Facebook CEO Zuckerberg has credibility questioned in House hearing on Libra currency
23 Oct 2019 12:00 am by Dave Perera
A portrait of Facebook CEO Mark Zuckerberg as dishonest and indifferent to his company’s impact on society emerged from members of Congress within the first hour of the social media titan’s much-anticipated appearance before the House Financial Services Committee this morning to discuss his planned digital currency.
Clad in a navy blue suit, white shirt and a politically neutral purple tie, Zuckerberg sat mainly stone-faced as members grilled him about election interference, paid political ads containing misinformation and plans to launch a digital currency dubbed Libra.
Two politically challenging years for the Menlo Park, California, company have lately converted Zuckerberg into a semi-regular presence in Washington, DC — speaking at Georgetown University to declare Facebook a platform for free speech, reportedly organizing dinners with conservative senators, and appearing on network TV news. He met with President Donald Trump in mid-September.
“Perhaps you believe you’re above the law, and it appears you are aggressively increasing the size of your company and are willing to step on or over anyone, including your competitors, women, people of color, your own users, and even our democracy, to get what you want,” said committee Chairwoman Maxine Waters, a California Democrat, within the hearing’s first minutes.
Zuckerberg’s appearance today before the House Financial Services Committee was set to be contentious before it started, with Democratic members of Congress taking to social media beforehand to canvass for questions. Once an avatar of American capitalism, Zuckerberg still heard paeans today for his business and technological acumen, but congressional skeptics outnumbered advocates.
“I get that I’m not the ideal messenger,” Zuckerberg said at the onset of the hearing of his plans to reorder the financial system.
Facebook’s proposal for a digital currency would create a reserve-backed, stable, virtual coin controlled by the non-profit Libra Association based in Switzerland. The reserve will mostly be US dollars, Zuckerberg said. Libra’s future has come under doubt after some of its biggest backers, including PayPal, Visa, Mastercard, eBay and Stripe, pulled out this month. Democratic members of the Financial Services Committee have repeatedly called for Facebook to halt its Libra plans.
“I actually don’t know if Libra is going to work, but I believe it’s important to try new things,” Zuckerberg said at one point.
Waters has circulated draft legislation that would ban big online platforms from establishing digital assets. A working group of the Group of Seven association of the largest global economies also warned that stablecoins such as Libra hold the potential to disrupt financial stability.
A plea to let Facebook earn regulators’ trust was a theme of Zuckerberg’s testimony, an entreaty that earned ire from Democratic members.
“Have you learned that you should not lie?” asked Representative Nydia Velazquez, a New York Democrat.
“I disagree with the characterization,” responded Zuckerberg.
Zuckerberg and Facebook alike face a credibility problem, Velazquez said, citing the company’s 2016 decision to merge user data from the WhatsApp chat app with the Facebook platform.
“Do you understand why this record makes us concerned?” she asked.
The social media titan regularly invoked China in his responses, warning that competitors in the world’s most populous country aren’t waiting to get American regulators’ approval before launching their own cryptocurrencies. Mainly Republican members concurred. “The wave of innovation is spreading across the world, with or without us,” said Representative Patrick McHenry, the North Carolina committee ranking member.
Still, should US financial regulators withhold approval, Facebook will walk away from Libra, promised Zuckerberg.
“If at the end of the day we don’t receive the clearances that we feel like we need to move forward, and the associate chooses to move forward without us, then we will not be in a position — we will not be a part of the association,” he said.
Zuckerberg also took heat for discriminatory practices found on Facebook. Earlier this year, the company settled a suit from civil rights groups by agreeing to restrict the ability of landlords, employers and lenders to choose their advertising audiences on Facebook. It still faces a lawsuit from the Department of Housing and Urban Development alleging the social media giant’s advertising placement algorithm discriminates against protected classes.
“You have ruined the lives of many people, discriminated against them,” said Representative Joyce Beatty, an Ohio Democrat and vice chair of the Congressional Black Caucus.
Facebook's ranks continues to be mostly white and male, some members said. The company has a goal for half of its workforce to be diverse within five years.
After the hearing,Waters said Zuckerberg’s six hours’ worth of testimony failed to change her opinion about Libra.
“I don’t support Libra, at all, at this point,” she said while talking with reporters. “It’s not as if I support it if it does this or if it does that. At this point, I am not a supporter of Libra. I don’t know what it is, I don’t think that it has been adequately explained.”
She pronounced herself unimpressed with pro-LIbra arguments that China is taking the lead in financial payments innovation. “I’m not worried. What I believe is that we’re big enough, we’re strong enough, and we’re smart enough.”
Waters also warned Zuckerberg that his actions may lead to the breakup of Facebook. “He has opened up a discussion about being broken up,” Water said. “That’s still in the air, and of course that question is out there.”
Global tech & social media companies are in for a bumpy ride after many of them suspended their cooperation with data requests from Hong Kong authorities.
02 Jul 2020 5:00 pm by Neil RolandThe US Federal Reserve Bank of New York’s biggest financial stability worries are possible cyberattacks on the banking system.
26 Jun 2020 5:00 pm by Dave PereraA privacy backlash has led South Carolina to bar its health department from using smartphone contact-tracing apps.