Lowlights from Zuckerberg’s Libra testimony in Congress

‘I don’t control Libra” was the central theme of Facebook’s CEO’s testimony today in Congress. The House Of Representatives unleashed critiques of his approach to cryptocurrency, privacy, encryption, and running a giant corporation during almost five hours of hearings. Zuckerberg tried to assuage their fears while stoking concerns that if Facebook doesn’t build Libra, then the world will end up using China’s version. Yet Facebook won’t stop shaking up society, with Zuckerberg saying its News tab feature will be announced this week.

During the hearing before the House Financial Services Committee that you can watch here, Zuckerberg recommitted to only releasing Libra with full US regulatory approval. But given the tone of the questioning and Zuckerberg’s lack of fresh answers since Facebook’s David Marcus testified about Libra in July, Libra now looks even less likely to launch in 2020. With few highlights or positive moments coming from the hearing, here are the lowlights that matter.

The hearing started tensely, with Rep. Maxine Waters (D-CA) declaring that “Perhaps you believe that you’re above the law, and it appears that you are aggressively increasing the size of your company, and are willing to step over anyone, including your competitors, women, people of color, you own users, and even our democracy to get what you want . . . In fact, you have opened up a serious discussion about whether Facebook should be broken up.

However, some members of congress used their time to advocate for American dominance instead of heavy regulation. Rep. Patrick McHenry (R-NC) said “the question is, are we going to spend our time trying to devise ways for government planners to centralize and control as to who, when and how innovators can innovate.”

Zuckerberg Libra testimony

On Libra

Zuckerberg tried to leverage nationalist sentiment to deflect scrutiny. “As soon as we put forward the white paper around the Libra project, China immediately announced a public private partnership, working with companies . . . to extend the work that they’ve already done with AliPay into a digital Renminbi as part of the Belt and Road Initiative that they have, and they’re planning on launching that in the next few months.” He later said that for Libra, “Chinese companies would be the primary competitors.”

Facebook’s executives have repeatedly leaned on this “let us, or China will” argument we chronicle here.

Yet Zuckerberg wouldn’t commit to blocking anonymous Libra wallets that could facilitate money laundering, only saying Facebook’s own Calibra wallet would have strong identity checks.

Facebook has assured regulators that Calibra’s data would be kept separate from the social network. But Facebook said the same when it acquired WhatsApp, then reneged and integrated its data. This time around, Congresswoman Nydia Velázquez declared that “we’re going to need to make sure that . . . you learned that you should not lie.”

When pushed on why Libra Association members like Visa, Stripe, and eBay left the organization, Zuckerberg admitted “I think because it’s a risky project and there’s been a lot of scrutiny.” Zuckerberg struck back at finance incumbents, saying “I think that the US financial industry . . . is just frankly behind where it needs to be to innovate and continue American financial leadership going forward.”

In an awkward moment, Zuckerberg could not answer which Libra members were run by women, minorities, or LGBTQ+ people. “Is it true that the overwhelming majority of persons associated with this endeavor of white men?” Rep Al Green (D-TX) asked. “Congressman, I don’t know off the top of my head” Zuckerberg responded.

What if the Libra Association chooses to add the Chinese currency to the basket used to back Libra and reduces the US dollar’s fraction of the basket? “I think it would be completely reasonable for our regulators to try to [implement] a restriction that says that it has to be primarily US dollars” Zuckerberg responded in one of his most substantial answers of the day. Zuckerberg was receptive to feedback that the Libra Association should keep its white paper updated.

As for why Libra isn’t just backed 100% with the US dollar, Zuckerberg explained that “I think from a US regulatory perspective, it would probably be significantly simpler. But because we’re trying to build something that can also be a global payment system that works in other places, it may be less welcome in other places if it’s only 100% based on the dollar.”

Zuckerberg was criticized for trying to profit and potentially helping money laundering while claiming Libra is designed to help the unbanked. Zuckerberg said the Libra Association “hadn’t nailed down policies” about whether anonymous payments are allowed.

Rep Brad Sherman (D-CA) said “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 currencydrug dealers, terrorists”. Some members of Congress like Sherman chose to use their entire time monologuing instead of actually asking questions. 

Zuckerberg got a chance to clear up a major snafu from Marcus’ testimony, where he said the Libra Association was in contact with the Swiss data regulator, which CNBC reported hadn’t heard from Libra. Zuckerberg explained today that the Libra Association had been in contact with the primary Swiss Financial Market Supervisory Authority instead.

Throughout the testimony, Zuckerberg tried to distance himself and Facebook from the Libra Association’s decision making process. “We might be required to pull out if the Association independently decides to move forward on something that we’re not comfortable with” Zuckerberg said. That means if Facebook can’t launch Libra, it could still theoretically launch without the social network though it does most of the engineering heavy-lifting.

The strategy was crystallized by Zuckerberg’s response to whether he could commit to moving Libra’s headquarters from Switzerland to the US. “At this point, we do not control the independent Libra Association so I don’t think we can make that decision.”

The ‘we don’t control Libra’ argument provides Facebook and Libra an escape hatch from criticism, because any member and even the newly appointed chairperson and board can’t unilaterally control or make promises about its actions.

