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Abu Dhabi, UAEWednesday 20 January 2021

Zuckerberg defends Facebook's digital currency Libra before US congress​

The head of the social media giant told policymakers the project would not go ahead without approval from regulators. Still, many of them appeared unconvinced

Facebook chairman and chief executive Mark Zuckerberg greets members of congress after testifying at a House Financial Services Committee hearing in Washington. Reuters
Facebook chairman and chief executive Mark Zuckerberg greets members of congress after testifying at a House Financial Services Committee hearing in Washington. Reuters

Facebook chief executive Mark Zuckerberg endured hours of prickly questioning from policymakers on Wednesday as he defended the company's new globally ambitious project to create a digital currency while also dealing with widening scrutiny from US regulators.

Representatives also grilled Mr Zuckerberg on Facebook's track record on civil rights, hate speech, privacy and misinformation – not surprising given the litany of scandals the company has been dealing with over the past two years.

The House Financial Services Committee's immediate focus was Facebook's plans for the currency, to be called Libra. Mr Zuckerberg took pains to reassure policymakers that his company will not move forward with Libra without explicit approval from all US financial regulators.

Still, many members of the panel appeared unconvinced.

Maxine Waters, the California Democrat who chairs the panel, said the Libra project and the digital wallet that would be used with it, Calibra, "raise many concerns relating to privacy, trading risks, discrimination … national security, monetary policy and the stability of the global financial system."

Furthermore, Ms Waters told Mr Zuckerberg, "You have opened up a discussion about whether Facebook should be broken up."

The social media giant has sparked public and official anger at every turn, from its alleged anticompetitive behaviour to its shift into messaging services that allow encrypted conversations, to its refusal to take down phoney political ads or doctored videos.

The break-up spectre – the worst-case scenario for Facebook and other tech behemoths – has been raised by prominent politicians, notably Senator Elizabeth Warren, a leading Democratic presidential candidate.

The Justice Department, the Federal Trade Commission, the House Judiciary antitrust subcommittee and attorneys general in several states are all conducting investigations of Facebook and other tech companies amid accusations that they abuse their market power to crush competition.

Mr Zuckerberg was on the defensive at the hearing, his first testimony to Congress since April 2018, parrying criticism but also acknowledging lapses. He conceded at one point that the Libra project is "risky," acknowledging several high-profile companies such as Visa, MasterCard and PayPal had signed on as partners in the currency's governing association but have recently bailed.

Under continued criticism of Facebook's handling of hate speech and potential incitements to violence on its site, he said, "We're not perfect. We make a lot of mistakes."

Trust was a central theme of the hearing. Given Facebook's history, "why should Congress, regulators and the public trust you to create what amounts to the world's largest bank, what really amounts to a shadow sovereign government?" asked Madeleine Dean, a Democrat from Pennsylvania.

Mr Zuckerberg responded: "Well, congresswoman, we are not creating a bank. We are helping an organisation create a payment system."

He then held up China as a strong reason for encouraging innovation as embodied in the Libra project.

"While we debate these issues, the rest of the world isn't waiting," he said. "China is moving quickly to launch similar ideas in the coming months."

Facebook also has cited competition from China as a compelling argument against breaking up the company.

Mr Zuckerberg's China statements found a ready echo from some Republicans on the committee, such as Patrick McHenry of North Carolina, who stepped up to defend the Libra project and urge lawmakers not to put "innovation on trial".

But Democrats, in a rare tilt, allied themselves with President Donald Trump and his Treasury secretary, Steven Mnuchin, who have publicly criticised the Libra plan. Mr Mnuchin and other regulators, including Federal Reserve chairman Jerome Powell, have warned people that the digital currency could be used for illicit activity such as money laundering or drug trafficking.

Mr Zuckerberg touted his optimistic vision of Libra and what it could mean for people around the world who do not have access to bank accounts.

Updated: October 24, 2019 12:10 PM

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