ON WEDNESDAY, MARCH 6, 2019, Mark Zuckerberg tossed down another bolt from his fishbowl Olympus. After all the incremental tweaks since the election, and all the ongoing public concern and scrutiny, he was finally making his big move. The name of the post was “A Privacy-Focused Vision for Social Networking.” The king of sharing was now recalibrating to emphasize the feature that set Thefacebook.com apart in its very first appearance: privacy.
He made the decision in his wartime CEO mode: by declaration. “I basically just found I could’ve invested years in talking to our team internally and still not gotten everyone to the same place,” he says. “At some point we just needed to make a decision.”
His observations of Internet behavior had convinced him that people were gravitating toward services without the drawbacks of the News Feed. “Private messaging, ephemeral stories, and small groups are by far the fastest growing areas of online communication,” he wrote. “Many people prefer the intimacy of communicating one-on-one or with just a few friends. People are more cautious of having a permanent record of what they’ve shared.”
Since the Zuckerberg Way is to see upcoming paradigm shifts as opportunities, he was now shifting Facebook to take advantage. “As I think about the future of the Internet,” he wrote, “I believe a privacy-focused communications platform will become even more important than today’s open platforms.”
Since the premier open platform was the Facebook Blue franchise, that might have presented a problem for Zuckerberg. Fortunately (for him) he owned three other communications platforms besides Blue. He also owned what he believed would become the dominant platform in the century’s third decade, the VR company Oculus. And was bringing all of them under tighter control.
Zuckerberg had actually been preparing for this shift for the last year. While all the headlines had been about scandals and elections and earnings, he had been quietly changing the company.
Beginning with the dispatch of the founders of all the key companies he had bought.
Elaborating on his vision at the 2019 F8 conference a few weeks later, he took pains to say that the shift wouldn’t mark the demise of legacy Facebook. It would have a place as what he called “the town square,” a public forum where well-meaning people and just plain awful people could participate in a two-billion-headed conversation. But people increasingly wanted protected spaces where they could converse privately. This would be akin to “the living room,” where conversations were not public. Facebook was now betting that the living room would be more popular than the town square. It would present fewer problems for Facebook than the current free-for-all where misinformation, hate speech, and stupid distractions thrive in plain sight. With strong encryption, no one would see the content that now causes such outrages.
When I talked to him after his keynote, I noted that he did not once mention the News Feed in his speech.
Short silence. “Yeah, that’s maybe true,” he finally said. “But it’s still important.”
Just not the future of the Internet.
What enabled Zuckerberg to be so confident about his company’s future in the post–News Feed world was the astounding success of the franchises he’d bought and created between 2012 and 2014. One of them, Instagram, was turning into an epochal win. Its growth rate far surpassed Facebook’s and, after a deliberate start, ad revenues began pouring in. Though it too had been used as a tool for Russian misinformation, the stigma never seemed to settle on the photo-based social-media site. Instagram was beloved. Its CEO, Kevin Systrom, was viewed as a Silicon Valley guru, one who, in contrast to his boss, was known for probity, design rigor, and empathy. Instagram was so successful that, in the words of one Facebook executive, “The sideshow became the show.” Which in itself would become a problem for Mark Zuckerberg.
When I visited Instagram’s new headquarters in early 2017, though, everything seemed copacetic. In contrast to Building 20’s warehouse chic, Instagram’s new palace had a minimalistic aesthetic and big windows that shooed in natural light. Just like an Instagram post. Five years after selling to Facebook, Kevin Systrom was still firmly in charge.
“When we joined [Facebook], I think our big question was, Were we going to have independence?” he told me. “Because when you start something, it’s your baby and you want to take care of it and you want to nurture it. There’s something that makes Instagram special, and it’s the community, and I did not want Instagram to become a feature of something larger.”
He and his co-founder, Mike Krieger, essentially ran Instagram as a separate franchise, but reaped the benefit of Facebook’s infrastructure, marketing, and even its artificial-intelligence research. For example, Instagram had recently used Facebook’s machine-learning skills to change its feed from a chronological stream to a ranked one. Though Systrom reported to CTO Mike Schroepfer (that would soon change to Chris Cox), he still had direct contact with Zuckerberg. They would meet for dinner once a month or so, and the interaction was more like a business meal between peers than a meeting with the boss.
Systrom insisted to me that, as of that moment, Zuckerberg did not meddle. Systrom cited the recent redesign of the Instagram logo, which had been a fairly realistic image of a ’60s Polaroid-ish camera, with a rainbow-colored patch at the top-left corner. Though a redesign seems trivial, it was actually a massive deal. Times had changed; Instagram had become a global business. And the app was not just a way to share in a fun and vintage way but an important part of the way people expressed themselves. So it deserved a logo that discarded the realistic view, known in software as a skeuomorphic image, and went to something more abstract, a glyph of rectangles and circles that suggested a camera. Replacing the rainbow were warm color gradients that gave the logo a shimmery look. Because the change was so dramatic, Systrom was a little concerned when he showed it to Zuckerberg over one of their dinners. “By the way, I forgot to mention we’re designing our logo,” he said late in the meal, bracing himself for a long discussion. But Zuckerberg just looked at it and said it was nice, though maybe he didn’t care for the rainbow gradient so much.
Systrom had even reached a good compromise with a potential flash point: inserting ads in the stream of Instagram posts. Systrom thought the News Feed has suffered with too many ads, and did not want Instagram degraded in the same way. He insisted, at least at first, on a limit to how many ads would be in the feed, and the right to approve the ads that did run. If that meant that Instagram would forgo the revenues that came from opening up its feed to the millions of businesses who used the self-serve process of the Blue app to reach targeted customers, so be it. Systrom personally signed off on each ad that appeared, making sure that he, and not some algorithm, determined whether it met the aesthetic standard to look good in the Instagram flow.
“Everything we do in product here is very independent,” Systrom told me. “We’re all kind of marching towards a similar destination, but we have very different ways of doing it.”
Neither of us knew it at the time, but that 2017 conversation might have been the last time Systrom would be touting his freedom. In the months that followed, Instagram would be fettered by an increasingly short leash, looped around the wrist of the guy in the gray T-shirt.
One other thing would change. In 2018, Systrom would become a father. He’d take the generous parental leave that all Facebook employees are encouraged to enjoy. And just before that leave was over, he would quit.
THE MARRIAGE OF Facebook and Oculus was bound to be rougher. Zuckerberg was excited about what Oculus would be in a decade, when virtual reality would presumably become as dominant as mobile proved to be after the smartphone. In the meantime, Oculus was basically a game company selling hardware, an alien business to Facebook.
Survival as a game company would require Facebook to toss in billions of dollars and compete in an industry it didn’t care much about. Oculus had a chicken-and-egg problem. Ideally there would be a wide library of great software that ran on its flagship product, Oculus Rift. But it was expensive: the $500 price tag did not include the supercharged computer required to run the software, which brought the total to $1,500, more than most people could afford. Because the user base remained tiny, the big game developers did not see the value of spending the million-plus dollars it would take to create a first-class title.
So Facebook paid them. It set up a division called Oculus Studios that handed out grants for companies to produce content that would run on the Rift. Meanwhile, software wizard John Carmack, a pragmatist, worked on cheaper, mobile-based products with broader appeal. Oculus did a deal with Samsung to create Gear, a $100 headset where your own smartphone would provide the visuals. It was VR on the cheap. Gear sold a lot more units than Rift, but it was an inferior experience.
