting thing is figuring out why it makes sense despite my direct experience. Even though I would have preferred they gave me some of that money instead.

encoderer2• 5 years ago

Yes nailed it.

Executives of a certain vintage learned a lot watching the carnage from US v Microsoft. Talk about destruction of shareholder value. I would say for Facebook this is money well spent.

stickfigure• 5 years ago

If the narrative doesn't make sense, maybe it's not true. Or wildly exaggerated.

throwawaylinux5• 5 years ago

This is bizarre. I get throwing in a little extra to shield executives, but $5 billion?

I think it's bizarre that is what you find bizarre. You've already accepted paying more to shield the executives, so after that it's just negotiation.

What I find bizarre is that essentially "donating" money to a government regulator can induce the regulator to cover up and turn a blind eye to a person's alleged or suspected breaches in the course of investigations and prosecutions.

In the world of plebs, this is either bribery or blackmail, depending on who blinks first, and conspiracy.

I understand corporations "agreeing" to punishment with regulators like it's some cordial negotiation. It seems perverse but if the alternative is horrendously long expensive court cases that the regulator can't afford and doesn't have a good chance of winning, then sure. It does tell me the legislation and regulatory environment is broken (probably by design), but at least I understand regulators operating as they do in the environment they find themselves in.

But this? "Slip us some cash under the table and Mark's little problem goes away" veers into the fundamentally unethical and unjust to me. I'm sure it's just that my tiny pleb brain is not sophisticated or rich enough to understand.

JohnFen8• 5 years ago

this is either bribery or blackmail, depending on who blinks first, and conspiracy.

It doesn't much matter to me what the flavor is, what matters is that this is corruption in action, pure and simple.

bawolff2• 5 years ago

I think it's bizarre that is what you find bizarre. You've already accepted paying more to shield the executives, so after that it's just negotiation.

To one up you - i find it bizare that you think that's the bizare part.

The entire point of a corporation, as a governance structure, in general is to limit liability for its shareholders. That's true for all corporations not just facebook. Its the reason people establish corporations instead of running businesseses informally as an individual.

The only surprising thing is the cost benefit trade-off here seems a bit much. Its not surprising that the facebook corporation tried to do its entire reason for existing.

sgregnt• 5 years ago

My two cents: I don't think you can find ANY government (icluding Scandinavia countries, Switzerland and what not) that is NOT engaged in - "donating" money to a government regulator can induce the regulator to cover up and turn a blind eye to a person's alleged or suspected breaches in the course of investigations and prosecutions." That's how government regulation works, more regulation more opportunities for corruptions.

elihu• 5 years ago

What I find weird is that for Facebook to pay a big lump of money to avoid personal liability seems like it would be unethical and possibly (I'm not a lawyer, so I don't know all the fine points here) actually something that Facebook could be successfully sued for by their shareholders, and yet the FTC was fine with it. Doesn't that make them complicit? I mean, it seems like that ought to be against FTC policy or something to accept deals that benefit the founder but throw the shareholders under the bus.

electriclove• 5 years ago

What does the FTC do with that $5b?

JohnFen8• 5 years ago

Typically, proceeds from large fines go to the US Treasury.

bawolff2• 5 years ago

The other bizarre part is why did ftc agree? The ftc isn't motivated by shareholder profit, why would they take the $5B deal if they thought something was there?

compiler-guy2• 5 years ago

As a regulator, having one of the largest settlements ever paid by a social media company (or any company at all for that matter) is a major win. Especially traded off against the possibility that you lose in court.

klyrs2• 5 years ago

Impressive. Does this count as a benefit that Zuck owes taxes on? Or does FB write it off as a loss that reduces their tax burden at no cost to Zuck?

autokad2• 5 years ago

I don't reckon this is something that is taxed. We don't get taxed if an employer pays for us to go to a conference, offers us legal advice, etc.

andi999• 5 years ago

Actually here if the employer pays too much for going to a conference (for some countries more than 24€ per day for food) then that amount needs to be taxed.

munk-a8• 5 years ago

The conference and some sorts of legal expenses are pretty legitimate expenditures if you operate with the opinion that going to a conference makes you a more productive employee. Training employees definitely shouldn't be double taxed (we might even want to subsidize it as a society) but it's a hard area of activities to define.

