
A starkly threatening internal memo to Snapchat employees was leaked to Cheddar early Friday, painting a desperate picture of the struggling young company. In a Sisyphean twist, the leaked memo was about preventing leaks. Michael OâSullivan, chief lawyer and general counsel of Snapchatâs parent company, threatened firing, lawsuits, and even jail time for employees who leak confidential information to the press.
The language is alarming, but itâs clear why OâSullivan is furious: Several of Snapâs recent moves have played out in the media before they were formally announced. In December, the âStories Everywhereâ feature, which lets users make and view Stories outside the app, leaked to press early. As did the plans for a major redesign, a round of layoffs in its Content team, and a wealth of confidential metrics for nearly every feature in the app. Youâd think Snapâs NDAs auto-deleted after 24 hours.
The relevant section of the memo, from Cheddar:
We have a zero-tolerance policy for those who leak Snap Inc. confidential information. This applies to outright leaks and any informal âoff the recordâ conversations with reporters, as well as any confidential information you let slip to people who are not authorized to know that information.
If you leak Snap Inc. information, you will lose your job and we will pursue any and all legal remedies against you. And thatâs just the start. You can face personal financial liability even if you yourself did not benefit from the leaked information. The government, our investors, and other third parties can also seek their own remedies against you for what you disclosed. The government can even put you in jail.
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Snapchatâs always been a secretive company, but its war on leaks appears to have grown frantic. Employees were famously banned from using the companyâs own app at the Christmas party last year. According to a Daily Beast report, the New York office has an entire banned floor that nearly all employees cannot access; almost no one actually knows what goes on there.
Itâs best to look at the memo in the context of Snapâs dire financial situation. The company lost a staggering $443 million in the third quarter of 2017. According to the Daily Beast report, part of Snapâs recovery plan is doubling down on exclusive deals with publishers who pay to produce content for Snapâs Discover tab. But the metrics leaked to the Daily Beast revealed that only about 20 percent of users check out the tab. With a static userbase, Snap may have an increasingly tough time charging big bucks for exclusive access to its app.
And thatâs before we get to Snapchatâs greatest enemy: Facebook. In August 2016, Facebook copied Snapâs signature product, user uploads that self-destruct after 24 hours, with the Instagram Stories feature. Last year, Facebook reported 200 million people use its Stories feature each dayâthatâs 25 million more users than Snapchat has in total.
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Itâs clear why the company is desperate, but threatening to throw people in the gulag for forwarding emails doesnât inspire confidence. âEmployee jail timeâ will only lead to worse press and drive out employees faster.
[Cheddar and Daily Beast]