On Encryption, DeepFakes, and Hoaxes

Beyond Libra, Rep Ann Wagner (R-MO) chided Zuckerberg saying “you’re not working hard enough” to stop the spread of child exploitation imagery online despite Facebook submitting millions of reports. She brought up worries that Facebook moving entirely to encrypted messaging could hide child abusers, and Zuckerberg merely said “I think we work harder than any other company”. He failed to explain how Facebook would continue improving detection through encryption.

Oddly, Zuckerberg was directly confronted about his views on vaccines since Facebook works to hide vaccine hoaxes and avoid recommending groups spreading unverified information about them. “I don’t think it would be possible for anyone to be 100% confident, but my understanding of the scientific consensus is that it is important that people get their vaccines” Zuckerberg said, defending Facebook’s decision to hide some of this content.

On DeepFakes, Zuckerberg confirmed that ” I think deep fakes are clearly one of the emerging threats that we need to get in front of and develop policy around to address. We’re currently working on what the policy should be to differentiate between media that has manipulated and been manipulated by AI tools like deep fakes, with the intent to mislead people.” Yet Facebook’s policy allows politicians ads to mislead people, weakening faith that it will properly address this new problem.

On Diversity, Discrimination, And Moderation

Regarding housing discrimination via Facebook ads, Zuckerberg committed to working with regulators to provide information under subpoena, noted Facebook has banned discriminatory housing ads, and said “Nobody wants to redline and I’m sure that was accidental.”

Zuckerberg received his heaviest criticism of the day from Rep Joyce Beatty (D-OH), who grilled him about not knowing if diverse bankers manage Facebook’s cash or if diverse law firms handle its court cases.  She chastised Facebook for a lack of diverse leadership, saying “this is appalling and disgusting to me”. Of COO Sheryl Sandberg who leads Facebook’s civil rights taskforce, Beatty said “we know she’s not really civil rights”.

Facebook CEO Mark Zuckerberg Testifies Before The House Financial Services Committee

WASHINGTON, DC – OCTOBER 23: Facebook co-founder and CEO Mark Zuckerberg arrives to testify before the House Financial Services Committee in the Rayburn House Office Building on Capitol Hill October 23, 2019 in Washington, DC. Zuckerberg testified about Facebook’s proposed cryptocurrency Libra, how his company will handle false and misleading information by political leaders during the 2020 campaign and how it handles its users’ data and privacy. (Photo by Chip Somodevilla/Getty Images)

Some of the day’s most astute questioning came from Congresswoman Katherine Porter (D-CA). She hammered Zuckerberg about Facebook lawyers fighting to avoid liability over data breaches. Then she trapped Zuckerberg on the issue of the mental health harms of being a Facebook content moderator that reviews horrific and graphic violence.

Would you be willing to commit to spending one hour a day for the next year, watching these videos and acting as a content monitor and only accessing the same benefits available to your workers?” she asked.I’m not sure that would serve our community for me to spend my time” Zuckerberg said. “What you’re saying is you’re not willing to do it” she replied.

Facebook Will Announce News Service

There’ll be more major launches from Facebook that could raise questions about its impact on society, Zuckerberg revealed. “Later this week we actually have a big announcement coming up on launching a big initiative around news and journalism, where we’re partnering with a lot of folks to build a new product that’s supporting high quality journalism.” Facebook plans to launch a News section featuring headlines from top outlets, though only some will be paid.

“I think that there’s an opportunity within Facebook in our services to build a dedicated surface, a tab within the apps for example, where people who really want to see high quality curated news, not just social content . . . I’m looking forward to discussing that in more length in the coming days.” That service is sure to trigger debates about whether Facebook is trustworthy enough to be a formal conduit for news.

Overall, the questioning today was much more intelligent than the vague and easily-Googleable queries launched at Zuckerberg by Congress in April 2018. We had no “Senator, we run ads” moments. Instead, it was Zuckerberg who repeatedly used the separation between Facebook and the Libra Association plus the fact that Libra’s policies are still being defined to avoid giving many substantial answers. Combined with the short five-minute Q&A period per member of Congress, Zuckerberg was often able to just repeat existing talking points.

Facebook CEO Mark Zuckerberg Testifies Before The House Financial Services Committee

WASHINGTON, DC – OCTOBER 23: Facebook co-founder and CEO Mark Zuckerberg testifies before the House Financial Services Committee in the Rayburn House Office Building on Capitol Hill October 23, 2019 in Washington, DC. Zuckerberg testified about Facebook’s proposed cryptocurrency Libra, how his company will handle false and misleading information by political leaders during the 2020 campaign and how it handles its users’ data and privacy. (Photo by Chip Somodevilla/Getty Images)

In one of the few lighthearted moments of the day, Rep Juan Vargas recognized the tough position Zuckerberg has gotten himself into. “It’s good to have someone that’s sturdy and resilient. You’re probably the right person at the right time to take this beating.”

The question is what array of Libra and Facebook executives would Congress need to have testify together to get real answers to critical questions about how to keep the two from harming the global economy.

The hearing is ongoing and we’ll continue to update this article with major takeways.

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