Zuckerberg on Capitol Hill: Lots of Grandstanding, Little Libra Clarity
Facebook’s CEO spent most of his hearing before the House Financial Services Committee as a punching bag on everything from political ads and election interference to privacy and security. He also talked about the Libra Association’s embattled digital currency plans.
By Rob Marvin
Wednesday was a long, long day on Capitol Hill for Mark Zuckerberg.
Rep. Brad Sherman (D-NY), for example, called Libra a “Zuck Buck” and pulled out a fake dollar bill mockup to drive the point home before delivering one of many scathing comments directed at the Facebook CEO during a hearing before the House Financial Services Committee.
“For the richest man in the world to come here and hide behind the poorest people in the world and say that’s who you’re really trying to help. You’re trying to help those for whom the dollar is not a good currency: drug dealers, terrorists, tax evader,” said Sherman, who didn’t ask a single question during his five minutes of allotted time.
That’s more or less how the day went for Zuckerberg. For more than six hours, Zuckerberg was grilled on a host of issues, from the Cambridge Analytica scandal and the FTC’s $5 billion fine to election interference and security, Facebook’s myriad privacy scandals, political advertising, housing discrimination. Here and there was some actual discussion of Facebook and the Libra Association’s digital currency, the ostensible topic of today’s hearing.
Zuckerberg commented on numerous payment processing companies exiting the Libra Association days before it elected a board, echoed his prepared remarks on launching Libra before China beats the US to it, and repeated time and again that Libra would not launch anywhere in the world until it received US regulatory approval.
While numerous members of the committee did ask technical questions about Libra, both sides of the political aisle spent much of their time grandstanding. As with July’s House and Senate hearings with Calibra head David Marcus in July, we didn’t learn much about Libra itself that we didn’t already know.
Keep Hitting That Punching Bag
Today was Zuckerberg’s first congressional appearance since April 2018, and lawmakers spent much of the hearing making up for lost time. Chairwoman Maxine Waters (D-CA) kicked off proceedings by rattling off the list of privacy woes, election concerns, antitrust investigations, and more that have plagued Facebook in recent years.
Many Democratic committee members focused on Facebook’s advertising practices, both in regards to political ads (and the platform’s guidelines around fact-checking political speech), as well as the housing discrimination lawsuit brought against Facebook for how its advertising tools have enabled unfair targeting.
A number of Republican committee members, on the other hand, hammered home the message that government regulation could stifle business and technological progress, with ranking member Patrick McHenry (R-NC) calling the hearing “a trial on American innovation.”
Rep. Frank Lucas (R-OK) asked Zuckerberg about deepfake videos, which Zuckerberg said are “one of the emerging threats we need to get in front of and work out a policy to address.” The Facebook CEO made a distinction between deepfakes, or media manipulated by AI tools, and videos edited in a misleading way, such as the altered Nancy Pelosi video that Facebook refused to delete in June.
Members including Rep. Lacy Clay (D-MO) and Rep. Al Green (D-TX) pressed Zuckerberg on Facebook’s settlement with the ACLU over housing discrimination, Facebook’s independent civil rights audit, and the diversity of the Libra Association’s leadership. But one of the testiest exchanges came between Zuckerberg and Rep. Joyce Beatty (D-OH) on civil rights.
Zuckerberg was also grilled about freedom of expression, for instance Facebook hosting white supremacist content, groups, and events, and fact-checking on political advertisements. Asked by Rep. Alexandria Ocasio-Cortez (D-NY) when he first became aware of the Cambridge Analytica scandal, Zuckerberg said around March 2018, when it became public.
Rep. Katie Porter (D-CA) pressed Zuckerberg on Facebook’s lobbying payroll, its treatment of third-party content moderators, and even made a crack about Zuck’s haircut.
What About Libra?
Zuckerberg did also get to testify about Libra. Asked by Rep. Ann Wagner (R-MO) about why payment companies Visa, Mastercard, PayPal, eBay, Stripe, and Mercado Pago all left the Libra Association, he said: “You’d have to ask them specifically…there’s a lot of scrutiny.”
Asked later by Rep. Ted Budd (R-NC) if the exodus meant Facebook would be starting from scratch on the compliance front, Zuckerberg said a lot more companies are interested and there’s a lot of work ahead, but gave Marcus a vote of confidence in leading the effort.
“There are still payment companies part of the association, and David Marcus who runs our Calibra subsidiary has run large financial services companies, including the president of PayPal. We have the right expertise to work through these problems,” he said.
Several committee members questioned the Facebook CEO about anonymity and anonymous wallets on the Libra blockchain. Zuckerberg retreated time and again to the defense that Facebook can control its own Calibra wallet, which will have AML/KYC compliance features and verification built in, but would not commit that Libra would not support any anonymous wallets.
Rep. Bill Foster (D-IA), one of the most technically knowledgeable members of Congress, probed Zuckerberg on whether Libra transactions would be anonymous or not. Zuck wouldn’t answer directly, only saying “it’s possible to build a system to allow that” and that Facebook intends to offer full consumer and fraud protections through Calibra.
“There are some competing equities here, and allowing some [anonymous wallets] to exist could increase financial inclusion, but it could also increase risks,” Zuckerberg said later in the hearing.
One thing Zuckerberg did state on several occasions is that if the Libra Association launched the digital currency without regulatory approval, Facebook would leave the organization. Asked whether he thinks Libra is money, Zuck said “it’s a payments system.”
For most questions about the basket of currencies backing Libra’s stablecoin, Zuckerberg said he would defer to regulators.
There’s also the question of whether Libra’s blockchain will ever be truly distributed and decentralized. Rep. Anthony Gonzalez (R-OH) asked whether Libra’s goal is still to ultimately transition from a permissioned to a permissionless blockchain. Zuckerberg said “that is the aspiration over time” but that Libra will have to adhere to different regulations in different countries.
Several members also spent time questioning Zuckerberg on Libra’s promise to serve the 1.7 billion underbanked or unbanked users globally. Libra’s white paper hasn’t provided much clarity on the technical specifics of how that will happen for users who don’t have bank accounts, reliable internet access, or a way to exchange physical cash for Libra even if they do have a smartphone.
Rep. Ayanna Pressley (D-MA) said that if it costs money to buy Libra and use the Calibra wallet, and if the two-thirds of that 1.7 billion lack enough money to open a bank account, Libra can’t “use tech to solve what is inherently an issue of wealth.”
She asked Zuckerberg if he’d leave his children’s inheritance in Libra, to which he replied yes, because Libra is backed 1:1 to reserve currencies.
Originally published at https://www.pcmag.com on October 25, 2019.
