San Francisco: On the Internet nobody knows you’re a dog—or the chief executive officer of a Fortune 500 company.
Or so thought John Mackey, the CEO of Whole Foods Market, LP, who used a fictional identity on the Yahoo message boards for nearly eight years to assail competition and promote his supermarket chain’s stock, according to documents released last week by the Federal Trade Commission (FTC).
Mackey used the online handle “Rahodeb” (an anagram of his wife’s name, Deborah). In one Internet posting sure to enter the annals of CEO vanity, Mackey wrote as Rahodeb, “I like Mackey’s haircut. I think he looks cute!”
With all a CEO has to do, the 14-hour days spent barking orders, digesting reports, motivating employees and courting Wall Street, why would they spend their time sparring with anonymous critics online? And what makes them think they won’t be revealed?
Certainly ego is involved. CEOs are used to having their own way around the office, where criticism is usually tempered. Successful executives such as Mackey, whose company’s share price has risen four-fold since 2000, are apparently seduced by the Internet’s promise of anonymity and the temptation of joining heated rhetorical battles about the issues closest to their hearts—even when the law requires them to stay on the sidelines.
“We have the most protected, covered, cautious and public relations-barricaded generation of leaders in history,” said Jeffrey A. Sonnenfeld, a professor of corporate governance at Yale. Today’s tightly controlled, artfully packaged executives, he said, “want to release and spout off, and they somehow think this is a forum where they’ll be held lessaccountable”.
But in many cases, that promise of anonymity is an illusion. Recently caught promoting themselves or their causes have been a handful of CEOs and political operatives, a critic for a major magazine, as well as dozens of lesser-known bloggers, authors and entrepreneurs who sneak changes onto their own entries on Wikipedia or the reviews of their books on Amazon.com.
This digital-age deception has a name, “sock puppeting”, and a precise definition—the act of creating a fake online identity to praise, defend or create the illusion of support for one’s self, allies orcompany.
For executives such as Mackey, sock puppeting is probably more gratifying than effective in swaying opinion or stock prices—until they get caught. Then it is embarrassing, and for CEOs, at least, potentially illegal.
The Wall Street Journal reported on its website on Friday night that the Securities and Exchange Commission had begun a formal inquiry into whether Mackey violated security laws with the posts.
Whole Foods maintains that Mackey did not break the law because he did not disclose any confidential company information.
But the consequences could be damaging to the company, if not to Mackey. Lawyers say FTC might use the comments to scuttle Whole Foods’ proposed acquisition of a competitor, Wild Oats, a company Mackey derided in his posts. Wild Oats may also use the comments as the basis of a lawsuit against Whole Foods.
Other CEOs have found their sock puppetry coming back to haunt them.
At the criminal fraud trial of Hollinger International’s CEO, Conrad M. Black, prosecutors introduced evidence that the former press baron had once proposed joining a Yahoo Finance chat room to blame short sellers for his company’s stock performance.
When his chief of investor relations declined to post the message because of securities rules, Black wrote in an email message, “Don’t be so strait-laced. Get our story out.” Prosecutors alleged that Black then posted the message himself, using the name “nspector”.
Black was found guilty on Friday of mail fraud and obstruction of justice, and he faces a maximum of 35 years in prison.
Mackey and Black are only the latest examples of high profile figures who tried to exploit the anonymity of the Internet to promote their companies and combat enemies under false pretences.
Patrick M. Byrne, founder and CEO of the beleaguered online retailer Overstock.com, has, for years, been accused of anonymously resorting to the Internet to battle with his company’s critics. In an interview, Byrne said he never hides his true identity and always signs his name when he posts under his online handle, “Hannibal” (the Carthaginian conqueror, not the celluloid serial killer).
Byrne said he uses online forums to convey what he has learned about the hidden agendas of his critics. “Nothing about being a public figure compels one to surrender one’s First Amendment rights,” he said.
Certainly many top executives honestly communicate on the Web via blogs without embarrassing themselves or their company.
Jonathan Schwartz of Sun Microsystems, Inc., J.W. Marriott Jr of Marriott International, Inc. and Michael J. Critelli of Pitney Bowes Inc., all write official blogs using their own names, earning points for perspicacity and accessibility, even if they avoid the frankness that anonymous postings allow.
For high profile figures, sock puppeting can be a shortcut to career disaster. In September, Tad Furtado, the policy director for the then-Rep. Charles Bass, Republican-New Hampshire, was caught posting under assumed names on Democratic blogs, arguing that the race was not competitive and that Democrats should focus their energies elsewhere. Liberal bloggers traced the source of the messages back to the House of Representatives and identified Furtado, who lost his job. His boss lost the election.
Writers are also no strangers to the temptation to burnish their positions with pseudonymous support, nor to the red-faced ruin that can result when they are discovered.
In April 2006, The Los Angeles Times pulled Michael A. Hiltzik, a Pulitzer Prize winning reporter, off of his blog because he had posted comments on blogs under an assumed name while feuding with readers.
In November, New Republic magazine suspended its culture critic Lee Siegel after it determined that he had been energetically defending himself in the discussion forums of his New Republic blog, under the name “sprezzatura” (Italian for “making the difficult look easy”).
In an interview, Siegel said it is only human to engage with critics, particularly in a medium like the Web that encourages self expression. He still defends his actions, saying he was having fun, playfully praising himself while combating some critics whom he saw as fierce and puerile. He thinks that much of the inflection of his online writing got lost on the computer screen.