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Few companies still in business have a track record as negative as Facebook. Facebook has paid billions of dollars in government fines and paid hundreds of millions in private settlements. Yet, the financial penalties are minimal relative to the actual harm done. Facebook has been involved one way or another in privacy breaches, organized crime, election manipulation, suicide, and even genocide. Mark Zuckerberg, who still controls Facebook, appears to ignore the consequences of his choices, consistently prioritizing profits over people. He disregards the law and operates without integrity or honesty, excommunicating insiders who speak out or challenge him. The evidence is overwhelming; the damage is incalculable.

This article explores Facebook’s corporate governance and scandals, concluding that the governance is irreparably flawed. As the article documents, despite repeated scandals, apologies, and fines, Facebook’s board has been unable or unwilling to break the cycle of bad decisions. Facebook’s board members should provide the candor and creative friction to self- regulate the company and ensure legal compliance; they do not. Accordingly, this article proposes an outside-monitoring model that would provide appropriate friction and counterbalance the otherwise weak governance at the company. Using other monitoring programs as examples, the article explores the mechanisms that are key to effective monitoring. As the article reveals, corporate monitors have the capacity to reduce recidivism and improve corporate culture over the long term. They do this through independence, oversight, disclosure and transparency, engaging with the public and contributing to the development of the company’s social license. Of course, monitors are not a solution for every company, but when the governance flaws are as sustained and systemic as those at Facebook, additional outside governance is appropriate and, arguably, even necessary.

Publication Citation

Havard Business Law Review, Vol. 12, Pp. 401.