In Zuckerberg’s keynote for the Oculus developers conference in 2017 he set a goal of a billion people using virtual reality. This was news to Oculus’s top executives, who were unaware of the prediction until they heard it in rehearsal.
While Zuckerberg was fixated on virtual reality as a social technology, the gamers at Oculus felt this was something for the future. “Social is probably number four on my personal list for what I think is important for VR,” John Carmack says. (He adds that this may be due to being “an antisocial person with hermit tendencies.”)
It was symbolic that Facebook’s social VR team was not even part of the Oculus organization, but an engineering group reporting through Zuckerberg’s chain of command. To satisfy his desires to get social VR now, they began building a product called Facebook Spaces (note: not Oculus) where people could interact in VR with the Rift. Since the Rift’s relatively tiny user base consisted mainly of hard-core gamers—who had zero interest in capturing baby’s first steps, especially since grandma had no headset to view it—Spaces had difficulty finding an audience. While the demos seemed cool—Zuckerberg did an elaborate one himself, with his own family as cartoon avatars superimposed into his actual living room—there was something visually unsettling about them.
Facebook’s demo for the 2017 F8 developer conference was not as charming. The company had just donated to the Red Cross’s effort to aid hurricane-ravaged Puerto Rico, and to explain it, Zuckerberg and his social VR head Rachel Franklin took a VR tour of the damaged island. The video showed their cartoon avatars viewing the wreckage with inappropriate giddiness, including a high-five celebrating Facebook’s generosity. Zuckerberg’s subsequent apology, if one could call it that, was of the “sorry to anyone I offended” variety. The episode did not help Facebook’s virtual-reality efforts.
Zuckerberg’s hope lay in Oculus’s research facility in Seattle, which had hired top scientists to help devise low-cost goggles that would solve long-term VR problems and deliver an “augmented reality” experience, superimposing computer graphics as an overlay on the real world. He exercised patience, confident that the lab’s head, Michael Abrash, was gathering the best scientists to advance the field. Oculus would need them, because Apple, Microsoft, and other companies were also devoting their resources to such a product.
That patience did not extend to the performance of the Rift, which he described in an earnings call as “disappointing.”
And then there was the Palmer Luckey problem. While the Oculus founder had participated in products like the hand controls for Rift, his time was increasingly spent as Facebook’s ambassador of virtual reality. He gave celebrity demos of the “Toy Box,” where two people could share a virtual space and do things like play Ping-Pong. In Time magazine’s big 2015 story on virtual reality, the cover subject was Luckey in a headset, superimposed on a tropical beach background. “Palmer focused on being the face of VR, doing press and evangelizing,” says Brendan Iribe, Oculus’s co-founder and CEO. “And it was great until the Nimble America situation.”
Luckey was a political conservative, supporting the right wing with the same enthusiasm he devoted to fast food, cosplay photos with his girlfriend, and soldering artisanal computer peripherals. He was a huge admirer of the military. Iribe remembers that once he got a call saying Luckey had driven a tank on the Facebook campus. The police had been called. The vehicle was Luckey’s Humvee, repurposed from military service with toy machine guns attached to the postings. To Facebook’s workers, though, it might as well have been a nuclear bomb. Luckey defused the situation and wound up posing for pictures with the cops, but the incident was a black mark on his record. “Here at Facebook, you can’t drive Humvees with guns—military vehicles—onto the lot and have the police show up,” says Iribe. “That’s not what we’re focused on here.”
In the summer of 2016, Luckey had come across a group of seemingly like-minded Trumpers in a sub-Reddit called The_Donald, devoting themselves to “shitposting in realtime.” They called themselves Nimble America, and he anonymously donated $10,000 to allow the group to fund a billboard outside of Pittsburgh with a cruel cartoon face of Hillary Clinton captioned, in uppercase, “TOO BIG TO JAIL.” When Luckey later confirmed his contribution to a Daily Beast reporter, he thought the exchange was off the record. The reporter thought otherwise. The story, “The Facebook Near-Billionaire Secretly Funding Trump’s Meme Machine,” ran on September 22, 2016.
This ruined Luckey at Facebook. The press eviscerated him. Luckey insisted he was misunderstood. His donation to Nimble America, he said, was only to buy billboards and maybe print some T-shirts. He had no role in Internet trolling, meme creation, or posting racist comments.
Still, the overwhelmingly liberal Facebooker workforce was appalled, and some called for his resignation. Ironically, this was happening at the same time as the top policy people at Facebook were intentionally doing nothing about the actual Trump meme machine that was running rampant on their platform. Worse, some Oculus developers said that they were abandoning the platform because of Luckey’s actions.
Luckey drafted a letter to his colleagues to explain the situation, but Facebook insisted he sign a different letter. Facebook’s deputy general counsel, Paul Grewal, emailed him to say, “I need to tell you Mark himself drafted this and the details are critical.” Luckey was shocked to see that the post going out under his name claimed that he was supporting third-party candidate Gary Johnson for president. Overall, the letter reeked of the inauthenticity of a hostage dispatch, and failed to satisfy anyone.
While Facebook did not fire Luckey—yet—it put him on ice, instructing him to stay off campus and not communicate with coworkers or on social media until after the election. His customary appearance at the annual Oculus developers conference was canceled.
Luckey’s treatment contrasted with that of another public Trump supporter, board member and original investor Peter Thiel. When Thiel said he would donate $1.25 million to the candidate, Facebook employees called for his ouster. Zuckerberg defended him in an internal post, literally as he was banning Luckey from the Facebook campus. “We care deeply about diversity,” he wrote. “That’s easy to say when it means standing up for ideas you agree with. It’s a lot harder when it means standing up for the rights of people with different viewpoints to say what they care about.”
Luckey assumed that once the election was over, the controversy would blow over. But when the unthinkable happened—Trump won—his return became impossible. Still, Facebook had good reason not to fire him in 2016. In January 2017, Luckey was scheduled to testify at the intellectual property trial springing from Oculus’s initial sale, and the company needed him as part of its defense. He dutifully prepared, and delivered his testimony, hoping that he would then be able to return. Oculus was his life.
But Facebook would not let the founder of Oculus return to Oculus. “I can say internally we looked very hard at what role he could have after this situation happened,” says Iribe. Each technology division head at Oculus was asked if he could use Palmer Luckey, the guy whose invention had created the division. And not one said that they had a place for him. For all practical purposes, Palmer Luckey was fired.
A few days later, Facebook hired an outsider, former Googler Hugo Barra, to become the new head of Oculus. Iribe was demoted, and would leave in 2018, after Zuckerberg figured out the person who would pull together Oculus, the social VR team, and all of Facebook’s other hardware efforts, like the Portal display. Meet the new VP of Hardware: Andrew “Boz” Bosworth. Zuckerberg tapped his go-to bro because he still thought VR was destined to become the next big thing. When he talked about it, his voice would rise a notch.
But his near-term goal of a billion users in virtual reality seemed unrealistic, considering the poor performance and huge losses of Oculus so far. “There’s no doubt that we thought we would be further in at this point,” says John Carmack. “We’ve squandered a lot of resources. We have been lavishly funded and there have been so many projects that are spun up and abandoned, internal directions that got staffed way up, lots of money spent and then we decide not to do them for good or bad reasons, lots of projects that have not been managed particularly well.”
