On June 18th Facebook unveiled plans to establish its own proprietary Bitcoin-style cryptocurrency, called Libra.
Facebook’s financial services offering would allow smart phone users to send money to each other and pay for goods across the Internet. Facebook hopes to implement its digital currency offering in 2020.
Facebook shares are up 45% this year, in part because investors are thrilled about the disruptive potential Libra has for revolutionizing how consumers pay for goods and services.
The company anticipates that its digital “wallet” will be adopted worldwide and will meet with regulatory approval.
Before Facebook can move forward with Libra, it will need to support from U.S. politicians and their voters.
And if Facebook management thought obtaining regulatory approval would be a mere formality, it received a rude awakening in Washington recently.
Data at risk
The biggest hurdle for Facebook, one which may prove to be insurmountable, is its well-documented lack of credibility with the public as well as with lawmakers.
Despite Facebook’s previous promises about cooperating with regulators, lawmakers on Tuesday said they have heard such assurances from Facebook countless times before, on matters ranging from privacy to the policing of the company’s platforms.
Each time the company assured regulators that it would protect users’ privacy, the company subsequently engaged in practices that exploited users’ private data and put consumers’ information at risk, critics allege.
Harvard University business professor Barbara Kellerman recently told The Wall Street Journal that the company feels it is accountable to no one, and that’s unacceptable.
Kellerman noted that the public was tired of hearing the same, two-faced pious pronouncements from Facebook about its concerns for users’ privacy, while it simultaneously continued to sell consumers’ data to undisclosed third parties.
Kellerman said that regulators and consumers have heard the same old song — “we messed up, and it won’t happen again” — too many times from Facebook brass.
“I’m sick of seeing Facebook through the lens of Mark Zuckerberg or Sheryl Sandberg,” the social media giant’s CEO and COO.
Politicians on both sides of the aisle rightly wonder: If Facebook can’t be trusted with personal photos, how is it responsible enough to handle a cryptocurrency?