Distrust in Facebook was the universal sentiment at Libra’s US Congressional hearing
Facebook Calibra head David Marcus was heavily grilled by US senators about the social media giant’s latest venture into its controversial Libra cryptocurrency project. While some of the senators showed optimism about innovation being introduced into the financial sector using technology, everyone equally and brutally expressed their outright distrust of Facebook.
Facebook had recently announced its plans of working on a global cryptocurrency network called Libra that will be handled by a consortium of several private companies. It will be based on the Libra Blockchain, backed by the Libra Reserve to ensure that the cryptocurrency isn’t volatile. Facebook also announced its digital wallet Calibra, which will be a standalone app and separate from social media. It will enable users and businesses to transact using Libra.
Essentially, this is Facebook’s grand plan of being a part of building a global digital currency network where Facebook’s own services will be the first platform where it will be used. The company says that it has open-sourced the project and completely relinquished control from it. So, it won’t be able to dictate any privacy policies over how the currency operates. At the hearing, Marcus insisted that Facebook will support third-party wallets, however, he didn’t discuss the question of whether the company would incentivise the use of Calibra on its platform or whether it would make it tedious to use other wallets. In the same statement, Marcus also said that customers will be easily able to migrate to other wallets if they decide to stop using Calibra, stressing that “data portability and interoperability” will be taken care of.
Terrorism funding and money laundering were big concerns raised by several members and Facebook agreed to comply with appropriate regulations and legislation. However, since transactions using Libra will also be international, it wasn’t clear on how the consortium would handle fraudulent cases if multiple parties from different countries are involved. When it came to investigating cases of fraud, Marcus said that in order to transact using Libra on Calibra, users have to provide government-issued IDs. In this way, it will be easier to find the two parties who were involved in the transaction.
There’s still nothing concrete on Libra’s policies since they’re still being written. Facebook wanted to have a more open approach and that is why the company says that it isn’t going to launch the service until the US govt approves. The business model, for now, is solely based on, as clarified by Marcus, Facebook users spending more time on the service for transactions. This will increase commercial activity on the social platform and obviously, enable Facebook to serve more ads to them. Marcus denied that the transactional data would be shared with Facebook since the social network and Calibra are separate entities. There won’t be any personally identifiable data on Calibra, according to him, and Facebook won’t be collecting any data. Of course, Facebook’s data harvesting via developer APIs for third-party apps is still a possibility and Facebook might still indirectly gain access to a significant amount of user data via Libra.
It hardly need be pointed out that Facebook doesn’t really have a clean track record of protecting user’s privacy or misusing a user’s data. Although Marcus insisted that both the user’s social and financial data would be separate, it’s hard to believe that anything Facebook does would be mindful of user privacy. The company did, after all, indirectly argue that users have no expectation of privacy in a California court.
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