Bosworth inherited what was to be Oculus’s breakthrough product, a standalone headset that promised to deliver almost all of the “wow” experience of the Rift. At $400—and no need to buy a specialized computer—it promised to be a breakthrough in the field. Oculus successfully launched the product, which even won the respect of a gaming press that had grown cynical.
Quest was not something that people would use on a persistent basis, and it would not fulfill Zuckerberg’s dreams of virtual or augmented reality being the platform for social interaction. That could only be done by ditching those cumbersome headsets and creating the technology that would allow people to become a form of cyborg—part human, part Facebook. That would happen, he hoped, by the efforts of Oculus Research, the lab in Seattle working on long-range projects. It was making progress on its wear-all-the-time Augmented Reality eyeglasses. Beyond that, Facebook was exploring how to get its products literally in people’s heads. It hired a team of neuroscientists to create typing-free interfaces between thought and action. And in 2019, Facebook bought a company called CTRL-Labs, which picked up brain signals from one’s wrist so one could control apps just by thinking. Every time the project got a mention in the press people would joke, Oh, Facebook now wants to get inside your brain. But that was actually true.
WHILE 2016 MARKED an election-year fiasco for the News Feed on the Blue app, Instagram introduced its most successful feature that year, one that would change Facebook forever. It would come from, of all places, Snapchat.
A few months after turning down Zuckerberg for good in 2013, Evan Spiegel realized that Snapchat had a piece missing. Sometimes people would snap a picture or a video and want to send it to a bunch of their friends. To do that on Snapchat’s one-to-one service, they’d have to do it serially, starting over again for each friend. How could Snapchat let people tell their daily stories to all their friends while maintaining the ephemeral spirit of the app?
“We really felt like that needed to be done in a respectful way,” says Spiegel. Meaning: not like Facebook, which he felt encouraged people to be inauthentic versions of themselves, a red-carpet distortion of their true, fun, goofy personalities. Even worse, the content was presented in a feed that unfolded in reverse chronological order. Unless you were Harold Pinter, who once wrote a play where the end came first, this was no way to tell your story. People knew this instinctively: when you come home and tell your family about your day, you don’t start at the end. You don’t tell the story of your birthday in reverse!
Spiegel’s answer was a feature that allowed its users to pictographically share the fun stories of their day, beginning to end. The defining feature of Snapchat—its impermanence—was even more valuable when users were sharing something to a group of friends as opposed to just one buddy. “There’s something really optimistic and inspiring about waking up every day as if it’s a new day, and not being defined in terms of who you were yesterday,” says Spiegel.
The name of the feature was obvious: Stories.
Stories would be the anti–News Feed.
Spiegel gathered a small team in the Blu House, one of several facilities his company now was working out of in downtown Venice. The product they created allowed you to post a series of photos or short videos and festoon them with the weird and silly stickers and virtual masks that the regular product offered. Users could swipe to the Stories page and see a strip of the stories available to them. After twenty-four hours, the stories would be gone. Spiegel thought it was brilliant.
But no one used it. “Like, literally no one had any idea what it was for,” he says. “What is this Stories thing?”
Spiegel did not panic. When Snapchat itself first launched, it had been a flop. “That’s always the challenge with new ideas,” he says. “It takes time for people to change their behavior.” That is what happened with Stories. After a few months, the graph that showed the rate of pickup roused itself from the basement and began to take the satisfying trajectory of an S-curve.
Facebook noticed. But this time it was not Mark Zuckerberg who would be trying to copy a Snapchat product. It would be Kevin Systrom. And that would be very bad news for Evan Spiegel.
Systrom has never denied that his Instagram Stories feature is essentially the same idea as the original Snapchat product. But he resists the idea that his team simply swiped someone else’s concept and slapped it onto Instagram. “You can view it one of two ways,” he says. The first, he says, is that while Instagram was growing, someone else changed the world with a competing product and the company needed to react by copying that product. The other view, which he embraces, is that Instagram’s own success was so vast and dramatic that it overstepped itself, and created a natural gap that needed filling. By Stories.
Instagram had started as a way for people to visually share highlights of their lives. But as it got bigger, the larger scale of the network made it less personal. More people were using it, but for some, it was no longer the first online place they would go in the morning. “The world needs a place where people can share funny, goofy things with their closest friends where they are not going to be judged,” says Systrom, sounding a lot like Evan Spiegel.
Systrom concedes that Snapchat filled that gap first, but now Instagram needed to fill it, too. “It was part of our ecosystem that we just left open,” says Systrom. “We wanted to allow people to share [and] highlight epic moments of their life, and if we wanted them to [also] share the silly moments throughout their day, people would embrace that.”
Instagram treated the project with the highest priority, and soon had its version of Snapchat’s idea. Then there was the question of what to call the feature. Everyone thought of it as just “stories.” Which was what Snapchat already was calling its product. “We started realizing that there’s no reason to call it anything different,” says Kevin Weil, Instagram’s head of engineering at the time. “Let’s just embrace it. This is going to be a common format for lots of apps and services, not just Snapchat and Instagram. So we’ll call it a story. The same way they have.”
Instagram was so confident—or perhaps needed the product to work so badly—that it went all in on it, in a way that had been seldom seen at Facebook in the past few years, where innovations were gingerly integrated, or in some cases even released as separate experimental apps. New features rolled out gradually, usually after painstaking testing on a small percentage of users in some remote country that no one normally paid attention to. Not Stories. Instagram released it to almost the entire world, all at once, hitting users like a sudden thunderstorm. Thumbnails for the Stories galleries were sited on top of the screen, indicating prominence over the feed that had been the core of IG’s product since the Burbn days.
Systrom had braced for a slow takeoff as people acclimated to the format. But the user base wolfed down Stories as if they were cheeseburgers dropped onto a desert island. “I didn’t realize how much we had created this vacuum to be filled,” says Systrom. (Or maybe Snapchat had trained them.)
In a way, Instagram had been failing users by evolving into a showcase for celebrities and influencers. The world of Instagram had belonged to its stars, and the rest of the crowd was just living in it. All of a sudden a new use for the service had popped up where you shared casual moments with your friends, with no pressure—in twenty-four hours, the story was gone. It was almost as if Instagram had suddenly achieved the fun and intimacy of . . . Thefacebook.com of college days, where silliness was the rule, and the concept of FOMO had yet to stir the persistent anxiety that gripped people in the new age of social media.
What’s more, Stories did not seem to be cannibalizing the Instagram feed. “People still love showing off their epic vacation in that one photo, but they also really like taking fifteen vacation photos that they don’t want to show people forever,” Systrom told me in 2017.
Snap CEO Evan Spiegel refused to comment on the blatant appropriation of his idea. (Snapchat had shortened its name in 2016.) His subordinates, though, were apoplectic. “It was like a bombshell going off,” says a Snap executive at the time. Spiegel would not comment for some time, even inside the company. Spiegel’s future wife, Australian supermodel Miranda Kerr, was not so circumspect. “I cannot stand Facebook,” she told London’s Telegraph: “When you directly copy someone, that’s not innovation—that’s a disgrace. . . . How do they sleep at night?”
