Facebook CEO Mark Zuckerberg
Facebook CEO Mark Zuckerberg testified before the U.S. House Financial Services Committee yesterday. The title of the hearing was: An Examination of Facebook and its Impact on the Financial Services and Housing Sectors. As we recently indicated, Messaging Matters has pulled the plug and stopped using Facebook, due to a combination of Facebook’s data mining business model, its history of user data breaches, and its pro-Republican bent. The rest of America is not likely to take much comfort after what was heard yesterday.
One of the main topics of questioning for Zuckerberg was Facebook’s new planned cryptocurrency, Libra. Committee members (mostly Democrats) raised privacy, financial security, national security, and other issues regarding Libra. Committee Chairwoman Maxine Waters (D-CA) stated that she favors a moratorium on Facebook’s rollout of Libra, pending Congressional and regulatory scrutiny. Waters also listed other areas of concern regarding Facebook, such as:
- Inclusion and non-discrimination, for example, in Facebook’s advertising practices regarding housing.
- Competition and fairness — Waters cited an ongoing antitrust investigation of Facebook by 47 state attorney generals plus the District of Columbia.
- Election security — Waters noted that, in 2016, Facebook allowed many false ads, and Russian election meddling, designed to help Donald Trump. Waters cited Zuckerberg’s statement last week that Facebook would not ban false political ads, which would once again permit fake election ads by Russia, Republican groups, and others.
In his testimony, Zuckerberg claimed that millions of Americans don’t have bank accounts, and could benefit from the smartphone-based Libra system. Zuckerberg said that Libra would be a “global payment system” backed by safe assets, especially U.S. dollars. Zuckerberg claimed that Facebook is the right platform for Libra, because Facebook already serves almost every country, and the envisioned financial transactions would occur in a similar manner as sending Facebook messages.
Zuckerberg said that Facebook founded the Libra Association in Switzerland, with a number of companies to run the system. Zuckerberg affirmed that Facebook will not proceed with Libra without receiving U.S. regulatory approvals, though Rep. Carolyn Maloney (D-NY) noted that many regulators are involved. Zuckerberg also committed to increase diversity at Facebook, including having 50 percent women and people of color at the company.
Chairwoman Waters said that the 2016 election ads from Russia targeted blacks more than any other groups, and that Russia plans to run similarly false ads in the 2020 elections. Zuckerberg admitted that Facebook was “on our back foot” regarding the 2016 Russian ads, but that the company has taken curative steps since then (for example, according to Zuckerberg, Facebook has since taken down a number of fake Russian and Iranian ad networks).
Waters also noted that Facebook had banned cryptocurrency ads in 2018 because they were allegedly misleading and deceptive, but now has reversed course seemingly to benefit its own cryptocurrency. Zuckerberg responded that he believes in the principle of carrying ads to give opportunity to various speakers, such as political candidates. Zuckerberg indicated that “we do not fact check politicians’ speech.” In contrast, however, Zuckerberg said that Facebook contracts with third parties to fact check some non-political ads, when users identify such ads as problematic.
Rep. Maloney noted that “anonymous wallets” such as that envisioned in Libra can hide financial crimes. Zuckerberg responded that Facebook’s “Callibra” digital wallet will have strong identity requirements, and that Facebook will work with regulators to make sure these concerns are alleviated, but that he can’t speak for other companies in the Libra Association.
Rep. Ann Wagner (R-MO) noted that numerous large companies, including PayPal, Visa, MasterCard, eBay, Stripe and others, have dropped out of the Libra Association. Wagner asked, “why did they leave?” Zuckerberg answered that the Libra project “is risky” and faces a lot of scrutiny.
Rep. Nydia Velàzquez (D-NY) mentioned the Cambridge Analytica data breach/Republican targeting scandal, as well as Facebook’s false statements to European regulators that WhatsApp and Facebook would not be linked after Facebook purchased WhatsApp. According to Velàzquez, “Facebook has a credibility problem.” Rep. Velazquez asked Zuckerberg if Facebook would commit to waiting until Congress, not just regulators, come up with the proper legal framework to guide regulators before launching Libra. Zuckerberg indicated that Facebook will not wait for legislation to proceed with Libra if it receives regulatory agency approvals.
Rep. Brad Sherman (D-CA) pointed out that cryptocurrency can help tax evaders, drug dealers and terrorists. Sherman also noted that Facebook will likely employ many lawyers and lobbyists to prevent Congress from enacting new legislation that protects people from these harmful effects of the Libra cryptocurrency. Sherman likewise stated that “regulators” currently means Donald Trump’s (presumably very lax) regulators.
Rep. Ed Perlmutter (D-CO) expressed concern that Libra, and especially its Callibra digital wallet, is a form of currency that might violate the U.S. Constitution, which gives Congress the power to coin money and regulate its value. Perlmutter expressed concern that Libra essentially would be a Swiss bank. Rep. Perlmutter stated, “we need to know what this is; we have to regulate this.”
Virtually every Republican took an opposite tack from the Democrats, praising Zuckerberg for his business success. One after another, they repeated the word “innovation” in their praise of Zuckerberg and Facebook. These were the kind of lockstep talking points at which Congressional Republicans excel. One Republican Congressman, Andrew Barr of Kentucky, accused unnamed “politicians” (but obviously Democrats) of “openly embracing socialism and central planning.”
If history is any guide, Zuckerberg’s attempt to provide soothing words to the Committee will be followed by more anti-consumer business practices. At Messaging Matters, we’re glad to be gone from the Facebook world.
Photo by Antony Quintano, used under Creative Commons license. https://is.gd/h8CsiO
