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Thursday, Apr 18, 2024

Lowlights from Zuckerberg’s Libra testimony in Congress

“I don’t control Libra” was the central theme of Facebook CEO Mark Zuckerberg’s testimony today in Congress. The House of Representatives unleashed critiques of his approach to cryptocurrency, privacy, encryption and running a giant corporation during six hours of hearings.

Zuckerberg tried to assuage their fears while stoking concerns that if Facebook doesn’t build Libra, the world will end up using China’s version. Yet Facebook won’t stop shaking up society, with Zuckerberg saying its News tab feature will be announced this week.

During the hearing before the House Financial Services Committee that you can watch here, Zuckerberg recommitted to only releasing Libra with full U.S. regulatory approval. But given the tone of the questioning and Zuckerberg’s lack of fresh answers since Facebook’s David Marcus testified about Libra in July, Libra now looks even less likely to launch in 2020.

The hearing started tensely, with Rep. Maxine Waters (D-CA) declaring that “Perhaps you believe that you’re above the law, and it appears that you are aggressively increasing the size of your company, and are willing to step over anyone, including your competitors, women, people of color, you own users, and even our democracy to get what you want . . . In fact, you have opened up a serious discussion about whether Facebook should be broken up.“

However, some members of Congress used their time to advocate for American dominance instead of heavy regulation. Rep. Patrick McHenry (R-NC) said “the question is, are we going to spend our time trying to devise ways for government planners to centralize and control as to who, when and how innovators can innovate.” Many Republicans complimented Zuckerberg on his business acumen, though none showed outright support for Libra.

With few highlights or positive moments coming from the hearing, here are the major takeaways followed by a chronicle of the top exchanges between Zuckerberg and Congress:

-Zuckerberg claims China will soon have its own version, so regulators shouldn’t block Libra

-He’s open to regulators requiring Libra to be majority-backed by the U.S. dollar

-Zuckerberg would leave inheritance to his children in Libra since it’s backed one-to-one with real currency

-He wouldn’t commit to blocking anonymous wallets but he’s open to baking more anti-money laundering into Libra’s network

-Zuckerberg plans to expand verifying users via government ID to battle abuse of Facebook

-He said Libra partners left because “it’s a risky project and there’s been a lot of scrutiny”

-Zuckerberg confirmed the Libra Association has abandoned or modified its plan to deal themselves dividends on interest from the Libra reserve

-Facebook will pull out of Libra if it does something Facebook can’t allow or that it’s prohibited from by regulators

-Zuckerberg didn’t discuss Facebook’s policy allowing misinformation in political ads with President Trump during their meeting

-He says Facebook is developing anti-deepfakes technology and a policy about takedowns

-He repeated his call for more government regulation instead of Facebook making its own rules

-Facebook will comply with subpoenas for info on discrimination in housing ads

-Zuckerberg wouldn’t commit to trying out the role of Facebook content moderator

-Facebook plans to announce its upcoming News tab this week

-Congress’ questions were smarter than a year ago, but still pried little new information on Libra out of Zuckerberg

-Zuckerberg repeatedly relied on the Libra Association’s independence from Facebook to avoid substantial answers


On Libra versus China

Zuckerberg tried to leverage nationalist sentiment to deflect scrutiny. “As soon as we put forward the white paper around the Libra project, China immediately announced a public private partnership, working with companies . . . to extend the work that they’ve already done with AliPay into a digital Renminbi as part of the Belt and Road Initiative that they have, and they’re planning on launching that in the next few months.” He later said that for Libra, “Chinese companies would be the primary competitors.”

Facebook’s executives have repeatedly leaned on this “let us, or China will” argument we chronicle here.

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