House Lays Into Zuckerberg on Facebook Currency Project

Facebook Chief Executive Officer Mark Zuckerberg, center, is surrounded by photographers after arriving for a hearing before the House Financial Services Committee on Capitol Hill in Washington, Wednesday, Oct. 23, 2019, to discuss his plans for the new cryptocurrency Libra. (AP Photo/Susan Walsh)

WASHINGTON (CN) — Struggling to soothe antitrust and privacy concerns over the wallet app designed for Facebook’s digital currency Libra, CEO Mark Zuckerberg found few friendly faces Wednesday at a hearing of the House Financial Services Committee.

Against Zuckerberg’s utopic description — he said the service would help more than a billion people globally who lack access to a bank account — lawmakers struggled reconcile Zuckerberg’s statements about financial security with Facebook’s recent regulatory troubles. The Federal Trade Commission hit Facebook with a $5 billion fine amid disclosures that the political consulting firm Cambridge Analytica had breached millions of users’ data without their consent to send targeted ads. 

Representative Scott Tipton, a Colorado Republican, asked how the company planned on protecting people’s vulnerable information and data from these types of breaches.

Throughout the hearing, Zuckerberg noted the company employs 35,000 people to monitor Facebook’s data breaches and other security-related initiatives. He noted in his opening statement that Facebook specifically created its digital-payment service Calibra as a regulated subsidiary, “so that there is clear separation between Facebook’s social data and Calibra’s financial data.”

“Even though we haven’t launched the Calibra project, we do take payments for a number of things today, ranging from fundraisers to people buying ads and we have a secure tier in our data center focused on payment information and that has worked well so far,” Zuckerberg added later in the hearing.

Members of Congress noted that a digital currency like Libra could shape U.S. economic policy, such as how the U.S. applies sanctions to foreign countries. Since transactions between Calibra users would be encrypted similarly to the way Facebook secures its messages, the service would also open an avenue for the anonymous funding of bad actors or organizations.

Representative Brad Sherman, a California Democrat, said the currency could additional enable a black-market drug trade in addition to softening the strength of U.S. sanctions.

“Right now, Turkey is stopping at 20 miles into Syria, not because of U.S. troops, we’re out, but because of U.S. sanctions because of the lowly U.S. dollar,” Sherman said. “We stand to lose all that because cryptocurrency is the currency of the crypto-patriot.”

Facebook’s policy regarding political ads was also at the forefront of conversation, Wednesday, following the company’s assurance last week that it would not ban political ads containing false statements. Representative Maxine Waters, a California Democrat, said the policy gave politicians “a license to lie.”

Waters said the company had consistently changed its policies to benefit itself, noting that last year it banned all ads relating to cryptocurrency citing that the ads were normally deceptive. The company rolled back the ban on cryptocurrency ads while announcing Libra earlier this year — something Waters said had occurred because Facebook recognized it could dominate the cryptocurrency market.

Zuckerberg pushed back.

“Our policy is that we do not fact check politicians’ speech and the reason for that is that we believe that in a democracy, it is important that people can see for themselves what politicians are saying,” he said. “From a business perspective, the very small percent of our business that is made up of political ads, does not come anywhere close to justifying the controversy that this incurs for our company. So, this is really not about money. On principal, I believe in giving people a voice. I believe that ads can be an important part of voice.”

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