Case Notes/Answers
Facebook-Can Ethics Scale in the Digital Age By
George Riedel, Carin-Isabel Knoop
Discussion Questions:
1. Why has Facebook been so successful?
2. By mid-2018, there appeared to be at least two central
challenges facing the business: addressing user privacy/trust
concerns AND moderating content to reduce harm to a global
community. What makes these challenges so hard? Is one worse
than the other?
3. Facebook management has launched a major set of new
initiatives to address these challenges and invested considerable
resources. Do you have confidence they will solve these
problems? Sandberg was an HBS 1995 graduate—how would you
judge her performance?
4. If not, what should/will other stakeholders do to address
matters, including:
1. Regulators, Users, Advertisers, Shareholders, Privacy
Advocates, etc.
2. The Board
, 5 -3 1 9 -0 6 4
FEBRUARY 4, 2019
TEACHING NOTE
Facebook—Can Ethics Scale in the Digital Age?
Case Synopsis
Since its founding in 2004, Facebook has built a phenomenally successful business at global scale to
become the fifth most valuable public company in the world. The revelation of Cambridge Analytica
(CA) events in March 2018, in which the information of 78 million users was leaked in the 2016 U.S.
election cycle, exposed a breach of trust and privacy with its user community.
In the past, growth at any costs appeared to be the de facto strategy at Facebook. To set the stage, the
case opens with a quote by Facebook Founder, Chairman, and CEO Mark Zuckerberg: “Unless you are
breaking stuff, you aren’t moving fast enough.” 1
At the time of the case, around late summer 2018, many voices—including those of regulators,
advertisers, ethicists, shareholders, and users—argued for a more responsible approach to addressing
their concerns. Zuckerberg and COO Sheryl Sandberg mapped out their six-point plan to address this
existential threat. Could they continue to grow and rectify the breach of trust and privacy? Did other
stakeholders have some greater responsibility, too?
In addition to issues of privacy and trust, there was a growing chorus of concern about “content
moderation”—not for the easy topics like spam or copyright material, but for the more difficult issues
around political points of view, hate speech, polarizing perspectives, etc. How will Facebook strike the
balance between free speech and corrosive content across billions of users and dozens of languages?
Are they the arbiters of truth/censorship in the digital world? Will/should other stakeholders play a
more meaningful role in answering these questions?
Learning Objectives
This case was developed for the first year required curriculum course at Harvard Business School
called Leadership and Corporate Accountability (LCA). LCA was added to the HBS first year
curriculum in 2004, largely in response to the debacle of ENRON and the need to have a more
constructive approach to business ethics. In the course, cases and instructors focus on “grey area
problems,” which may take many different forms. Some are difficult everyday challenges, while others
are high stakes decisions that affect an entire organization. Grey area problems usually involve some
,5. Are we at “peak” Facebook—either because of future business
model performance (e.g., lower growth, greater spending,
regulatory risk, etc.) or emerging“sin stock” concerns from
investors—OR is it time to “buy the dip”?
, 319-064 Teaching Note—Facebook—Can Ethics Scale in the Digital Age?
combination of competing responsibilities, ambiguous standards, factual uncertainties, aggressive or
hostile stakeholders, and intense time pressure.
Students are asked to consider how management is responding to such challenges from the point
of view of four major stakeholder groups: shareholders, employees, customers, and society. Finally,
the situations and any potential solutions or proposed approaches are viewed through three lenses in
hopes of finding a “sweet spot” at the intersection of legal responsibilities, ethical expectations, and
economic outcomes.
The case is part of the course’s Customer Module, which focuses on core issues such as Capability
and Information asymmetry, Caveat Venditor vs. Caveat Emptor, and predatory practices, and includes
case studies such as “On Weldon’s Watch: Recalls at Jonson & Jonson from 2009 to 2010” (HBS Case
No. 311-021) and “The Maggi Noodle Safety Crisis in India” (HBS Case Nos. 116-013, 116-014, and 116-
038). The Facebook case will sit in the Customers module but also touches on some themes in the
downstream Society module.
The objective of the case is for students to focus on the balance of responsibilities to customers,
users, and other stakeholders in a business that has grown quickly to global scale and influence. In this
case, we highlight tensions between:
• The company’s outstanding financial performance versus collateral damage to
privacy/trust/societies.
o Who should be responsible for privacy/trust: the company with asymmetrical
information/capabilities or the users who bear the most downside risk to themselves and
society? Is “notice and consent” a fair approach for users? Any predatory behavior concerns
here? Where are the benefits to and burdens of different groups?
o When does harm become apparent/obvious? Design choices for the platform/business
model are made early on in the process, yet the impact only shows up later, and, in this
case, after a catalytic series of third-party disclosures. Can you put the genie back in the
bottle?
o Should the company be the arbiters of free speech or should some part of a democratic
society assume that mantle? Has society given a tacit license for Facebook to grow?
• Given Facebook’s unique shareholder structure and the large role the company plays in the
public domain, is Facebook’s management doing enough? Can Facebook “self-regulate”? If not,
will/should other stakeholders (e.g., Board, Shareholders, Regulators, Users, etc.) act as a
catalyst for change?