Legal expenses brought on solely due to your employment (i.e. the rando manager at dominion that a bunch of people sued last year) also shouldn't be considered individual benefits. Employers should never have the ability to shift liabilities onto employees without really good cause (i.e. gross negligence). That's why, if there's an accident at an autoshop with a lift and you're injured you're generally better off suing the shop rather than the employee.

mrep• 5 years ago

For the corporation, it depends on the fine. Normally they cannot write off fines but apparently it does happen if it is not considered an official penalty or fine: https://www.pbs.org/wgbh/frontline/article/how-80-billion-in...

CoastalCoder• 5 years ago

So it's a "donation" to avoid legal trouble. I'm not a lawyer, but that certainly stinks like bribery (or perhaps extortion) to me.

GrumpyNl• 5 years ago

Crazy and so corrupt.

xutopia• 5 years ago

So money fixes everything.

throwaway3975• 5 years ago

The full headline is “Facebook paid billions extra to the FTC to spare Zuckerberg in data suit, shareholders allege”. This is just an allegation.

jaywalk• 5 years ago

Yeah, a journalist has to say "alleged" because it's a lawsuit that hasn't been settled in court yet. But it happened, and there's evidence. So it's more than "just an allegation."

InvaderFizz• 5 years ago

If that outrages you, how about using threats of fines as an end run around congressional appropriations to fund pet projects?

See: https://www.wsj.com/amp/articles/will-biden-restore-charitab...

This has been an ongoing problem since Bush Jr, it was halted under Trump, and it looks like this admin has brought it back.

It's a nice bit of work: We'll settle with you, for a reduced amount, but you have to make a tax-deductible donation to these foundations we specify. Don't worry that they are in no way helping the victims of your malfeasance.

naveen99• 5 years ago

How much to add a gag order / classify the whole agreement, NSA letter style ? Asking for a friend. At some point these decisions get made by a committee of people who are themselves way below the pay grade for these decisions… I wonder how that works. The math is hard to make consistent.

warent• 5 years ago

Not to sound snide, genuinely curious how this is different from bribery?

pdabbadabba• 5 years ago

This headline desperately needs to be corrected to reflect the fact that this is an allegation in a lawsuit, not something Politico is reporting as fact.

randmeerkat• 5 years ago

“The most sacred of the duties of a government [is] to do equal and impartial justice to all citizens."

-Thomas Jefferson

shmageggy2• 5 years ago

I'm sure the gov't would be happy to take 5B to let you and I off the hook for white-collar crimes as well. See, perfectly equal!

margalabargala• 5 years ago

The law, in its beautiful equality, forbids rich and poor alike from sleeping under bridges.

dfxm12• 5 years ago

The cynic in me realizes that white collar criminals of Zuckerberg's stature really only likely serve time if it involves a huge amount of tax evasion. This money keeps Zuckerberg's name off of any official filings, but I don't think there was ever any real threat of him going to jail. So the $5b is, in a way, pure profit.

drunkpotato• 5 years ago

You think billionaires go to jail for avoiding taxes? Are you sure you have any cynic in you whatsoever?

skybrian2• 5 years ago

It’s usually interesting to find the context for these quotes. In this case the language is a bit obscure, but he seems to have been arguing that taxing both income and sales is a form of double taxation? [1]

This is in a note about a book by Antoine Destutt de Tracy, who was apparently a philosopher who coined the word “ideology.”

Anyway, I guess it’s repeated because it sounds good, but most people don’t care what Jefferson meant and might not agree with his point about double taxation.

