Facebook Inc. CEO Mark Zuckerberg attempted to assure legislators about the company's commitment to security and privacy with its planned digital currency Libra, depicting the project as key to ensuring U.S. leadership in the global movement toward digital payments.
In testimony for the U.S. House Committee on Financial Services, Zuckerberg acknowledged that Facebook "isn't the ideal messenger" given some high-profile controversies involving user privacy on its platform, but he stressed that Libra fit within Facebook's core mission of empowering others — in this case, by granting more user control over money transfers. Other countries, such as China, are already moving quickly toward similar systems, he noted.
"If America doesn't innovate, our financial leadership is not guaranteed," Zuckerberg said Oct. 23 in prepared remarks. "I actually don't know if Libra's going to work, but I believe that it's important to try new things."
Several legislators expressed skepticism that Facebook would be a good fit for launching such a sensitive and ambitious project. The company has battled public backlash regarding concerns about its security and privacy controls in recent years.
"Why should we believe what you are saying about protecting customer privacy and financial data?" asked Rep. Nydia Velazquez, D-N.Y.
Zuckerberg said Facebook is already taking steps to ensure that Libra will remain separate from its core social platforms, noting that Calibra, the newly created Facebook subsidiary that will manage Libra, will not share any of the users' financial data or account data with other parts of the company. The service will also not use people's payment account information to make lending or credit decisions, he said.
Lawmakers also raised concerns that the new digital currency could potentially be misused. Rep. Carolyn Maloney, D-N.Y., for instance, called Libra a "new loophole" for money laundering.
"There are millions of people in the world who are hoping that your innovation works, but I think you may have bitten off more than you can chew by trying to create a private currency," said Rep. Steve Stivers, R-Ohio.
Some of Libra's initial 28 founding members recently left the initiative amid the ongoing scrutiny, including Visa Inc., eBay Inc. and PayPal Holdings Inc. Zuckerberg at the hearing stressed that Facebook would not move forward with Libra without the blessing of U.S. regulators.
Financial Services Committee Chairwoman Rep. Maxine Waters, D-Calif., said Libra's launch had renewed discussion about whether Facebook should be broken up. Facebook and other large technology companies have faced intensifying scrutiny from several U.S. politicians in the run-up to the 2020 presidential election year, with some calling for government breakups of big tech.
Facebook has also encountered increased regulatory scrutiny. In July, the company disclosed that it was being investigated by the U.S. Federal Trade Commission for antitrust concerns, shortly after it agreed to pay a $5 billion fine to settle FTC-documented privacy violations.
Additionally, 47 state attorneys general are pursuing a joint antitrust investigation into the company.