Mic Drops and Hacks at Facebook

Facebook has been in the news a lot in the past month, with the majority of it being negative. Here’s a rundown of the headlines:

50 Million Accounts Hacked

How did it happen?

By using the ‘View As’ feature, a bug was exploited that generated an access token. With that token, a person would be able to log into the account of the person being viewed.

Were passwords exposed?

No, an access token allows a user to be logged in without a password, so no passwords exposed. But it is still recommended that you reset your password.

(See more information here.)

News about the Hack Blocked

Two stories about the hack by The Guardian and the Associated Press were flagged by Facebook’s automated spam filters. Though totally reasonable as automated system will always run the risk of false positives, this only added fuel to the fire.

(See more here.)

WhatsApp Founder Mic Drop Out

The History

Whatsapp was acquired by Facebook in Feb 2014 for $US19 Billion (Cash – $4 billion, Stock – $12 Billion and Restricted Stock – $3 Billion). It currently has over 1.5 Billion users and was created after one of the founders was rejected for a position at Facebook (a very costly decision in hindsight).

What Happened

Co-founder Brian Acton quit the company leaving $US 850 million on the table in unvested stocks. The driving factors behind his departure were:

  1. His belief that FB misled EU regulators about plans to commingle WhatsApp and FB data
  2. FB exploring ad based revenue without consent consent from the cofounders

(Read more about the drama here)

Other Mic Drops

Instagram Co-Founder (Sep 2018)

  • Acquired by FB in April 2012 for $US 1 Billion (Cash + Stock)
  • 1 Billion monthly users in 2018
  • Link

Oculus Co-Founder (March 2017)

  • Started as a Kickstarter – raising $US 2.5 Million
  • Acquired by FB in March 2014 for $US 2 Billion
  • Link

So what does this all mean?

It seems like a difficult road for acquisitions to integrate into the Facebook mothership. Is this a common occurrence in all tech companies? If so, does it go for the same in M&A’s in other industries? Or is there’s something underlying specific to FB that have to led to these prominent departures?

My guess would be misalignment of vision and expectations that have led to fundamental differences. In particular the need for FB to show ROI on acquisitions to their shareholders. This may be a direct conflict with the values and promises made to users of the acquired companies which weren’t accustomed to the same financial performance pressures. Also a general disdain for ad-based revenue models.