Meta’s AI Cash Machine Lets Zuckerberg Keep California—and Control
Meta’s AI Cash Machine Lets Zuckerberg Keep California—and Control
The collision began with California’s Proposition 40, a proposed one-time 5% levy on billionaires’ net worth. For Zuckerberg, whose economic stake in Meta is about 13% but whose super-voting Class B shares command roughly 61% of the vote, the distinction was decisive: selling Class B shares to pay a tax bill would convert them into lower-vote Class A stock and erode his control.
By July, as Meta’s independent committee weighed the company’s capital needs, Zuckerberg warned that a multibillion-dollar liability could force him to reconsider California residency. He later told directors he would need to start the process by mid-September to establish residency elsewhere by mid-October. The committee took the threat seriously—not merely as a tax dispute, but as an operational risk. It said it was “crucial” that Zuckerberg remain close to management and Meta Superintelligence Labs, recalling the difficulty of running the company when he could not be physically present during the pandemic.
The backdrop was Meta’s escalating AI bill. Third-quarter revenue rose 26% to $64.6 billion, yet capital expenditures reached $34.9 billion and free cash flow fell to negative $2.1 billion; Meta projected $135 billion to $140 billion in 2026 capex. Management forecasts contemplated raising hundreds of billions of dollars over several years, beginning as early as late 2026.
After contentious negotiations—at one point involving discussion of committee resignations—the sides struck a September deal. Every shareholder will receive one nonvoting Class C share per existing share; Zuckerberg can immediately sell 20% of his new shares, equal to 10% of his overall economic stake, without losing majority voting control. He also agreed to remain in California, or wherever Meta is headquartered, for eight years absent unforeseen circumstances.
Meta frames Class C as an AI-era financing tool for capital raising, compensation and acquisitions. But the filing concedes the structure “could substantially prolong” Zuckerberg’s voting control—and, because he can unilaterally approve it, Class A shareholders did not get a vote.
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