Cryptocurrency News Today: After this week’s hearing, Libra really might be in trouble
A recurring theme of this newsletter is that, when it comes to big tech companies, Congressional hearings are often unsatisfying. Members fail to do their homework, and embarrass us with their picayune questions. Or they play to the cameras, interrupting witnesses before they can answer. For their part, tech executives take pains to make as little news as possible. They stick closely to their talking points, and when prodded off script they claim ignorance and promise that their staff will look into it later.
Today’s hearing of the House Financial Services Committee, at which Facebook CEO Mark Zuckerberg discussed his company’s plan to release a Cryptocurrency, offered us all of those tropes. (Though it must be said that, unlike last year, this time members seem to have largely done their homework.) And the consensus view of the day’s events — Congress very mad at Facebook — is something we knew before the hearing even began.
That said, they really do seem quite mad. Here’s Tony Romm in the Washington Post:
During the congressional grilling, Republican Rep. Ann Wagner (Missouri) challenged Facebook for failing to stop child exploitation online. Rep. William Lacy Clay (Missouri) lit into Zuckerberg for advertising policies that he claimed had resulted in discrimination against diverse communities on social media. And in one tense exchange, Democratic Rep. Gregory Meeks (N.Y.) upbraided Zuckerberg for his company’s role in serving as an “accelerant in many of the destructive” political fights around the world.
“Facebook has been systemically found at the scene of the crime,” he began. “Do you think that’s just a coincidence?”
There were lots of exchanges that, when clipped and posted on Twitter, earned many retweets. Like when Rep. Joyce Beatty pressed him on diversity efforts. Or Rep. Sean Casten’s hypothetical question about a Nazi politician. Or Rep. Alexandria Ocasio-Cortez’s probing questions on the limits of political advertising on Facebook.
And yet, while there were moments when the CEO found himself tongue-tied, for the most part Zuckerberg handled himself well. As the New York Times’ Cecelia Kang put it:
5Hrs later, Zuckerberg succeeded in what set out to do: Just Take The Heat. That means: do not buckle when interrupted, defend Facebook w/o appearing too defensive, don’t promise anything & don’t answer anything too controversial (Congresswoman, I’ll get back to you) #Hearings101
— CeciliaKang (@ceciliakang) October 23, 2019
Weirdly, the cumulative effect of all the embittered exchanges was to make the nominal question at the center of the hearing — whether Facebook should be permitted to develop and release a new currency — feel like a sideshow.
And yet it’s worth noting that it was on some of the Libra-related questions where Zuckerberg seemed to struggle the most. As Alex Heath wrote at The Information:
The roughly six-hour hearing saw Zuckerberg fumble questions from the House Financial Services Committee about how the external Libra Association will be funded, what kinds of regulations should apply to Libra, how Facebook plans to make money from Libra, and how policies like refunding fraudulent transactions will work. […]
What Zuckerberg did make clear is that Facebook won’t launch Libra without proper regulatory approval in the U.S., and that Facebook would withdraw from the Libra Association if the group eventually decided to move forward on its own without the approval of U.S. regulators. But Zuckerberg’s testimony didn’t shed any light on what specific laws Facebook thinks should govern Libra.
On one hand, this hearing was always going to cast Zuckerberg in the role of a piñata. On the other, if today was supposed to advance Facebook’s case that Libra is a good thing for the world, it’s not clear to me that it succeeded.
It’s hard to say at this juncture whether Libra remains a viable project. In the past few weeks it has had what appear to be a significant series of significant setbacks, culminating with some of its most prominent early backers quitting.
For their part, Facebook and the Libra Association have said it’s nothing to worry about — and in fact may be “liberating.” “I would caution against reading the fate of Libra into this update,” David Marcus said earlier this month, in a tweet that struck me as being at great risk of not aging well. “Of course, it’s not great news in the short term, but in a way it’s liberating. Stay tuned for more very soon. Change of this magnitude is hard. You know you’re on to something when so much pressure builds up.”
It’s true that Facebook expected a lot of pressure here. Zuckerberg talked about it in the leaked audio that I published here earlier this month:
The public things, I think, tend to be a little more dramatic. But a bigger part of it is private engagement with regulators around the world, and those, I think, often are more substantive and less dramatic. And those meetings aren’t being played for the camera, but that’s where a lot of the discussions and details get hashed out on things. So this is going to be a long road. We kind of expected this — that this is what big engagement looks like.
The question is whether Facebook is, indeed, getting a better reception in private than it is getting in public. So far, there is little evidence that it has. In the meantime, for all their dramatizing, the lawmakers who spoke today seemed sincere in their concerns about the havoc Libra might wreak havoc on the global