There’s no disputing the top Tech PR story of Fall 2018. In a move that took many by surprise, Sir Nick Clegg, the one-time leader of the Liberal Democrat Party and Deputy Prime Minister of the UK joined Facebook as head of global affairs and communications.
On the face of it, it’s a good fit. Both are no strangers to controversy. Both have damaged reputations that are in serious need of restoration.
There was a time – circa 2010 – when everyone agreed with Nick and everyone liked Facebook.
Fast forward eight years and how times have changed. A wave of scandals has engulfed the social media company. Its business philosophy once widely admired as a model of growth and influence has become synonymous with all that is wrong with Silicon Valley culture.
Similarly, the tide of public goodwill that swept Sir Nick to one of the top jobs in British politics quickly evaporated after voters blamed his role in a series of misjudgements. Not least was his part in the government’s decision to raise university tuition fees despite his own party’s election pledge to cut them.
In the event no amount of apologizing could win back the people’s trust and his political career slipped into a steady decline.
Sir Nick hopes to use his position at Facebook to “build bridges between politics and tech.” An essential part of this process, he says, will be to help Facebook “navigate the numerous challenges it faces.”
Four of the most pressing challenges are as follows:
Facebook is under pressure from world leaders to pay more tax on its operations outside of the U.S. Last year Facebook made a $20bn profit on worldwide sales of $40bn.
Many governments including the UK – where Facebook’s taxable profits last year amounted to just 5% of sales – have long suspected the big tech firms of gaming the system to minimize overseas tax obligations.
During his time in office Sir Nick Clegg himself raised the issue of tax avoidance, demanding the introduction of anti-abuse rules.
Measures aimed at increasing tax revenues from digital services companies were announced in the latest UK fiscal budget. Chancellor Phillip Hammond was quoted as looking forward to calling Sir Nick to discuss them.
This is likely to be just the start. EU finance ministers are understood to be close to agreeing new tax rules that focus on where tech users are based, rather than where a company places its headquarters.
Other countries, too, are intent on closing loopholes that let companies reallocate profits to lower-tax regimes.
Today’s social media giant started out as a technology company – a definition its senior executives still stand by despite many of its operations today resembling those of a media company. That’s because it mainly produces, packages and distributes content for mass consumption.
Facebook has been wrestling with this dual identity for some time. The company’s continued refusal to accept responsibility for content on its platform ultimately led to the fake news scandal.
Its response has been to launch news channels committed to high-quality journalism on its Facebook Watch video portal. At the same time Facebook’s Instagram is preparing to add a media hub with program-length video content from sponsors and publishers.
Yet Facebook still has no plans to officially appoint any editors. Instead it expects users to be able to discern factual content from fiction according to what their friends and peers make of it.
But facts are very different from opinions. Failure to address the current model will surely lead to further problems down the line. It’s time for Facebook to fully embrace what it has become.
Another challenge for Facebook is to demonstrate it can be trusted to put its house in order when it comes to data privacy.
It was effectively found to be asleep at the wheel when the personal data of 50 million of the social media platform’s users was harvested as part of a massive breach of privacy.
The British consultancy, Cambridge Analytica, number crunched the detail and in 2016 sold its findings to politically motivated sponsors wanting to unfairly influence democratic processes in the U.S. and the UK.
Facebook was recently fined £500,000 ($650,000) for its part in the scandal. Unfortunately lessons appear not to have been learned. Not only have plans to require British political advertisers to submit to identity checks been delayed but fresh data breaches are still emerging.
In September this year Facebook discovered another breach – once again affecting some 50 million accounts.
It could potentially become a test case for the new EU General Data Protection Regulation (GDPR) legislation which carries a maximum penalty of up to 4% of annual turnover.
Big tech dominates the Internet to such a degree that the only serious threat it faces is from politicians.
The political appetite for curbing the powers of Facebook and others is growing.
Not so much in the U.S. where they are still largely admired as symbols of American achievement. But in the UK and the EU calls are growing that those businesses making huge profits from our personal data should be subject to stricter regulation and oversight.
Further regulation in Europe appears inevitable and it will be in Facebook’s interest to work closely with the authorities to formulate the rules. As an outspoken pro-EU supporter and former MEP, Sir Nick has exactly the right contacts and goodwill Facebook needs at the negotiating table.
In summary, Facebook’s appointment of Sir Nick Clegg would appear to be a shrewd move. His personal charisma and proficiency at intellectual debate are ideally suited to one of the top jobs in tech PR.
Moreover, as political and media pressure for greater control of Big Tech builds his experience of UK and European government will be invaluable in the tricky discussions ahead.