Facebook once again faced intense questioning from US lawmakers over the future launch of its cryptocurrency project Libra, in a combative hearing that highlighted deep skepticism over the tech firm’s possibly entering the banking world following a slew of privacy scandals.
Members of the US House financial services committee grilled the Facebook executive David Marcus for more than five hours on Wednesday, asking him how the company plans to protect user data, challenging its purported goals of bringing banking services to underserved populations, and demanding more accountability to regulatory bodies.
The hearing came after senators questioned Facebook on Tuesday about similar matters. Though some members praised the company for taking steps to innovate, the tone of the hearing was overwhelmingly hostile, and it was clear Facebook does not yet have a clear path to Libra’s launch.
“I don’t think you should launch Libra at all,” the Democratic representative Carolyn Maloney told Marcus, arguing that the creation of a currency was a core government function that should be left to democratically accountable institutions.
Representative Brad Sherman of California said that if successful, Libra could be “one of the biggest things this committee will deal with this decade” and questioned why Marcus appeared in Congress in place of the chief executive officer, Mark Zuckerberg, given the potential magnitude of the project.
Congress questions Libra’s headquarters location
Lawmakers zeroed in on privacy and other concerns surrounding the project on Wednesday, questioning why Facebook would base the body overseeing the cryptocurrency in Switzerland, out of reach of US legislators.
Facebook repeatedly stressed it would work with regulators to ensure users’ privacy, but as of Tuesday, the Swiss regulatory body responsible for its regulation had not heard from the company, it said.
Other lawmakers challenged the characterizing of the Libra Association, a collective of dozens of companies that contributed millions of dollars to Libra ahead of its launch, as a not-for-profit organization.
Multiple members asked how Facebook and the companies in the association, which include Uber, Lyft, MasterCard and Paypal, would profit from the currency. The New York Democrat Alexandria Ocasio-Cortez said Libra constitutes “a currency controlled by an undemocratically selected coalition of largely massive corporations”.
Marcus said the companies joined the association because the “status quo is not working for too many people, and that people deserve better”.
“People deserve lower cost, and they deserve a lower barrier of entry to digital money,” he said, adding that ultimately, Facebook would profit from an increase in activity linked to small businesses on the platform.
Congress defends the dollar
The Missouri representative Ann Wagner asked how Facebook would launch a global currency without undermining the power of the US dollar, or destabilizing the global economy.
“I’m concerned that a 2020 launch date demonstrates deep insensitivities around how Libra could impact our national security, the global financial system, the privacy of people across the globe, criminal activity and international human rights,” she said.
Marcus repeatedly said “we do not want to compete with the dollar” but also said “we want Libra to be a digital global currency” and “one unit of digital currency for the whole world”.
He suggested that because the coin would initially be backed by financial holdings, more than half of which would be US dollars, the currency was less at risk of affecting existing currency values.
Facebook accused of censorship
Some lawmakers could not resist the opportunity to bring up conservatives’ longstanding claims of bias on the platforms. Representative Steve Stivers of Ohio asked if the Libra Association would exclude companies or users with conservative social views.
Others pressed Marcus on Facebook’s past privacy violations and wondered whether the company would bar hate groups from using the currency.
“Personally, I believe that we shouldn’t be in the business of … deciding what people can do with their money or not,” Marcus said. “But that being said, this is an important question, and we need to be thoughtful about the policy.
In one exchange, Sherman connected Libra’s launch to the terrorist attacks of 9/11.
“We have been told by some that innovation is always good,” Sherman said. “The most innovative thing that happened this century is when Osama Bin Laden came up with the innovative idea of flying two airplanes into towers.”
Potential legislative roadblocks ahead
The hearing on Wednesday came days after the Federal Trade Commission handed Facebook the largest fine ever levied against a technology company, ordering the company to pay $5bn for privacy violations in the Cambridge Analytica scandal.
Critics say the fine will hardly make a dent for Facebook, which had more than $15bn in revenue in the first three months of 2019.
As Facebook attempts to launch Libra, the House financial services committee is considering legislation called the Keep Big Tech Out Of Finance Act, which would prohibit tech companies with at least $25bn in revenue, such as Facebook, from issuing digital currencies.
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