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Powerful Facebook investors just co-filed a proposal to take down Mark Zuckerberg as chairman

Mark Zuckerberg
Mark Zuckerberg, Facebook’s CEO and chairman.
  • Four powerful institutional Facebook investors have co-filed a shareholder proposal to split Mark Zuckerberg’s dual role as CEO and chairman.
  • The proposal was originally filed by the activist investor Trillium Asset Management and revealed by Business Insider in July, after Facebook’s brutal second-quarter earnings.
  • Scott Stringer, the New York City comptroller, and Joe Torsella, the Pennsylvania state treasurer, are among those lending their support, giving significantly more weight to the governance-change demand.
  • But the chance of the proposal becoming a reality is slim. A similar proposal in 2017 was popular among independent investors but crushed because of Zuckerberg’s voting power.

Four powerful institutional Facebook investors have co-filed a shareholder proposal to take down Mark Zuckerberg as chairman following what they say was his “mishandling” of several scandals this year.

New York City Comptroller Scott Stringer, Illinois State Treasurer Michael Frerichs, Rhode Island State Treasurer Seth Magaziner, and Pennsylvania State Treasurer Joe Torsella are joining forces to pile the pressure on Zuckerberg.

They have put their names to a proposal, originally filed by the activist investor Trillium Asset Management, demanding that Facebook appoint an independent chairman. Business Insider first reported on the proposal in July.

Their support gives the demand significantly more weight, given that they control more than $1 billion in Facebook stock. It also points to an increasing base of support for sweeping governance change at Facebook.

If approved by investors — including Facebook’s management — at its annual shareholder meeting next year, Trillium’s proposal would require the company to appoint an independent chairman, breaking up Zuckerberg’s dual role as CEO and chairman.

A similar plan was put forward last year. Though 51% of independent investors voted in favor of that change, it was crushed as a result of Facebook’s dual-class share structure; Class B shares have 10 times the voting power of Class A shares, and Zuckerberg owns more than 75% of Facebook’s Class B stock.

That means he has more than half of the voting power at Facebook and therefore the ability to swat away investor proposals, making the chance that Trillium’s proposal becomes a reality slim.

A new chairman is essential to helping Facebook out of its ‘mess’

But unrest among investors is growing.

“We need Facebook’s insular boardroom to make a serious commitment to addressing real risks — reputational, regulatory, and the risk to our democracy — that impact the company,” Stringer said in a statement, adding, “An independent board chair is essential to moving Facebook forward from this mess, and to reestablish trust with Americans and investors alike.”

Magaziner said: “Without an independent board chair, the board’s oversight of the company remains inadequate, as evidenced by the recent mishandling of several controversies. Having an independent board chair … is in the best long-term interest of Facebook shareholders.”

Chris Wylie
Christopher Wylie blew the whistle on the Cambridge Analytica crisis.
Neil P. Mockford/Getty Images

Trillium’s proposal cites a series of scandals involving Facebook as the reason for a change, including the use of its platform to meddle in the 2016 US election, as well as the Cambridge Analytica data scandal.

Trillium also mentioned last month’s Facebook data breach, which affected 30 million users, in an email to Business Insider. (You can read Trillium’s proposal in full here.)

Stringer and Frerichs have previously spoken to Business Insider and other news organizations about the need for an overhaul.

Together, the four manage $333.4 billion in state funds, including pensions and college-savings plans.

Stringer oversaw about $895 million worth of Facebook shares, while Frerichs had $35 million invested as of June — before the firm’s stock price cratered following its brutal second-quarter earnings in July. Trillium had $11 million of Facebook stock under its management.

Facebook declined to comment. It has previously said that removing Zuckerberg as chairman would cause “uncertainty, confusion, and inefficiency in board and management function.”

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Hackers stole millions of Facebook users’ highly sensitive data — and the FBI has asked it not to say who might be behind it

facebook ceo mark zuckerberg
Facebook CEO Mark Zuckerberg.
AP Photo/Andrew Harnik
  • Facebook says 30 million users were affected by the massive hack it first disclosed two weeks ago.
  • On Friday, the social-networking firm revealed more details about the attack — and said the FBI had asked it not to reveal who might be behind it.
  • Hackers accessed millions of victims’ highly sensitive personal data, including locations, relationship information, recent searches, and birthdates.