[1] https://founders.archives.gov/documents/Jefferson/03-09-02-0...

biztos• 5 years ago

Thanks for doing that footwork. Ever since I was old enough to pay income taxes (started aged 14) it has burned me that my “share” of my income is then taxed at various steps along its way to some other citizen’s income, where the remainder is taxed yet again.

boplicity2• 5 years ago

I'm not sure that we should be taking advice on "impartial justice" from a slaver -- especially one who helped craft one of the most deeply ironic sentences that a slaver has ever crafted in history:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness

I only bring this up, because of how jarring the idea of "impartial justice" is in the context of Thomas Jefferson.

rufus_foreman• 5 years ago

Were slaves citizens?

fallingknife• 5 years ago

This title is leaving off 2 very important words at the end:

Facebook paid billions extra to the FTC to spare Zuckerberg in data suit, SHAREHOLDERS ALLEGE

dang2• 5 years ago

Added eventually. Thanks!

comeonseriously• 5 years ago

The FTC also said in court that Facebook’s fine would have been closer to $106 million...

Fines need to keep up. This is ... nothing. $106M is what, 1.5 DAYS of revenue. 1 and 1/2 DAYS. Gah! That's ridiculous!

tombert• 5 years ago

Wait, I'm missing something. Wouldn't overpayments to a government entity have to be reported? Why are we just hearing about this now?

This isn't a loaded question, I'm genuinely curious if a lawyer or someone more educated than me could explain this.

jjulius• 5 years ago

In this instance, no. The FTC authorized the settlement of $5 billion, and that's what Facebook paid. It's not like the FTC authorized a settlement for $1 billion and Facebook paid $5 billion.

The "overpayment" alleged by the lawsuit is that the settlement should've been far, far less than $5 billion, but was increased to that amount in order to prevent Zuckerberg from being individually targeted, thereby "overpaying".

Caveat: I'm not a lawyer, and I just have a basic understanding of this entire issue.

dschuetz• 5 years ago

News flash: Facebook is a corrupt company, and anyone working there is morally bankrupt. Duh.

scott00• 5 years ago

One point I think a lot of people are missing here: it's not likely that Zuckerberg would have paid anything out of his own pocket even if he had been sued individually. Generally most large companies agree to indemnify and defend their executives against any civil liability stemming from their position with the company.

r00fus2• 5 years ago

So is Zuckerberg saying he values his privacy that much? I mean, what does he have to hide?

Meanwhile, FB itself buys info on people to "augment" their understanding of them as users. And for those who don't willingly participate - they create shadow profiles.

spiderice2• 5 years ago

I get you’re attempting to make a point, but liability != privacy. They didn’t pay 5 billion for his privacy. At least that wasn’t the main goal, even if it is a byproduct

r00fus2• 5 years ago

Zuckerberg is Facebook - he has controlling interest.

Keep in mind he lives in a house in Palo Alto, CA where he bought all the houses around him to gain more privacy. He clearly values it.

ManuelKiessling• 5 years ago

The best democracy that money can buy.

amelius2• 5 years ago

Where did the money go?

We, taxpayers, have the right to know.

loeg6• 5 years ago

To the FTC. It's in the (linked) headline.

amelius2• 5 years ago

And how are they going to spend it?

brudgers4• 5 years ago

"Shareholders" doesn't mean much here.

Facebook has Class A shares that each get one vote.

Facebook has Class B shares that each get ten votes.

The board has Class B shares.

The Zuckerbergs control most of the Class B shares.

Enough to have a majority of the votes.

That's what owners of Class A shares bought into when they bought their Class A shares.

If the article didn't ignore this, it would be a lot less interesting. So it does.

wolverine8763• 5 years ago

How does that impact the lawsuit? There's no vote involved, it's a courtroom. Whatever their voting power, they lose the same amount of money.

throwaway20482• 5 years ago

that doesn't mean class B shareholders can do anything they want that hurts class A shareholders.

brudgers4• 5 years ago

There’s no evidence (in the article) that any shareholders were harmed.

