AUGUST 3 2019 LISTENER 41
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ET
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AG
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F
acebook’s plans to launch Libra, a crypto-
currency it touted as a safe way to exchange
money for the millions of people in the devel-
oping world without access to bank accounts,
look dead in the water for now.
Facebook executive David Marcus’ appearance
before the US Senate banking committee last week
was disastrous. Democrat and Republican politi-
cians alike made it clear they’d do everything they
could to stop the social-media giant from launch-
ing an alternative to conventional banking.
“We’d be crazy to give it a chance to experiment
with people’s bank accounts,” said Sherrod Brown,
a Democrat from Ohio, who likened Facebook to
a “dangerous toddler who has gotten
his hand on a book of matches” and,
after burning down the house several
times, “called every arson a learning
experience”.
“Instead of cleaning up your house,
now you’re launching into another
business model,” said Martha McSally,
a Republican senator from Arizona.
This was different from Facebook
founder Mark Zuckerberg’s appear-
ance on Capitol Hill in April 2018 in
which he tried to atone for the Cam-
bridge Analytica data scandal. That
had seen the company expose data
on up to 87 million Facebook users
to a political research firm that was trying to help
Donald Trump win the 2016 presidential race.
The sheer arrogance and lack of self-awareness
in Facebook’s leadership forging ahead with an
ambitious plan to revolutionise e-commerce are
staggering. Just two weeks ago, Facebook was fined
US$5 billion by the US Federal Trade Commission
for a slew of privacy violations, including Cam-
bridge Analytica.
It was a record-breaking fine, but it amounted
to a slap on the wrist for Facebook, which made
US$22 billion in profit last year. The company’s
share price rose on the news, increas-
ing Zuckerberg’s vast fortune in the
process.
So it was hard not to delight in the
grilling of Marcus, who heads Calibra,
the division that is responsible for
Facebook’s digital-currency efforts.
New Zealand has its own reason to
distrust Facebook after it allowed the
spread through its network of video
of the Christchurch mosque shoot-
ings in March, then
made token efforts to
address its failings.
For all that, Libra
has merit. Facebook
envisages it not as a
rival to digital currency
bitcoin, which has
experienced wild fluc-
tuations in value and
is hard for most people
to understand and use.
Instead, it would allow
anyone with a digital
wallet on their mobile
phone to exchange
Libra coins and pay for things easily
online.
It would not be controlled by
Facebook directly, but by the Libra
Association, which includes big
companies such as eBay, Uber, Voda-
fone, Visa and Mastercard as well as
Facebook.
The currency would be underwrit-
ten by the association members’
assets, giving merchants confidence
that its value would be stable.
W
ould Libra take off? No one
loves the banking sector’s
fees, and there are 1.7 billion
“unbanked” people worldwide who
could benefit from such a system. But
Facebook is the wrong company to
design it and now is the wrong time
to launch it.
Although Facebook claims it would
not access any transaction data of
Libra users or harvest information to
target adverts at them, the company’s
cryptocurrency effort is by no means
altruistic. It fears Google or another
company doing something simi-
lar and drawing Facebook users to
another platform.
It would be different if the idea
came from a neutral outfit such as the
trusted not-for-profit Mozilla Founda-
tion, which created the Firefox web
browser.
But at the best of times, a decentral-
ised currency that takes power away
from the government-regulated bank-
ing system would be a tough sell.
A Libra-like digital currency would
be beneficial, but not one with the
taint of a hungry corporate such as
Facebook. l
Not a bit of it
A digital currency
planned by social media’s
persona non grata looks
like a non-starter.
by Peter Griffin
TECHNOLOGY
It would be different
if Libra came from
a neutral outfit
such as the Mozilla
Foundation.
Facebook executive David
Marcus: disastrous grilling.