Thirty million people have been affected by a massive hack of Facebook, with the attackers gaining access to millions of victims’ highly sensitive personal data.

On Friday, Facebook provided more details about the attack that it first disclosed two weeks ago — and said the FBI had asked it not to discuss who might be behind the attack.

In its update, Facebook said that the company was cooperating with the American law-enforcement agency and that 30 million people were affected, down from its original estimate of 50 million. In the case of 14 million victims, the attackers gained access to a variety of data including locations, contact details, relationship status, and recent searches — highly sensitive data that could be used to facilitate identify theft.

It appears to be the worst hack in Facebook’s 14-year history.

The hackers were able to exploit vulnerabilities in Facebook’s code to get their hands on “access tokens” — essentially digital keys that give them full access to compromised users’ accounts — and then scraped users’ data.

“We’re cooperating with the FBI, which is actively investigating and asked us not to discuss who may be behind this attack,” the Facebook executive Guy Rosen wrote in a blog post.

“We now know that fewer people were impacted than we originally thought. Of the 50 million people whose access tokens we believed were affected, about 30 million actually had their tokens stolen.”

For 14 million victims, the attackers accessed a trove of user highly sensitive data, including gender, relationship status, religion, hometown, current city, birth date, devices used to log in, education, locations checked into, pages followed, recent searches, name, and contact details.

For another 15 million, the hackers accessed less information — only name and contact details.

And for 1 million affected users, the hackers did not access any information.

Users can check whether they were affected, and what information was accessed, by visiting Facebook’s help center.

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‘Not a random idea factory’: Why Facebook says its brain sensors are closer than you think

Regina Dugan Facebook’s Regina Dugan Facebook/Business Insider

Brain scanning and skin sensors sound like the stuff of science fiction.

And Facebook’s recently announced efforts to create this technology could easily be dismissed by cynics as a public relations stunt by a large company looking to prove its innovation bona fides.

But the 60 scientists and engineers working at Facebook’s “Building 8” — as the skunkworks hardware lab is known — are already making detailed plans for this sci-fi-like future.

Within 18 months, Building 8 hopes to have a working prototype of a brain sensor capable of typing 100 words a minute. And the group is drawing up plans to form a panel to examine the ethical implications of brain scanning.

Regina Dugan, head of Building 8, along with two members of her team, sat down with Business Insider to discuss the group’s progress to date and its plans for the future.

While Facebook’s ability to interface directly with the human brain is still years away from reality, Dugan and her team are serious about their work and its massive implications on Facebook’s businesses and society as a whole.

“We have an entire product launch team whose job it is to move out products at scale,” Dugan said.

Facebook chief technology officer Mike Schroepfer went out his way to stress the reality of Building 8’s efforts in a separate interview, telling BI that the point of the lab was not simply to have a “random idea factory” that never results in actual products.

Right now, the most pressing goal is to develop a working prototype in the next 18 months of a noninvasive brain sensor that’s capable of turning thoughts into text at 100 words a minute, according to Dugan. After that, Building 8’s next mission will be to figure out how to mass produce and sell the sensor.

Dugan, the former head of Google’s advanced projects group who joined Facebook in 2016, said that Facebook’s plans to form an ethics and legal panel with Building 8’s outside university partners to examine the privacy and health implications of brain scanning.

“This is early days,” said Mark Chevillet, the neuroscientist Dugan hired last year to led the brain-to-text project at Building 8. “We have some big challenges ahead of us.”

‘This is not a random idea factory’

12983910_10102777875412201_1824114153464567549_o From left: Facebook CTO Mike Schroepfer, Regina Dugan, and Mark Zuckerberg. Facebook

Aside from the scientific and technology challenges behind communicating directly with the human brain, shipping and selling hardware to millions of people represents a new challenge for Facebook.

With Building 8, Dugan and Facebook appear to be taking a page from Alphabet’s X “moonshot” division, which is known for developing far-flung, futuristic products within fixed time frames before either shutting them down or spinning them out as standalone businesses.

