What happens when a firm embroiled in controversy over its treatment of user data sets out to become a global financial force?
Facebook has announced its intention to sell a digital currency, known as Libra, as early as next year. Perhaps to alleviate public fears that CEO Mark Zuckerberg is pursuing world domination, the firm has stressed that the currency will be managed independently by a group of companies and charities. It has also claimed that Mastercard, PayPal, Uber and Spotify are all likely to eventually accept Libra payments.
Facebook is using a noble cause to justify Libra. The firm says that the minimal transaction fees on its platform will make finance more accessible to people in developing countries, and help refugees and migrants to build new lives without needing to carry cash. By allowing people to send money to relatives and friends overseas, it will also fulfil the role of firms like Western Union, without the formidable fees.
This hasn’t reassured everyone. Facebook has over 2.38 billion users worldwide, and if Libra was widely embraced it could soon become a major financial force. A speedy uptake could even threaten the stability of other currencies; although it seems unlikely that Facebook will be able to satisfy all of the nation-state regulators and administrative hurdles by next year.
Since the announcement, a US lawmaker has said that Facebook should wait until the US Congress has examined the project. Democratic congresswoman Maxine Waters cited the firm’s “troubled past” when calling for the moratorium—referring to its history of user-data controversies.
Anyway, let’s face it—few would say Facebook is a poster child for social responsibility, trust and transparency. And there are so many unanswered questions. Who will be responsible for money if it’s lost, or if the digital wallet is hacked? How will the firm and its members prevent fraud and money-laundering? We can think of lots of unhappy endings to this story — but we’re interested to see how it plays out.
Posted by Caitlin on 3 July 2019