Time for tech giants to dump their egos

In the words of one image consultant, Mark Zuckerberg had 15 minutes to deal with the Cambridge Analytica crisis that has wiped billions from the value of his company. It took him five days, and even then his glib response did little to fix the problem. Indeed, Facebook’s shares carried on falling. It has been a lamentable performance from what should be one of the world’s most media savvy firms.

But hold on. It is far from alone. In fact, all the tech giants are terrible at communicating. Cocooned within a bubble of self-righteousness and dominated by founder-entrepreneurs, they react to a crisis with a mixture of bluster and arrogance that takes a bad situation and makes it several times worse. Sooner or later they are going to have to find a way of fixing that – or else find themselves constantly hammered by one crisis or another.

If there was one thing you might think they would be aware of at Facebook’s Menlo Park headquarters it is that on the internet, information travels very quickly. And yet as the scandal over Cambridge Analytica’s use of information grew, the company acted as if it had all the time in the world. It was Wednesday before it said anything, and even then all it could come up with was a long, technical post on its own site followed by a rambling half apology on TV from Zuckerberg.

What should have been a minor setback was suddenly turned into a potential extinction event. It is not the first time it has happened, however.

Amazon, despite its brilliance in technology and marketing, has all the PR skills of North Korea’s Kim Jong-un. It has been plunged into one scandal after another.

It typically responds with all the empathy and savvy of a local government parking official on a bad day. In most cases, it remains inscrutably silent. When it does say something, it usually makes it worse.

Likewise, Apple has come under fire for conditions at its sub-contractor’s factories in China, and for built-in obsolescence on its phones. Google has been in trouble over its diversity programme and allegations of sexism. Again, both companies have been hapless in their response.

It is not hard to understand what the problem is. These are all companies that have grown to vast size very quickly. The oldest of them is just over four decades into its existence. They have not had the time to mature, or to build up experience of how to deal with setbacks, as well as success.

Next, they are all dominated by founder-entrepreneurs who are typically convinced of their invulnerability. There isn’t much point in anyone telling Jeff Bezos at Amazon or Zuckerberg at Facebook that they are making a terrible hash of a situation. That mixture of self-belief and confidence is great for building a new company. At a certain point, it turns into hubris. And that is when it starts to catch you out.

Finally, all the major tech giants operate within a culture of selfrighteousness that makes it impossible for them to believe they are in the wrong. When you make “don’t be evil” one of your corporate mottos, as Google did (although it quietly dropped it a couple of years ago), you are tempting the gods to take revenge. Likewise, when you identify closely with liberal politics ahead of a potential presidential run, as Zuckerberg has, you make yourself a target. Companies with billions in revenues probably aren’t perfect all the time. It would help if their CEOS recognised that and concentrated on fixing problems rather than insisting they get everything right.

Very few big businesses are good at responding to scandals. Volkswagen didn’t handle dieselgate well. None of the companies caught up in the horse meat scandal in 2013 came out of it looking good. Most, however, do at least manage to come up with an apology fairly quickly, and have learnt that they need to start fixing problems as quickly as they can.

The tech giants have yet to grasp that. They are now of a size where they will need to learn how to respond quickly and effectively. Facebook has already lost $50bn (£35bn) in market value since the story broke. The major tech stocks have lost $200bn between them. But if they can’t figure out how to deal with a crisis, those may be just the start of the losses.

‘What should have been a minor setback turned into potential extinction’