Facebook’s bad PR mojo hurts Libra’s chances
David Marcus is one of the least ‘major tech exec’ major tech execs I’ve ever met. I interviewed him onstage at LeWeb a few years ago when he was President of PayPal, and he gave answers to my questions that actually meant something, rather than the slick, over-rehearsed non-answers most execs spew when an interviewer asks them anything even remotely challenging.
So I’m inclined to believe Marcus when he says that Libra, the new 'Facebook cryptocurrency’ he’s leading is intended to become, as the white paper
puts it, “a simple global currency and financial infrastructure that empowers billions of people.”
Indeed, Marcus admits that the entire project has to be run by an independent organisation, or Facebook’s bad PR mojo will drag it down. As he told Wired
: “Some of the articles out there have described this as Zuck-bucks and Face-coin… If it’s that, it’s dead in the water.”
And yet despite efforts to position this as an equal partnership alongside a bunch of other big names in tech and payments, Facebook’s bad PR mojo may yet bring Libra to its knees before it launches.
Facebook has suffered bad public reactions to its activities for as long as it’s existed (remember the outrage over the launch of News Feed, or Beacon, which shared information about your purchases with friends?). But in the past, Facebook could reliably launch something new and receive massive benefit of the doubt from most people. Press and users alike would be excited to try the company’s shiny new thing, and the mistakes of the past were set aside.
But now Facebook appears to have run out of doubt from which to benefit. It’s overdrawn at the bank of goodwill. The Cambridge Analytica scandal, various privacy snafus, and a general sense that Facebook has no intention of changing for the better, mean politicians in particular are in no mood to look the other way when it comes to a major new activity from Zuckerberg and co.
“House Financial Services Committee Chairwoman Maxine Waters urged the company to halt development of the token until Congress and regulators can examine it. Other lawmakers demanded hearings and questioned whether the coin, called Libra, will have appropriate oversight.
"The scrutiny shows the risks for a corporate titan like Facebook, which already faces deep skepticism in Washington, of moving into a controversial industry like cryptocurrencies. Still reeling from allegations that it failed to protect users’ data, the Silicon Valley power is now entering a space that is known for its lax regulation and resistance to oversight.
"“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data,” Waters, a California Democrat, said in a statement. “With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.””
In other words, no-one is in the mood for giving Libra an easy ride. It doesn’t help that some tech watchers don’t even see it as a proper cryptocurrency. The FT’s Alphaville blog is particularly scathing
“(Libra is) a glorified exchange traded fund which uses blockchain buzzwords to neutralise the regulatory impact of coming to market without a licence as well as to veil the disproportionate influence of Facebook in what it hopes will eventually become a global digital reserve system.”
A few years ago, Facebook would have been widely viewed as brave and audacious for looking to transform the global payments industry. These days, it’s starting to look like a significant overreach.