Very well, apparently. Stories, Zuckerberg boasted in an earnings call, was on track to be bigger than the News Feed. But if Systrom and Krieger felt their success would be rewarded by Zuckerberg, they were wrong.
IN ZUCKERBERG’S MOVE to bring his properties under control, the toughest challenge was WhatsApp. WhatsApp had a cloistered culture, its workforce bounded within the walls of the unmarked office in Mountain View. They eschewed traditional metrics of success. Its mission was not merely to connect people but to bestow them with freedom to connect without constraints—from mobile services and even from governments.
So it was entirely consistent with that mission that WhatsApp pursue a scheme to encrypt all its messages by default. Co-founder Brian Acton especially felt WhatsApp’s users should be able to communicate in a way where government eavesdroppers could never access the secrets they shared with friends, family, and business associates.
In the summer of 2013, Acton began working on an end-to-end encryption model for WhatsApp. Creating a cryptosystem to protect the communications of more than a billion people, and withstand the attacks of everyone from wizardly hackers to sophisticated state intelligence agencies, is the ultimate don’t-try-this-at-home enterprise. It was a blessing when Acton connected with Moxie Marlinspike, a crypto-activist and master cryptographer who believed that encryption was core to freedom in the digital age.
Marlinspike was being funded by donors to create a mass-market easy-to-use encryption tool called TextSecure. Acton convinced him to help build the TextSecure technology into WhatsApp. Though senders and recipients would not necessarily realize it, every single message sent would be as protected as a missive from one spy to another. Snoops, spooks, hackers, and divorce lawyers might be able to intercept a message, but they never would be able to read it, because from the time the Send button was pressed to the moment it was read, the content would be scrambled. Even Facebook would not be able to read it.
There was considerable risk. The FBI and the NSA had been warning about a scenario called “Going Dark,” where security and safety would be at risk if they were not able to retrieve the content of messages. Facebook could be slapped with fines, or, if it turned out that one of those encrypted messages involved the planning of a murderous attack, the company could be shunned, or worse.
The purchase deal still had not closed when Acton informed Zuckerberg—he pointedly did not ask permission—that WhatsApp was pursuing end-to-end, and the CEO took it in with his typical inscrutable form of assent. “We were like, Mark, we are building end-to-end encryption,” says Acton. “He’s like, Okay, okay fine, you guys go ahead and do that, I don’t care.”
Actually, Zuckerberg had done a considerable amount of thinking on the subject. He had been outraged in 2014 when Facebook learned, via Edward Snowden’s leaks, that the US government was snatching its communications from Facebook’s data centers. Zuckerberg also had an emotional bias toward encryption. If his own early communications—the IMs and emails regarding ConnectU when he was at Harvard—had been encrypted, he might have been spared embarrassment.
When Zuckerberg did express reservations about encryption, his issues were not about addressing the concerns of law enforcement, but about Facebook’s bottom line. In mid-2017, Facebook was implementing a new financial strategy in its messaging apps, opening what had previously been a person-to-person communications service to one where businesses and customers could connect. Messenger was already well along on that path. According to Acton, “The question Mark kept raising was, If we have end-to-end encryption, are we leaving money on the table?” The problem wasn’t that the actual messages between businesses and customers would be hampered, but that Facebook itself would not be able to scan the messages to see what was in them and use the information to make a better user experience, or even to serve users better ads or add-on services. “People were questioning end-to-end encryption in terms of its business value,” says Acton.
WhatsApp kept its encryption. But the conflicts about making money from WhatsApp became increasingly heated.
Not long after the deal closed, discussions began between the founders and Zuckerberg on whether WhatsApp should drop its yearly fee of a dollar. The revenue was minuscule in light of Facebook’s much bigger economy. Acton was against it; he felt that the fee was like an insurance policy. “Mark was like, Kill it, kill it, kill it,” says Acton. “[If] the boss says kill it and the minion says don’t kill it, you kind of lose the argument.”
The next compromise was bloodier. Koum and Acton had designed WhatsApp to be the opposite of Facebook in terms of gathering information; all it knew about users was their phone numbers, by design. Their assumption—one they communicated to their users via the WhatsApp blog when they sold to Facebook in 2014—was that they would be allowed to continue along those lines.
Respect for your privacy is coded into our DNA, and we built WhatsApp around the goal of knowing as little about you as possible. You don’t have to give us your name and we don’t ask for your email address. We don’t know your birthday. We don’t know your home address. We don’t know where you work. We don’t know your likes, what you search for on the Internet or collect your GPS location. None of that data has ever been collected and stored by WhatsApp, and we really have no plans to change that.
But Zuckerberg was not going to pay more than $20 billion for a service that would run counter to his own core business model. In mid-2016, he made another argument that, as CEO with total voting control, he could not lose: Facebook should be able to use some WhatsApp data and merge it with its other services. One move in particular stood out: integrating the phone numbers of WhatsApp customers into Facebook’s databases. This would allow Facebook to link this most valuable of personal identifiers to millions of users of the Blue app who had previously withheld that information.
Doing this would require rewriting the terms of service contract between WhatsApp and its users. Users, of course, rarely read those lengthy and impenetrable TOS contracts. But regulators do, especially in the privacy-conscious European Union, which parses those legalistic word salads as one of the few reliable clues to what companies are actually doing with user data.
Complicating matters was that Facebook had specifically promised when it bought the company that it would not integrate WhatsApp data with its own. The pledge had been necessary to win approval of the persnickety European bureaucrats, and in the United States, the FTC had also obtained that promise.
The TOS change seemed to run afoul of this agreement. Particularly egregious was the fact that the change would be opt-out rather than opt-in. That meant that if the user did nothing, the data would be shared. Only the savviest and most motivated users knew about the change and figured out how to stop their WhatsApp data from being merged with the giant repository of Facebook data. Acton later told Forbes’s Parmy Olsen, “I think everyone was gambling because they thought that the EU might have forgotten because enough time had passed.”
The post on the WhatsApp blog of August 25, 2016, which Koum and Acton signed onto even as they despised the move, put the change in a positive light. “By connecting your phone number with Facebook’s systems, Facebook can offer better friend suggestions and show you more relevant ads if you have an account with them,” it said.
The EU wasn’t fooled. Because the change violated the promise Facebook made when it submitted the acquisition for review, it fined the company 100 million euros (about $122 million) for the turnaround. Facebook claimed, “The errors we made in our 2014 filings were not intentional.”
Zuckerberg kept pushing. In early 2017, he insisted that WhatsApp move to the Menlo Park campus. The move was as harmful to WhatsApp’s culture as Acton and Koum feared. The WhatsApp people were accustomed to a different atmosphere from the boisterous, close-quartered dorm-room spirit permeating Facebook’s offices. Porting WhatsApp’s more heads-down vibe to Menlo Park created friction. To Zuckerberg’s credit, he allowed WhatsApp employees to keep their larger desks, and even had the bathrooms remodeled to accommodate them—the privacy-obsessed WhatsApp folk wanted stall doors that reached the floor. But according to a Wall Street Journal article, other Facebook folk resented the idea that these newcomers were special. Some Facebook veterans, offended that WhatsApp people had the temerity to hand out posters requesting that visitors “please keep noise to a minimum,” would catcall the newcomers. “Welcome to WhatsApp—Shut up!” they’d chant, wrote The Wall Street Journal.