Businesses pay money to settle legal issues all the time.

The larger payment settled the issue (with the Federal Government). The smaller alternative would not have (according to the article).

In the end some shareholders disagree with other shareholders.

And anyone can sue anyone.

dandotway• 5 years ago

Class B shareholders can do anything they want that hurts class A shareholders, so long as class A shareholders can't successfully sue. 67.8% of Fortune 500 companies incorporate in the state of Delaware[1], largely because Delaware has a Court of Chancery that handles corporate cases and is renowned for making shareholder lawsuits unsuccessful.

[1] https://www.legalzoom.com/articles/incorporating-in-delaware...

sireat• 5 years ago

I am extremely uncomfortable with these less voting right shares that so many companies(FB, Google et al) favor these days.

It perverts the open market and reminds me of shenanigans in Eastern European stock markets and Asian ones where it is the norm for minority shareholders to be left out to dry.

It creates a conflict of interest for those with more voting rights than ownership. Usually the interests are aligned but there are no checks and balances anymore.

In the old days a corporate raider could challenge a badly run company and threaten to overturn the board.

So now you have 14% of company but have 65% of voting rights you can do whatever to those 85% "minority" shareholders.

So those with Class B shares get to have their cake and eat it too.

This is close to FB building a 5B money hole(https://www.youtube.com/watch?v=JnX-D4kkPOQ) in a desert.

B1FF_PSUVM• 5 years ago

you have 14% of company but have 65% of voting rights

Good point. It makes no difference if the other shareholders have 1 or 0 votes per share. They have no control of the company, they just loaned it money - in practice they have variable yield bonds.

Also, viewed that way, the company has a much smaller market cap and a huge debt.

1vuio0pswjnm7• 5 years ago

"Zuckerberg, Sandberg, and other Facebook directors agreed to authorize a multi-billion settlement with the FTC as an express quid pro quo to protect Zuckerberg from being named in the FTC's complaint, made subject to personal liability, or even required to sit for a deposition," one of the suits alleged.

"... or even required to sit for a deposition."

Has he even sat a deposition since the Winklevoss case.

Years ago there was a shareholder suit against Facebook et al. that was going to trial (rare). Zuckerberg was scheduled to testify.

IIRC, Facebook settled on the eve of his scheduled appearance.

The plaintiffs counsel was quoted in the press as saying something along the lines of "Mark Zuckerberg may know computers, but I know ..." Clearly he was looking forward to it. :)

Surely there are more litigators out there who would love to have a go at Mark Zuckerberg.

Also, many years ago in the back and forth between Zuckerberg and Greenspan at Harvard, Zuckerberg made a remark that suggested he was frightened of federal court.

Testifying before Congress is not the same as testifying in federal court. Congress is a big step up from appearing before some Harvard administrator for disciplinary violations, but its not under oath and the consequences of lying are, lets be honest, non-consequential.

IMO, if a plaintiffs lawyer or prosecutor ever gets Zuckerberg into a federal courtroom to testify, he will halt and catch fire under questioning. Even with all the resources at his disposal, he is likely "uncoachable". He only knows how to lie, and as we have all seen he isnt very good at it.

"They amended the complaints last month after receiving internal files about the board's discussions on privacy, which a federal judge had ordered Facebook to provide."

There is value in discovery in litigation and regulatory proceedings against Facebook and Big Tech, regardless of the likely success of any of the indivdual cases, IMHO.

These companies rely on non-transparency to carry out their surveillance "business" without public backlash. Every lawsuit against them is a chance to learn more of what they do and potentially publish about it. Much of what we know has come from regulatory proceedings or lawsuits. The more we learn about what goes on behind the scenes, the stronger the future allegations that lawyers can make. Bit by bit, they unpeel the onion.

