Despite a stellar market performance, a lot is on the line for Facebook and its CEO, Mark Zuckerberg, in the upcoming midterm elections, according to Roger McNamee, co-founder of tech-focused private equity firm Elevation Partners.

“I think the issue for Facebook and for Mark is that the country is trusting them with the 2018 midterm elections," McNamee told CNBC's "Squawk Alley," "and if something goes wrong here, it’s gonna be really hard to give them a pass.”

Facebook has been criticized for allowing the proliferation of false news on its platform during the 2016 presidential election. Zuckerberg's discussion of fake news and censorship with Recode's Kara Swisher revealed to McNamee that the CEO's all or nothing approach to the issue is the wrong tack.

“When you are dealing with hate speech, there is a much better option. And that is to engage with people and to inform them,” he said. “Facebook is actually a really good platform for doing that.”

McNamee said Facebook needs to start applying human-based solutions to the issues it faces.

“Facebook approaches every problem as though there is a code or AI-based solution,” he said. “Some of the problems that they’ve created – filter bubbles would be a perfect example – have gone beyond the reach of technology.”