Acton didn’t have much of a relationship with Zuckerberg. When the two of them met, Acton would try to start a conversation about their kids—they both had young children and even had used the same obstetrician to deliver their babies. Acton felt that at those points Zuckerberg would always change the subject. “He got really good at keeping people away,” says Acton. “And the dude lives about a mile from where I live!”
Acton tried to bring up his problems with Sandberg as well, with poor results. He saw her as a political animal, and felt she did not regard him as a peer. Once he was at a meeting with her and in the middle of it she spotted a visiting acquaintance—“some high-profile guy from ESPN or something” he recalls—and interrupted the meeting to talk to the visitor.
Sandberg would frequently argue that WhatsApp should carry ads, comparing it with Instagram, which embraced advertising and was making a fortune for Facebook. Acton told Sandberg he disagreed with the “monetization initiatives” Facebook was suggesting, and even invoked the clause in his contract that said he didn’t have to stick around if Facebook drew revenue from WhatsApp in a manner he disagreed with. Sandberg told him that all of that was above her pay grade.
The spring of 2017 and into the summer, Acton kept going to Jan Koum. Dude, I can’t do this anymore, he’d say. He knew Koum wanted out as well, and suggested they leave together.
But Koum’s plan was to stick it out and negotiate his exit in stages: first a departure from the board, then an extended period of time where he would be technically employed at Facebook. And then he would collect the vast majority of the money coming to him—about three-quarters of the $2 billion remaining.
Acton could not wait. He rashly told Zuckerberg he was leaving before invoking the monetization clause. “I didn’t hit him with any hard-hitting punches like, Oh, this is a shitty place, this ad stuff is wearing me out,” he says. “I kind of regret it, because I feel I was a little disingenuous to Mark. But I didn’t ever feel I had the rapport that I could even share that with him.”
Acton believed that because of the clause in his contract about monetization, he was entitled to speed up his vesting, even though he was leaving the company. But he hadn’t mentioned it. There was about a billion dollars at stake. About two weeks after the meeting he wrote an email to invoke that clause. They met again, Acton, Zuckerberg, and Facebook’s deputy general counsel, Paul Grewal. Zuckerberg told him it was probably the last time they would ever be talking. Acton said that he wanted to make it clear that this was about the monetization. “That was one of the last things I said to him,” says Acton. “I just didn’t want to put ads in the product.”
Both sides tried to hammer out a settlement, but ultimately Acton didn’t feel good about it and just walked away, leaving almost a billion dollars behind. His departure went public in September 2017.
Eight months later, on April 30, 2018, Facebook announced Koum’s departure. In a blog post Koum wrote, “I’m taking some time off to do things I enjoy outside of technology, such as collecting rare air-cooled Porsches, working on my cars and playing ultimate Frisbee.” With Koum’s kitty now estimated at $9 billion, the Porsche market just got more interesting. His last day was in August 2018.
As bitter as Acton’s exit was, he did have the salve of walking away with $3 billion. “That’s a good way to look at it,” he says when I point this out to him at the end of a long interview we had in downtown Palo Alto. (“Anything you want, I’ll tell you,” he promised.) He used $50 million of that stake to create the Signal Foundation, which uses Moxie Marlinspike’s crypto tools for an easy-to-use and impossible-to-break communications service for the masses. He sees it as penance for yielding his business, if not his soul, to Mark Zuckerberg.
“I espoused a certain set of principles, even publicly, to my users and I said, Look, we are not gonna sell your data, we are not gonna sell you ads, and I turned around and sold my company,” he says. “That is my crime and my penance [is] that I have to pay to that crime. I live that every day. Signal is my hope to pay back on that.”
Acton took one last shot at the company that made him a self-loathing billionaire. On March 20, 2018, on the heels of the Cambridge Analytica news, he invoked a hashtag that had been trending for a while on Twitter:
It is time. #deletefacebook.
The most popular response to the tweet came from Elon Musk. “What’s Facebook?” he tweeted, not even softening the blow with an emoji.
Acton’s former colleague David Marcus, himself in charge of Facebook’s message app, posted an indignant response on his public Facebook feed. “I find attacking the people and company that made you a billionaire, and went to an unprecedented extent to shield and accommodate you for years, low-class,” wrote Marcus. “It’s actually a whole new standard of low-class.”
Marcus’s post won a lot of Likes from Facebook’s executives. But Brian Acton’s critique—both in the Forbes interview and in the one he had with me a few weeks earlier—was directed as much toward himself as toward Facebook and Zuckerberg. “I am the first to declare,” he told me, “that I am a sellout.”
Replacing Koum as the head of WhatsApp was a longtime Facebooker named Chris Daniels, who had paid his dues as head of the troubled Internet.org initiative. He struggled to win over his subordinates, and some loyalists left, but he began to put the service on a path to include some of the things the founders had long fought against. In November 2018, ads began appearing on WhatsApp.
Not long after he took the job, Daniels reported the progress he had made at a small group meeting. “I want to say one thing,” said Zuckerberg, signaling a rare meta-comment. “There are some good things that Jan brought to the table, but I also realize how much he was standing in our way.” Then he mentioned how it made him reflect about a few other areas in the company where he should be thinking the same thing. It was an odd thing to say when one of the Instagram founders was in the room.
In March 2019, after Zuckerberg announced that he was combining all the services, including WhatsApp, Daniels left as well. Zuckerberg replaced him with another executive who’d been in the birthday photo, Will Cathcart.
STORIES, WHICH INSTAGRAM had taken from Snapchat, were such a success that Zuckerberg initiated a heist of his own—Zuckerberg announced internally that Facebook, the Blue app, was going to add its own version of Stories.
Facebook’s adoption of its younger sister’s breakaway feature came at an interesting moment. The growth of Facebook’s Blue app had slowed: in North America it was actually declining. Meanwhile, Instagram had topped a billion users, reaching that level even faster than Facebook had. What’s more, it was now beloved in a way that Facebook no longer was. While Facebook was increasingly viewed like taxes—something unpleasant that was part of your life whether you liked it or not—people enjoyed Instagram. Young people in particular embraced Instagram and barely ever checked Facebook. When I spoke to a few high school classes in 2018, I would ask the room how many people used Facebook, and perhaps one or two hands would be raised. But almost everyone held their hands up when I asked about Instagram.
Zuckerberg could rightfully take pride in his purchase. But to some inside the company it seemed he wanted to take . . . credit. When speaking about the success of Instagram he made it a point to note that while the co-founders did a good job, their success was equally due to Facebook’s support. He pointed this out in the earnings call when he announced Instagram’s cross into the billion-user realm, and it came up one afternoon when he and I were taking a long walk on the faux savannah on Building 20’s rooftop. The conversation started by revisiting his refusal to sell to Yahoo! in 2006, and how happy he was to have made the difficult choice. He told me he now advises young entrepreneurs not to give in to pressure and sell their companies if they feel that those companies have potential to succeed independently.
I couldn’t help but make the connection to a pair of co-founders of a rising company who accepted an identical offer. “Does that mean that Kevin and Mikey made a mistake by selling to you?” I asked him.
He paused for a minute, as if he were a chess grandmaster startled by a move from an inferior player who suddenly shifted the board to his disadvantage. He didn’t want to denigrate two executives who had done a fantastic job for him. But he did anyway. “On the one hand, I think they would’ve done a good job; they’re very talented and could have built the business to be worth more than a billion dollars,” he told me. “On the other hand, I really do think that without the work that Facebook has done, and I think we’re the best in the world at this, I don’t even think that they’d be half as big as they are today.”
