Daily Management Review

Is Joining Libra Association Proving Costly To Zuckerberg?


Zuckerberg faces the U.S Congress for Libra Project and other failures of Facebook.

Source: flickr.com; (CC BY 2.0)
Source: flickr.com; (CC BY 2.0)
Facebook Inc’s chief executive officer, Mark Zuckerberg agreed that Libra, Facebook’s “planned digital currency” seems to be a “risky project” while reassuring the U.S. authorities that it could take global financial systems to a larger crowd besides lowering the electronic payments’ cost.
Zuckerberg had to face “the U.S. House of Representatives Financial Services Committee” about its queries on “election interference, free speech, hate groups and fake news”. Democratic Representative, Maxine Waters’ urged policymakers to “consider breaking up Facebook” as she questioned the C.E.O on Facebook’s way of dealing with “misinformation and voter suppression ahead of the November 2020 U.S. presidential election”.
In fact, Waters objection on Libra project is not unknown as she has said:
“It would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the Libra project”.
Policymakers from both the sides attacked Facebook for its failure in dealing with “online child exploitation and political misinformation, and for data privacy lapses”. Nydia Velazquez, a Democrat Reporesentative said:
“Facebook’s internal model was for a long time was ‘Move fast and break things.’ Mr. Zuckerberg, we do not want to break the international monetary system”.
On the other hand, Zuckerberg informed that before launching Libra, Facebook “would insist on U.S. regulatory approval”. Libra is being developed by “a Switzerland-based consortium”, while Zuckerberg said that in case Libra Association launches the currency without the above mentioned approval then Facebook will quit the consortium. According to Reuters:
“Libra has faltered in recent weeks amid sustained criticism from lawmakers and regulators globally over fears it may aid money laundering and upend the global financial system. Several financial partners including Mastercard, Visa, PayPal and eBay have abandoned the project”.
Ann Wagner, a Republican Representative, questioned Zuckerberg on Libra Association losing company associates. In her words:
“You’ve lost these stable partners and I find it highly concerning. Why do a number of these founding members have concerns of whether you’re up to the task of meeting our money laundering and regulatory standards?”
In return, Zuckerberg agreed that the reason for the departure was Libra being a “risky project”. Recognising the fact that Facebook may not the right company for Libra project, Zuckerberg reported that Facebook will need to work “to build trust”, whereby adding:
“The vision here is to make it so that people can send money to each other as easily and cheaply as it is sending a text message.”
Although some Republicans came out in Zuckerberg’s support, while the majority had objections.  The “top” Republican Representative of the panel, Patrick McHenry said:
“I have my own qualms about Facebook and Libra and the shortcomings of Big Tech. But if history has taught us anything, it’s better to be on the side of American innovation”