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As Facebook’s profits soar, Zuckerberg moves to consolidate his power

The company posted predictably stupendous financial results

Facebook is crushing it. The company nearly doubled revenue from last year, and more than tripled its profit. These financial metrics are impressive, and meaningful for Facebook. But perhaps the most important piece of news from today's quarterly earnings was the creation of a new class of shares meant to "create a capital structure that will, among other things, allow us to remain focused on Mr. Zuckerberg's long-term vision for our company and encourage Mr. Zuckerberg to remain in an active leadership role at Facebook."

Zuckerberg is following in the footsteps of founders like Google's Larry Page and Sergey Brin, who created a third class of stock back in the summer of 2014. Like Facebook's new stock, the shares are non-voting, meaning they can't be used by activist investors to try and influence the direction of the company.

Because it disenfranchises investors, this approach has drawn heavy criticism. Google's shareholders tried to vote against it, but were easily overpowered by the founders. But it has also been liberating for Google, which can pursue a wide variety of expensive research and development projects — or moonshots if you prefer — without worrying about how shareholders will react. Zuckerberg posted a personal note about the news:

When I look out at the future, I see more bold moves ahead of us than behind us. We’re focused not on what Facebook is today, but on what it can be, and what it needs to be for our community. That means investing in areas like spreading connectivity, building artificial intelligence and developing virtual and augmented reality.

...there are more global challenges that I feel a responsibility to help solve — like helping to cure all diseases by the end of this century, upgrading our education system so it’s personalized for each student, and protecting our environment from climate change. That’s why Priscilla and I created the Chan Zuckerberg Initiative and committed to give 99 percent of our Facebook shares during our lives to advance human potential and promote equality.

Today, Facebook’s board of directors is announcing a proposal to create a new class of stock that will allow us to achieve both goals. I’ll be able to keep founder control of Facebook so we can continue to build for the long term, and Priscilla and I will be able to give our money to fund important work sooner. Right now, there are amazing scientists, educators and doctors around the world doing incredible work. We want to help them make a bigger difference today, not 30 or 40 years down the road.

Facebook reported revenue of $5.38 billion this quarter, compared with $3.54 billion for the same period last year. It made $1.51 billion in net income, a big jump from the $512 million it made in the same period last year. It has 1.65 billion monthly active users, and nearly a billion people use Facebook on their mobile devices every single day. Those people are spending a lot of time watching stuff. Creation and consumption of video on Facebook has more than tripled since this time last year. The strong results drove the stock up more than 9 percent in after-hours trading.

On the earning's call, Zuckerberg said Facebook was built by a series of bold moves. He pointed to his decision to turn down acquisition offers from the likes of Yahoo and to acquire Instagram for a billion dollars, as moments when he was able to take risks that shareholders might have vetoed.