By late 2017, it was clear that Zuckerberg’s relationship with Instagram had changed. How can we help you? had changed to How are you helping us? And then, in keeping with his wartime CEO speech, Maybe you should just listen to me.
At first, Zuckerberg seemed to simply want to tap Instagram for more revenues. The number of ads on the system was always a concern of Systrom’s, and previously Zuckerberg would look favorably on his arguments to take a long view and not clutter the feed, or more recently, Stories, with a lot of ads. Now Zuckerberg was ordering an increase. It was almost as if Zuckerberg wanted to increase Instagram ads so he could lower the volume on Facebook Blue, thus making Blue more attractive.
As Instagram hit a billion users in early 2018, it seemed to those at Instagram that his nos to their requests for resources became even more frequent. Zuckerberg instructed Growth leader Javier Olivan to list all the product benefits Facebook provided to Instagram, basically so he could trim them back.
One conflict came from Systrom’s plans for its internal messaging service, Instagram Direct. Systrom and Krieger wanted to build it out to a separate app, like Facebook had done with Messenger. It would be a competitive answer to Snap. As with Snap’s service, the messages would disappear a day after the recipient viewed them. Since none of Facebook’s messaging services had captivated the youth market as much as Snap did, it might have been Facebook’s best chance to win that valuable demographic.
At one point, this would have been the kind of development that Systrom and Krieger would have mentioned to Zuckerberg as a fait accompli. But once Zuckerberg began ruminating on a vision for a unified Facebook, those days of independence were over. For its 2018 budget, Instagram allocated a certain number of hires to further develop Instagram Direct. Zuckerberg rejected the request. It was part of a pattern. Though Instagram was the fastest-growing property at Facebook in 2017, Zuckerberg cut back on its hiring in the 2018 budget.
Still, Instagram began testing the new app in several countries. It was received well enough to extend the test. But Zuckerberg put a halt to it, saying he wanted to gauge its impact on other properties. Then he formally issued an order to stop the progress. Months later, Facebook would announce that in the future, all messaging on Instagram would be handled by the Messenger team.
Another benefit from Facebook to Instagram on Olivan’s list was cross-promotion. When a user shared an Instagram photo on the News Feed there would be a notation of that, a little way to expose Instagram to Facebook users.
Gone.
Even more serious for Instagram, Zuckerberg was reconsidering cutting back on Instagram’s use of the Facebook friend graph. This was one of Instagram’s most valuable growth tools: when new users signed up they could instantly connect with all their Facebook contacts, making the service valuable from that moment on. Instagram’s leaders could live with more ads and less promotion, but not losing the friend graph. Zuckerberg had promised the Instagram team he would never do that. A few months later, Facebook decreased Instagram’s access to the graph. Soon after that, Zuckerberg began experimenting with a total cutoff.
The pattern was unmistakable: Zuckerberg was changing Instagram’s direction from something that could be bigger than Facebook Blue to Blue’s giant satellite. Those close to Systrom noticed his frustration, as he endured what seemed like constant micro-humiliations. Despite his senior service, Systrom was not part of Facebook’s de facto ruling cabal. He was not usually included in the emergency crisis meetings dealing with things like the Russian invasion or Cambridge Analytica. Zuckerberg hadn’t even made a visit to Instagram’s headquarters. Ever.
The last big Instagram event with Kevin Systrom presiding was the launch of a service called Instagram TV, or IGTV. The idea was to leverage Instagram’s popularity with celebrities and influencers to take on YouTube, which was the go-to platform for people whose talents largely lay in brilliantly sharing—or faking—authenticity so that millions of people would connect with them. But first Instagram had to convince a skeptical Zuckerberg that the product would not draw eyeballs from the video efforts on the Blue app. Under the leadership of Fidji Simo, Facebook was spending billions of dollars on a service called Facebook Watch, even producing its own programs. Zuckerberg finally let the project go forward, but Instagram was directed to agree that the IGTV videos would be posted to Facebook by default before it could launch the product.
The launch, which was to take place in Menlo Park with a live connection to journalists and influencers gathered in Facebook’s East Village New York City office, was a disaster. Instagram had contracted with a top-end events organizer, which produced an elaborate set with a revolving stage. It didn’t work, and the presentation bombed. By the time a newly improvised presentation was ready, many of the journalists were gone.
And then Systrom left for his paternity leave.
BY MAY 2018, when Zuckerberg reorganized his executive team, it was universally understood that the alpha dog among them was Chris Cox, who until then was the head of products. He had been the voice welcoming thousands of Facebookers as they joined the company, and people would regularly tell him how they still drew inspiration from his speech. If Zuckerberg had been wiped out during his drive in a NASCAR vehicle on his national tour, the smart money for his successor would have been Cox.
So when Zuckerberg rearranged the musical chairs in the executive suite—promoting Javier Olivan, giving Growth to Alex Schultz, extending Schrep’s domain—he could trust Cox in a new role as the person in charge of what was becoming known as the Family, the collection of apps that, in total, were bigger than Facebook itself. In its financial results, Facebook had changed the way it reported its Monthly Average Users to a total of all people using at least one of the services. This had the advantage of demonstrating momentum despite the mediocre growth of the Blue app. The total number was on a trajectory to reach a mind-blowing 3 billion by 2020.
Not long after he moved into the role, Cox tried to explain it to me. “I’m going to be focused on making sure we can keep these unique cultures and values of these different products, but build a really strong, solid infrastructure across [the apps].” The key part of that, he said, was making sure that the safety and security measures that Facebook was developing for the Blue app were built into the messaging apps that Facebook owned.
But that didn’t match what Zuckerberg had been thinking. Maybe at one point it would have been appropriate for the cultures of the individual companies to thrive. But now, it was time for those properties—because that’s what they were, properties—to be recognized as cogs in the Facebook machine. For a while, this was something Zuckerberg communicated internally, at first obliquely. He would be making moves that, if you took a step back, you could figure out—he was drawing those franchises closer. Like getting rid of each service’s name in its employees’ email addresses: no more instagram.com, or whatsapp.com or even oculus.com. Everybody would use the mother ship domain of fb.com. Even the names of the services themselves would be adjusted. No more just plain Instagram. It would be Instagram by Facebook. (At least he wasn’t exhuming “A Mark Zuckerberg Production.”)
Cox was in the difficult position of middleman for many of the disagreements between founders and Zuckerberg. Of particular concern was the dissatisfaction of Systrom and Krieger. It was clear they were unhappy, but Zuckerberg continued on his path.
So it could not have been a surprise to Zuckerberg when Systrom and Krieger quit. They broke the news to Cox, their immediate boss. There was no need to physically meet with Zuckerberg to give him a chance to change their minds.
Adam Mosseri, who had become Instagram’s chief operating officer earlier that year, would now head the franchise. He had also been in the birthday picture.
After their departure I asked Zuckerberg directly about what I had been hearing from the Instagram team: Were you in any way jealous of Instagram?
“Jealous . . .” he repeated.
Yes, I said. And that you would prefer growth of Facebook’s Blue app to Instagram’s?