Wasnt it Zuckerberg and Google's CEO Schmidt who told the people they have nothing to fear about sharing what they know with Big Tech. When we ask Big Tech's staff to share what they know, they resist. Perhaps someone will remove the friction (as in "frictionless sharing").

Anyway, the question what price will Facebook be willing to pay this time to keep these shareholder suits from going to trial and Zuckerberg having to testify. That amount will not be public information. :)

quietthrow2• 5 years ago

Serious question : I would like a person familiar with law to explain how is this not a bribe essentially? (Cos clearly it’s not treated like one. Where/what is the reasoning that invalidates my question )

loeg6• 5 years ago

It's a negotiated settlement between a regulatory agency and a business. This isn't a payment to an individual abusing their government authority to seek bribes.

quietthrow2• 5 years ago

So in essence if a crime or wrong doing is done by an entity and money is exchanged to reduce penalty it is considered a settlement. But the same thing done between people is a bribe.

Here the entity is technically abusing their people given authority to enrich itself and people it’s responsible to and letting go of the other entity responsible for wrongdoing. Charging more money for that is ok. But if you swap that entity for people or person it’s a crime?

I understand this is all interpretations but seems like a pretty dated way to bring “justice”

hintymad• 5 years ago

FB also pays $12M a year for Zuckerberg's security details? In comparison, Amazon pays $1.2M for Bezos. So, I was wondering what kind of security could possibly cost $12M. Sounds like a tax-free way of spending on house decoration?

93po3• 5 years ago

If you want a few guys for security at any given time, and you want security 24/7, and you need security at multiple locations, then this all adds up really fast.

3 people in three shifts is 9 people needed per day. Given that people aren't going to work 7 days a week, you need extra people for coverage and weekend shifts. Let's be conservative and say 15 total. This is per location. Office, house, second house. That's 45 people. That's $266k per year in cost per person. Given the expenses of the motor pool, motor pool maintenance, travel accommodations and expenses for personal, the admin overhead of managing 45 people, etc etc this sounds fairly reasonable to me. If I was a billionaire I'd be spending at least that much too.

missedthecue3• 5 years ago

the Secret Service has an annual budget of almost $2.5 billion (though they do have some responsibilities aside from protecting POTUS)

xyzzy21• 5 years ago

Not that high. Unless it's premium plus kick-backs plus slush fund.

GravitasFailure5• 5 years ago

Your estimates are pretty spot on. I'd also add that security companies generally contract at double the hourly rate for officers, and $133,000/yr, $66.50/hr is simply not a mind-boggling number to be paying good quality armed security that need significant vetting and training.

kbenson• 5 years ago

It's much more fun to think one of the richest people in the world is committing tax fraud by getting extra "spotter" security people hired that are less trained and more spread out on the property, and then handed yard/cleaning supplies and told "well, while you're in the area, maybe clean up a bit, okay?"

JohnJamesRambo2• 5 years ago

Ok how does Bezos do it 10x cheaper? This is a very Amazon vs. Facebook stat haha.

hef198982• 5 years ago

Doesn't explain how Bezos gets away 1o times less in company expenses.

nelsondev• 5 years ago

In front of Zuckerberg’s house in San Francisco, 24 hours a day, there is a man sitting in a black escalade watching his house. That’s not free.

I imagine it’s like that across his numerous properties, as well as more who travel with him at all times.

blondin• 5 years ago

OP's is a sensible question to ask really. made me wonder what makes his security cost 10x, not why it's needed.

baby2• 5 years ago

What’s the address :P?

bigiain4• 5 years ago

I wonder how many of them spend all day with AR glasses on clicking on things that aren't threats, to train the AI that'll put them out of a job?

(I wonder if you could sign up for that job, and poison the training set so Zuck can never get near, say, a fire hydrant or a puppy - without the robots all going to defcon 5?)

missedthecue3• 5 years ago

Why Mark Zuckerberg’s Personal Security Costs Eclipse the Rest of Silicon Valley

https://medium.com/swlh/why-mark-zuckerbergs-personal-securi...