Similarly, Building 8’s projects have two-year deadlines to determine whether they can be successfully shepherded from the prototype stage to consumers. Every product that comes out of Building 8 will align with Facebook’s broader mission to connect the world, according to Schroepfer.

“When we were talking to Regina about joining us, one of the conversations we had is, ‘Look, this is not a random idea factory to go do whatever the team wants to work on,'” Schroepfer told BI. “We want to focus people on things that are directly associated with the mission.”

“We were like, ‘If you deliver on this, we know what to do with it,'” he said. “It’s not just going to be some random tech demo. It’s going to go into our products and make a difference.”

Augmented reality and vibrating vests

The brain research that Building 8 is working on will eventually also influence Facebook’s efforts in virtual and augmented reality, the latter of which could one day replace smartphones by overlaying virtual information onto the real world.

“It has huge applications for communication and connection, which is part of our mission,” said Schroepfer of Building 8’s brain-to-computer – or “BCI” — work. “And it’s also a critical technology for AR and VR in the long run. Because the problems of input are a big challenge there.”

Mark Zuckerberg AR glasses F8 Zuckerberg recently said that the goal with AR was for it to work inside glasses “we all want” to wear. Getty

Zuckerberg and other Facebook executives have said that the goal for AR is to have a pair of lightweight glasses that can display virtual objects onto the world around you. The nascent technology is also being worked on by tech titans like Apple and Microsoft along with startups like Snapchat and Magic Leap.

The first AR-equipped eyewear will likely feature some sort of brain-controlled input, according to Schroepfer.

“If you are just able to move your eyes and do a single click from your brain, which is just a single-bit signal, I’ve now just rebuilt the mouse,” he said.

For Building 8’s first brain-scanning tech, Dugan and Chevillet stressed that the sensor they build won’t be able to listen in on all of a person’s thoughts. It will rather focus on transmitting text you think “right before you would say it out loud,” according to Chevillet, who likened the concept to “decoding imagined speech.”

“The signal we’re trying to decode is the signal you’ve already giving intentionally,” said Dugan. She said that the sensor will be able to pair with a device like a laptop or smartphone and function like dictating to Apple’s Siri without your voice.

Along with Chevillet’s brain-to-text sensor, the second Building 8 project aims to let you “hear through your skin” and is being led by Freddy Abnousi, an interventional cardiologist who previously worked at Stanford. His product will likely take the shape of some sort of wearable, like a vest or armband, that vibrates to convey words into the human brain.

He described physical touch as “this innate way to communicate that we’ve been using for generations, but we’ve stepped away from it recently as we’ve become more screen-based.”

The goal is for the device to be “just part of you,” he said. “It’s very natural if you think about it.”

Dugan sees the two projects, which are just the first of others Building 8 is working on but won’t talk about yet, as complementary to each other. One is focused on deciphering what the brain wants to say, while the other is trying to send unspoken thoughts from the body to the brain.

“There’s an interesting similarity in that they’re both communication mechanisms, just in different forms,” she said. “It’s about giving users more alternatives to having input and output into their devices.”

While Dugan said that Facebook’s brain interface would first likely help people who have communication disorders, she acknowledged that the potential for the technology is open-ended. There are massive privacy implications that come with Facebook having access to your thoughts, but for now, Dugan is betting that the positive outcomes will outweigh any negatives.

“I feel tremendously optimistic,” she said.

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Analysts are going gaga for Facebook’s earnings beat

mark zuckerberg facebook happy smiling virtual reality oculusFrank Zauritz – Pool /Getty ImagesFacebook CEO Mark Zuckerberg.
Facebook-A $118.84

 

Facebook smashed it.

The social-network giant beat expectations when it reported its first-quarter earnings on Wednesday, sending stock soaring in after-hours trading by 8% to an all-time high. The growth comes off the back of the company’s strong mobile business.

CEO Mark Zuckerberg is also proposing a new share structure that will allow him to give away the majority of his fortune to charity while retaining voting control of the company.

Analysts are responding uniformly positive to the news, raising their price targets for the company as they reiterate overweight/buy ratings across the board.