He said no and explained to me how he thought about it. Early on, Facebook was the main product and Facebook, Instagram, and Messenger were just starting. It made sense to leave the founders alone and let them build their best products. “That was incredibly successful,” he says. “And it made sense for the first five years. But now we’re at a point where all these products are big and important. I don’t want to just build multiple versions of the same product. We should have a more coherent and integrated company strategy.”
And if that meant losing the founders, so be it. “I can understand if you’re an entrepreneur who built one of those things and had awesome success, you’d wake up and say, ‘Okay, I’m proud of what I did but this isn’t for me going forward.’ That’s how I see it, and we’re going in the right direction.”
Those close to Kevin Systrom, though, believe that had Zuckerberg not asserted control, he would have remained at Instagram for twenty more years.
Systrom and Krieger did not trash-talk their employer on the way out. No #deletefacebook hashtags. Their farewell post was gracious. Normally, a departure of this significance would have generated a blizzard of questions at the weekly all-hands. But that was also the week that Joel Kaplan thumbed his nose at his liberal colleagues and showed public allegiance to Brett Kavanaugh. Also that week was the discovery of the security breach that exposed the personal information of 50 million Facebook users, the biggest information-security disaster in the company’s history. The exit of Instagram’s founders was downranked to outrage number three that week.
Systrom said nothing publicly until he appeared at a Wired conference in November. He revealed that he’d just gotten his flying license and was excited about that. He was spending time with his infant daughter. He didn’t want to lay out the details of his departure. But he didn’t pretend that it was a happy split. “You don’t leave a job because everything’s awesome,” he said.
WHEN ZUCKERBERG MADE his announcement about a new Facebook, where all the franchises would be integrated into one giant infrastructure, it seemed like a great opportunity for Cox, whose role would be to quarterback the integration. But Cox had no appetite for the job. He disagreed with the whole Privacy-Focused Vision. In particular, he had concerns about Zuckerberg’s insistence that products would be protected by strong encryption. In part, Zuckerberg was doing this as a reaction to his own experience: if some of his early communications had been encrypted—or vanished in the way Stories went away—his early IMs and emails would never have been exposed. And, of course, making privacy a centerpiece of the Next Facebook was a firm answer to critics charging Facebook with being an Orwellian snoop.
Cox saw the other side. Besides posing a technical challenge, encrypting the contents of all the messaging services so that even Facebook couldn’t read the posts would hamstring the company’s efforts to fight hate speech and misinformation.
A week after the Instagram duo left, Cox quit Facebook. He still loved the company, and had been giving his usual welcome to new employees even as he prepared his resignation. He simply disagreed with the strategy.
“As Mark has outlined, we are turning a new page in our product direction, focused on an encrypted, interoperable messaging network,” he wrote in a News Feed post, with a photo of him and Zuckerberg, both with big smiles, the best of friends. “This will be a big project and we will need leaders who are excited to see the new direction through.”
Meaning . . . not me. Cox was thirty-six years old and had spent thirteen of those years at Facebook. He was not going to spend the next two years working on an integration he did not believe in.
“For years, the company has been so rotated towards these town-square products that when you say, now we’re going to lead with the living room, it creates conflict,” Zuckerberg tells me. “Some of the best people at the company looked at this and said, ‘I’m not here for this.’ This is a deep cultural evolution, and I don’t have the answer or even understand the complexities of how this will play out. But it’s going to be a multi-year thing.” At least now with members of his inner circle installed in the services he wanted to integrate into Facebook, he could work through the process of melding operations without the impediment of possessive founders.
But a more immediate obstacle had arisen. Critics and regulators were questioning just why Zuckerberg had been permitted to collect those properties in the first place. They invoked a word destined to grow dramatically in Facebook’s word cloud over the next few years: antitrust.
When Senator Lindsey Graham had asked Zuckerberg in 2018 who his competitors were, the Facebook CEO stumbled a bit before saying there were eight large social apps. Zuckerberg didn’t mention that he owned four of them.
For months, anti-Facebook activists had been urging the FTC, the Department of Justice, and state attorneys general to take antitrust action against Facebook. Some of those opponents surmised that Zuckerberg’s integration strategy was a way to bind the properties so closely together in a technical sense that Facebook could thwart an order to sell one or more by credibly claiming that it was impossible to sever them. Tim Wu, a Columbia University law professor and antitrust expert who had once consulted with the FTC, had joined with Scott Hemphill of the NYU School of Law to create a thirty-nine-slide PowerPoint presentation charging that Facebook purchasing nascent competitors “in order to maintain its dominance in the provision of social media services” violated the Sherman Act and the Clayton Act, both laws against unfair competition. They took the presentation on the road, showing it to federal and state agencies and prosecutors.
Wu and Hemphill’s effort got a boost in May 2019 when a third partner joined them: Chris Hughes. As one of the original co-founders of Facebook, his was the sharpest et tu? of all the apostates to date. Hughes, who had headed a small social-justice nonprofit, now regretted his role in building a company he had come to consider unhealthy for the world. (Though his remorse apparently did not go as far as returning any of the $500 million he had gotten in Facebook stock.) The New York Times published his long op-ed, entitled “It’s Time to Break Up Facebook.” While affirming that Zuckerberg was “a good, kind person,” he shared inside stories that made his former classmate look like social media’s Al Capone. Hughes begged legislators and regulators to strip Instagram and WhatsApp from Facebook. For good measure, the Times created a five-minute mini-documentary on Hughes and devoted its lead editorial to a call for antitrust action.
Hughes’s pleas were hardly necessary. By mid-2019, Congress, state, and federal agencies were actively pursuing antitrust investigations against Facebook, as well as Apple and Amazon. But Facebook seemed the biggest target. By October, forty-six states and the District of Columbia had joined the investigations, while the FTC and DOJ were both gearing up for their own inquiries. The House of Representatives issued a sweeping subpoena asking basically for every piece of documentation, including personal emails, relating to Facebook’s pursuit of its start-up targets. Meanwhile, presidential candidates were inveighing against the company. Elizabeth Warren, one of the front-runners in the Democratic field, had a plan to split Instagram and WhatsApp from Facebook.
Facebook’s defense involved warning that if it were weakened, giant tech companies from China would rush in and fill the gap. None of its detractors seemed to buy that. And the clouds of regulation continued to loom.
Mark Zuckerberg was never one to pull back when people were challenging him. If he had, Facebook might have never connected almost half of humanity. Publicly, he would say that breaking up Facebook was a bad idea. A Balkanized Facebook would be less able to police its content, he’d say, and once again evoke the threat of Chinese companies invading the social graph. Privately, he was channeling Cato the Elder again. At an all-hands meeting in 2019—an employee leaked the transcript, a sign of eroded loyalty within the company—Zuckerberg said that if Warren won the White House and persisted in her views, Facebook would “go to the mat” to keep its properties.
But even more important than playing defense was moving forward. Facebook needed new initiatives so it could own the future as much as it owned the present. So in mid-2019, in the midst of fighting for his company’s life, Mark Zuckerberg was about to unveil what might have been the company’s most audacious project since the News Feed itself.
It was going to create “the Internet of money.”
Facebook had been trying for more than a decade to build commerce into its products, dating back to the Facebook currency struggles it had with Zynga. And now that Zuckerberg was binding all his franchises together, he envisioned businesses accessing multiple Zuckerberg services to enhance their commercial activities. But managing payments among those services, particularly in the developing world where people had no bank accounts or credit cards, was problematic.