• Having built the beast (both the platform and the business model), Zuckerberg and Sandberg
have committed to fixing the issues and invested large resources to do so. Do they have the will
and skills to fix it? What else should they be doing? If you don’t trust them/have confidence in
them, what changes could/should be made
2
Facebook-Can Ethics Scale in the Digital Age By
George Riedel, Carin-Isabel Knoop
Discussion Questions:
1. Why has Facebook been so successful?
2. By mid-2018, there appeared to be at least two central
challenges facing the business: addressing user privacy/trust
concerns AND moderating content to reduce harm to a global
community. What makes these challenges so hard? Is one worse
than the other?
3. Facebook management has launched a major set of new
initiatives to address these challenges and invested considerable
resources. Do you have confidence they will solve these
problems? Sandberg was an HBS 1995 graduate—how would you
judge her performance?
4. If not, what should/will other stakeholders do to address
matters, including:
1. Regulators, Users, Advertisers, Shareholders, Privacy
Advocates, etc.
2. The Board
, 5 -3 1 9 -0 6 4
FEBRUARY 4, 2019
TEACHING NOTE
Facebook—Can Ethics Scale in the Digital Age?
Case Synopsis
Since its founding in 2004, Facebook has built a phenomenally successful business at global scale to
become the fifth most valuable public company in the world. The revelation of Cambridge Analytica
(CA) events in March 2018, in which the information of 78 million users was leaked in the 2016 U.S.
election cycle, exposed a breach of trust and privacy with its user community.
In the past, growth at any costs appeared to be the de facto strategy at Facebook. To set the stage, the
case opens with a quote by Facebook Founder, Chairman, and CEO Mark Zuckerberg: “Unless you are
breaking stuff, you aren’t moving fast enough.” 1
At the time of the case, around late summer 2018, many voices—including those of regulators,
advertisers, ethicists, shareholders, and users—argued for a more responsible approach to addressing
their concerns. Zuckerberg and COO Sheryl Sandberg mapped out their six-point plan to address this
existential threat. Could they continue to grow and rectify the breach of trust and privacy? Did other
stakeholders have some greater responsibility, too?
In addition to issues of privacy and trust, there was a growing chorus of concern about “content
moderation”—not for the easy topics like spam or copyright material, but for the more difficult issues
around political points of view, hate speech, polarizing perspectives, etc. How will Facebook strike the
balance between free speech and corrosive content across billions of users and dozens of languages?
Are they the arbiters of truth/censorship in the digital world? Will/should other stakeholders play a
more meaningful role in answering these questions?
Learning Objectives
This case was developed for the first year required curriculum course at Harvard Business School
called Leadership and Corporate Accountability (LCA). LCA was added to the HBS first year
curriculum in 2004, largely in response to the debacle of ENRON and the need to have a more
constructive approach to business ethics. In the course, cases and instructors focus on “grey area
problems,” which may take many different forms. Some are difficult everyday challenges, while others
are high stakes decisions that affect an entire organization. Grey area problems usually involve some
,5. Are we at “peak” Facebook—either because of future business
model performance (e.g., lower growth, greater spending,
regulatory risk, etc.) or emerging“sin stock” concerns from
investors—OR is it time to “buy the dip”?
, 319-064 Teaching Note—Facebook—Can Ethics Scale in the Digital Age?
combination of competing responsibilities, ambiguous standards, factual uncertainties, aggressive or
hostile stakeholders, and intense time pressure.
Students are asked to consider how management is responding to such challenges from the point
of view of four major stakeholder groups: shareholders, employees, customers, and society. Finally,
the situations and any potential solutions or proposed approaches are viewed through three lenses in
hopes of finding a “sweet spot” at the intersection of legal responsibilities, ethical expectations, and
economic outcomes.
The case is part of the course’s Customer Module, which focuses on core issues such as Capability
and Information asymmetry, Caveat Venditor vs. Caveat Emptor, and predatory practices, and includes
case studies such as “On Weldon’s Watch: Recalls at Jonson & Jonson from 2009 to 2010” (HBS Case
No. 311-021) and “The Maggi Noodle Safety Crisis in India” (HBS Case Nos. 116-013, 116-014, and 116-
038). The Facebook case will sit in the Customers module but also touches on some themes in the
downstream Society module.
The objective of the case is for students to focus on the balance of responsibilities to customers,
users, and other stakeholders in a business that has grown quickly to global scale and influence. In this
case, we highlight tensions between:
• The company’s outstanding financial performance versus collateral damage to
privacy/trust/societies.
o Who should be responsible for privacy/trust: the company with asymmetrical
information/capabilities or the users who bear the most downside risk to themselves and
society? Is “notice and consent” a fair approach for users? Any predatory behavior concerns
here? Where are the benefits to and burdens of different groups?
o When does harm become apparent/obvious? Design choices for the platform/business
model are made early on in the process, yet the impact only shows up later, and, in this
case, after a catalytic series of third-party disclosures. Can you put the genie back in the
bottle?
o Should the company be the arbiters of free speech or should some part of a democratic
society assume that mantle? Has society given a tacit license for Facebook to grow?
• Given Facebook’s unique shareholder structure and the large role the company plays in the
public domain, is Facebook’s management doing enough? Can Facebook “self-regulate”? If not,
will/should other stakeholders (e.g., Board, Shareholders, Regulators, Users, etc.) act as a
catalyst for change?
• Having built the beast (both the platform and the business model), Zuckerberg and Sandberg
have committed to fixing the issues and invested large resources to do so. Do they have the will
and skills to fix it? What else should they be doing? If you don’t trust them/have confidence in
them, what changes could/should be made
2