We’ve rounded up a selection of reactions from analysts — but first, here are the key numbers, via Business Insider’s Jillian D’Onfro:

  • Earnings per share: $0.77 versus $0.62 expected.
  • Revenue: $5.38 billion versus $5.25 billion expected, up 52% year-over-year. Ad revenue is up 57% year-over-year.
  • Monthly active users: 1.65 billion versus 1.62 billion expected.
  • Daily active users: 1.09 billion on average for March. This quarter, 66% of Facebook’s monthly active users were daily active users, which is up from 65% during the same period last year.
  • Total costs and expenses were $3.37 billion, up 29% year-over-year, and capital expenditures were $1.13 billion.
  • Free cash flow for the first quarter of 2016 was $1.85 billion.
  • Facebook has 13,600 employees, up 35% from the same time last year.
  • Most of Facebook’s revenue comes from North America and Europe, with only about 24% ($1.3 billion) coming from Asia-Pacific and the rest of the world. But those areas account for 66% of its monthly active users. The average revenue per user in those regions is still tiny, compared to in the US: $1.56 and $0.91, respectively, versus $12.43 and $3.98 in the US and Europe.

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FACEBOOK’S ATLAS AD SERVER: What it is, how it works, and why it could finally move digital advertising beyond ‘cookies’

Slide3BI Intelligence

For years, digital marketers have been shackled to an increasingly outdated technology known as cookies, which are still used to measure and target digital ads.

Cookies — bits of code dropped into web browsers — are known to generate poor approximations of how many people view a digital ad, inaccurate estimates of how many times any given individual sees an ad, not to mention unreliable measures of clicks and sales. Worst of all, cookies are a non-starter within mobile apps.

In a new in-depth explainer and report from BI Intelligence, we dive into how Facebook-owned Atlas aims to take digital marketing beyond the cookie. Atlas is notable for how it leverages anonymous Facebook identity data to correct cookies’ inaccuracies and shine a light into what’s happening within the cookie-less world of mobile apps. In addition, Atlas’ ambition is to be able to connect offline purchases and conversions to digital ads shown across mobile and the web.

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Here are a few of the report’s main takeaways:

  • Facebook’s Atlas is an ad server that also allows ad buyers to measure, target, and optimize digital and mobile ads across digital (i.e., not just on Facebook). Atlas operates separately from Facebook, does not access personal information from the social network or share marketing data with Facebook.
  • Atlas is pitching itself primarily based on the claim that it can go far beyond cookie-based measurement to more clearly establish the ROI of digital ads, particularly when mobile is involved. Taking measurement beyond the cookie means marketers can focus on metrics beyond the last click, and observe the multi-device process that often leads in purchasing online or offline.
  • Atlas’ ambition is also to be able to connect offline purchases to digital ads shown across mobile and the web. To do so, it must have access to advertisers’ customer data or consumer data from third-party data vendors.
  • Atlas has a particularly strong advantage when it comes to measuring mobile ads. Cookies don’t work in mobile apps, so many marketers are flying blind when it comes to in-app ads. Atlas matches device-ID data with anonymized identity data of the user that accesses Facebook on the same device.
  • It’s important to remember that Atlas works with ad buyers, not ad sellers. Some major brands and agencies are already using or at least testing Atlas. 
  • Despite some clear advantages, Atlas has some crucial limitations, which are spelled out in the report. The principal one is that it will be very difficult for Facebook to wean the digital-media ecosystem off its reliance on Google’s DoubleClick platform, which is so well-entrenched.

The report has charts and data that can be easily downloaded and put to use.

In full, the 22-page report:

  • Explains how Atlas plans to take digital advertising beyond cookies, and the advantages this entails
  • Lists the limitations and barriers faced by Atlas in the context of the ad-server space
  • Discusses how a few agencies and brands have moved tentatively to adopt Atlas as their ad server
  • Includes 8 charts and 3 explainer slides on how ad serving works, how Atlas measures mobile ads, and how Atlas measures ads within browsers
  • Analyzes the difference between ad serving and measurement and how Atlas advances each function
  • Delves into market-share numbers for ad servers in the digital-ad industry

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