The solution—and an opportunity to grab a space in the net paradigm shift—came in an email to Zuckerberg from one of his favorite executives, David Marcus, who headed the Messenger team. On his 2017 Christmas break, Marcus had been on a family vacation in the Dominican Republic. He was musing about cryptocurrencies, which was not such a stretch for a former PayPal executive. A technology called blockchain had the potential to lock down the security of digital currencies, but so far the electronic currencies in circulation were more objects of speculation than exchange. Marcus felt that Facebook could change this.
What if Facebook created a global digital currency? Marcus had ideas on how it could do this and dashed them off to Zuckerberg.
With Zuckerberg’s passion for cryptography in full gorge, he welcomed the idea. It would especially be helpful after the merger of Facebook’s properties. Now they would be freed of the difficulties of navigating the hundreds of different national currencies in the world. By creating a universally accepted global coin, Facebook could monetize everything it owned, everywhere.
Marcus quickly turned Messenger over to his lieutenant and began building a team. Two of his top engineers were refugees from Instagram. The team grew over the next year. The engineers tackled some of the tricky problems of scaling a digital currency to handle millions of transactions. And the policy team worked on the values and messaging of this ambitious plan, which would be unveiled in a white paper that summer. Sounding very much like the marketing promise of Internet.org, the white paper presented the project as directed at underserved people in poorer regions of the globe. While Internet.org tried to provide broadband to these people, this new mission promised to provide economic power to the 1.7 billion adults in the world who have no access to a bank.
Facebook named the currency Libra. The word refers to three things—an ancient Roman unit of measure, the astrological sign whose symbol is the scale of justice, and a phonetic resemblance to the French “libre,” meaning “free.” “Money, justice, and freedom.” A “Libra” would be worth around a dollar, or a euro.
Libra had a convoluted plan for administration, mainly to address the skepticism people would bring to a global currency established by a company that was now among the least trustworthy on the planet. The company would turn over administration of this currency to an outside body, the Libra Association. It would have one hundred partners—each one a “node” on the blockchain, able to make direct transactions. Facebook would be only one of those nodes, with but a single vote. An outside director would run the association. Facebook would also make the Libra code available via open-source software. No secrets.
Ceding control actually would make Libra more valuable to Facebook, because not being owned by Facebook would make Libra attractive to those suspicious of Facebook, which was just about everyone.
Of course, Facebook would have the unique status of having created the Libra technology. And before the Libra Association even met, formalized its charter (Facebook had helpfully created a draft), or hired a director, Facebook had invented the first implementation of the currency, which it called Calibra. When the company announced the Libra project, it also revealed screen shots of the Calibra “wallet,” which was stuffed with a currency that did not exist yet.
Facebook announced the plans in July, including twenty-seven partners who raised their corporate hand to join the nascent Libra Association. Impressively, it included payment giants Visa, Mastercard, and PayPal. Notably missing were other tech giants, who might have removed the stigma of a plan so closely associated with one company.
Still, Facebook’s Libra project was genuinely worth discussion, as the company had tackled hard problems and come up with some innovative approaches to the serious issue of the rising trend of cryptocurrencies. But before those issues could be seriously discussed, one had to deal with the giant woolly mammoth in the room. This was Facebook doing this. Facebook!
When Marcus first revealed the Libra plan to me in May 2019—I was the first journalist briefed on the plan—he acknowledged the challenge of “trying . . . to create a public utility from a place of a great deal of skepticism because it’s coming from Facebook.” But there was no sense of how extreme the reaction would be after its unveiling. Regulators, legislators, and Facebook’s many, many critics pounced on the idea, suggesting that instead of “Libra” the unit of currency should be called “Zuck Bucks.”
Zuckerberg was unfazed. As always, he had been the one in the room to approve it. Perhaps as it was with the News Feed, so would it be with Libra. Once people tried it, they would love it. He clearly felt that way as well about his Privacy-Focused Vision for Social Networks, unpopular as it was in his own company, so much so that his most valued employee had left in order to avoid it.
In July 2019, Marcus testified before a skeptical Senate Banking Committee. His testimony failed to change minds. Over the next few weeks, several partners, including Visa, Mastercard, and PayPal, pulled out of the Libra Association. Trying to stop the tides, Facebook promised that it would not implement its plans without regulatory approval. On October 23, 2019, Zuckerberg himself came to Washington to answer questions on Libra before the House Financial Services Committee. Only a week before, he had been in the area, sharing his views on free speech in a lecture at Georgetown University; he was attempting to defend Facebook’s recently announced policy of not fact-checking political ads. Facebook’s position was that would do nothing to restrain outright lies in sponsored posts circulating on Facebook. For a company that had been devoting considerable energy to purging or minimizing toxic content on its platform, this was an odd stance.
The hearing began with a sour note for Zuckerberg. In her opening remarks the chairwoman, Representative Maxine Waters, who had asked for a moratorium on Libra, said that Zuckerberg’s proposal was so egregious that it had opened the door in her mind to breaking up Facebook. “It appears you are aggressively increasing the size of your company and are willing to step on or over anyone, including your competitors, women, people of color, your own users, and even our democracy to get what you want,” she told him.
A few legislators—mainly Republicans, apparently sated by the company’s consistent attention to their bogus complaints about bias—seemed to defend Zuckerberg, expressing concerns about stifling innovation. But mostly Zuckerberg, only three years ago the poster child for American ingenuity, was greeted with hostility. A recurrent theme was the company’s corporate rap sheet. For instance, Representative Nydia Velázquez of New York invoked Cambridge Analytica and Facebook’s broken promise not to merge WhatsApp data with its other databases. Zuckerberg, who appeared for much of the six-hour session as in need of concussion protocol, said it was an important question. “We certainly have work to do to build trust,” he admitted.
“Have you learned you should not lie?” asked Velázquez.
Low moments abounded. “You have ruined the lives of Americans,” said Representative Joyce Beatty, taking him to task for Facebook’s civil rights disappointments. Representative Alexandria Ocasio-Cortez pummeled him on his political ad stance.
Four hours into the session, Zuckerberg asked for a pause so he could go to the bathroom, waving his water bottle to indicate his distress. The chairwoman wanted one more round of questioning before a vote and dictated that he should submit to another questioner before he could relieve himself. That next interlocutor, Representative Katie Porter, started by making fun of his haircut and ended with a request that he commit to spending one day a week as a content moderator.
After the hearing, the chairwoman had a private conversation with Zuckerberg and then took questions. I asked her if she had heard anything to make her better disposed toward Libra. She said no.
The basic problem with Libra was this: Facebook, with its exquisitely talented engineers, its unparalleled drive, and its canny sense of product, may well have come up with the best implementation of digital money, topping dozens of less proficient previous stabs. But ultimately the quality was secondary to who made it. The determination would be made by assessing the legacy of Mark Elliot Zuckerberg, the man who set out to connect a world that was perhaps not ready to be connected, and did it anyway.
After Beacon, after Cambridge Analytica, after News Feed–fueled violence in multiple countries, after fines for civil rights violations, privacy misrepresentations, and security breaches from the FTC, SEC, EU, and UK Parliament . . . after everything, people wanted to know:
Why would anyone trust Facebook with their money?