JKCalhoun• 5 years ago

$65K a day.

Wow.

corndoge• 5 years ago

No sources cited for any of the interesting claims, nor does this article actually answer the question in concrete terms. This is someone who turned their opinion on why his security is so expensive into a full length article.

Tldr the author thinks it's because so many people use Facebook, have strong opinions on their policies, and because Zuck as the founder is synonymous with the company.

dcolkitt• 5 years ago

I’d say it’s more shocking how little they pay. These are founders who’ve created trillion dollar properties. Them being hurt or even hassled would potentially destroy billions in market value. If I was a shareholder, I’d insist on spending POTUS-tier security.

cascom• 5 years ago

Probably not, taxpayers spend a couple of BILLION a year just for the helicopters

BurningFrog3• 5 years ago

Zuck is worth $120B+.

Whatever is going on, it's not about him saving tax on $0.012B

randomdata• 5 years ago

Wealth and income are very different concepts, however. The first result on Google says that he earned $25M (total comp.) last year from Facebook. While the original comment states that FB provides the security detail, so it is not a personal liability of his, an amount equal to half of your purported income from said business is still quite significant and not something you would ignore if a tax benefit is present. Especially when you have that kind of money to hire the best tax professionals around to take care of it for you.

citizenpaul• 5 years ago

His yacht has two smaller yachts that follow it with security teams on board. Seriously.

danjac• 5 years ago

I guess the difference between running an online store and running a hate machine. Bezos' main concern (as with any run-of-the-mill billionaire) is kidnapping. On the other hand, if your business model has driven people to literally commit genocide, you're going to experience blowback that warrants some extra protection.

belter• 5 years ago

You know he is the CEO of Facebook. He needs some @@##$Privacy...

In any case, they overpaid the fine by thousands of times compared to what was required, so there is another shareholders lawsuit coming their way. You cannot be a public company and mismanage the company money like this.

entropicgravity• 5 years ago

Billions is the currency that guys like Zuckerberg trade in. In this case Facebook allegedly paid off the FTC when it fact Zuckerberg should have paid it. So Zuckerberg just pays back FB the four billion and everyone is happy. It's like you and me trading nickels.

chrismsimpson2• 5 years ago

The US again proving its two tier justice system. It’s frankly disgusting the Silicon Valley acolytes that deny this.

dang2• 5 years ago

Maybe so, but please don't fulminate on Hacker News. A good comment adds new information, not just bilious repetition.

https://news.ycombinator.com/newsguidelines.html

rajacombinator• 5 years ago

Nice way to sneak in a little political cash off the books.

kgwxd• 5 years ago

That's a regular suit with a Data mask.

wolverine8763• 5 years ago

I'm much more concerned with apparent corruption at the FTC: They took money to look the other way? What Zukerberg allegedly did, is it illegal? Is that a fair characterization?

edwnj• 5 years ago

I have no idea how those shareholders are going to argue saving Zuckerberg in a suit about Facebook is not in the companies direct interest.

Like literally, other than being the CEO, he is also the founder, majority shareholder and the brand of the company.

P.S. this is a PR ploy.. shareholders will never win a suit like this in a Deleware court.

xpe4• 5 years ago

I think perhaps you mean you have no idea how these shareholders are going to win that argument. The argument is worth making.

Shareholders want the board to consider many options and make a decision on behalf of their duties. Spending $5B to shield one particular leader is one option. There are others. There are many examples where boards and shareholders oust a particular CEO.

LightG• 5 years ago

In English - Zuckerberg bought himself out of the legal system.

Allegedly.

wavefunction• 5 years ago

I have to say seeing all these posts about Zuckerberg's privacy is very hilarious to me. He's as entitled to privacy as his users are.

akagusu• 5 years ago

This is America.

Facebook paid billions to spare Zuckerberg in data suit, shareholders allege

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