European here, I was always confused watching U.S. Senate hearings with social media CEOs having to explain and be almost interrogated and accused of someone’s suicide from supposedly “watching content on the platform”. Why do they need to do that and is it only U.S. thing or does it happen somewhere else?
In: Other
The reasons this is done is many, some petty, some important. First off you do not want to fight the government. In the end, the government has a lot of power they can wield against you if they choose. So if you are thinking about the CEO’s themselves, it is in their interest to show up. To refuse would not be taken kindly by Congress. Now Congress is not going to put them in jail if they don’t, but when regulations are proposed and they work against your company, not showing up will most definitely be remembered. In a sense it is petty. Congress is powerful and a bunch of huge ego’s, so tweak them at your own peril. That said while petty, they also have enormous power. You do not want people with that much power have any more negative feelings about you than they already do. So the CEO’s show up, show respect, play along, maybe try to get their view point across that might help them in the long run.
As others have mentioned, they represent the people who elected them, poorly often, but this remains true. If public pressure becomes great enough, they will act, if anything out of self preservation, but at the same time if the people demand action that is what they are supposed to do. And again, they have enormous power at their disposal to do so in many different ways. CEO’s know this too. Showing up might help mitigate, or at least create a message, that they are aware of the issues and are addressing it. Likely in hope of decreasing said pressure from the public.
Did I mention how powerful Congress and the U.S. government is? The U.S. government is like an 800 pound gorilla. If it resolves to do something they can mess you up. The truth is these CEO’s, while quite rich, are no match for the U.S. government. Their power is tiny by comparison. They know this. And when the U.S. government goes on a rampage for whatever reason they just don’t stop. That kind of power has a lot of inertia, once wielded, it will push hard and long to get what it wants. And with rare exceptions the government will get what it wants. And if your business is destroyed in the process? Too bad. You knew who had the power to do that all along. So the CEO’s show up.
Truth is that kind of power, at least domestically, is rarely wielded to the level it can be. The last time was 2008 when Obama basically forced GM to accept conditions that technically were illegal. Why did GM agree then? Well see above. The U.S. government was wielding its power and you are not going to win that fight. But as I said it is rarely wielded like that a lot. And companies will want to make sure that they don’t find themselves a target in some crisis where this happens. So they listen to Congress’s complaints, and at least superficially will do something in response to address those concerns. They keep at least some of Congress happy by doing so, reduce the target on their back, and otherwise keeps the government from using those powers it could.
It is a total asymmetry of power. The U.S. government has it. Nobody else is even close. You don’t mess around in a situation like that if you are a smart, responsible CEO.
Latest Answers