Zuckerberg defends Facebook’s currency plans before Congress

WASHINGTON
(AP) — Facebook CEO Mark Zuckerberg endured hours of prickly
questioning from lawmakers Wednesday as he defended the company’s new
globally ambitious project to create a digital currency while also
dealing with widening scrutiny from U.S. regulators.

Representatives
also grilled Zuckerberg on Facebook’s track record on civil rights,
hate speech, privacy and misinformation — not surprising given the
litany of scandals Facebook has been dealing with over the past two
years.

The House Financial Services Committee’s immediate focus
was Facebook’s plans for the currency, to be called Libra. Zuckerberg
took pains to reassure lawmakers that his company won’t move forward
with Libra without explicit approval from all U.S. financial regulators.

Still, many members of the panel appeared unconvinced.

Rep.
Maxine Waters, the California Democrat who chairs the panel, said the
Libra project and the digital wallet that would be used with it,
Calibra, “raise many concerns relating to privacy, trading risks,
discrimination … national security, monetary policy and the stability
of the global financial system.”

Furthermore, Waters told Zuckerberg, “You have opened up a discussion about whether Facebook should be broken up.”

The
social media giant has sparked public and official anger at every turn,
from its alleged anticompetitive behavior to its shift into messaging
services that allow encrypted conversations, to its refusal to take down
phony political ads or doctored videos.

The breakup specter — the worst-case scenario for Facebook and other tech behemoths — has been raised by prominent politicians , notably Sen. Elizabeth Warren, a leading Democratic presidential candidate.

The
Justice Department, the Federal Trade Commission, the House Judiciary
antitrust subcommittee and attorneys general in several states are all
conducting investigations of Facebook and other tech giants amid
accusations that they abuse their market power to crush competition.

Zuckerberg was on the defensive at the hearing, his first testimony to Congress since April 2018
, parrying criticism but also acknowledging lapses. He conceded at one
point that the Libra project is “risky,” acknowledging several
high-profile companies such as Visa, MasterCard and PayPal had signed on
as partners in the currency’s governing association but have recently
bailed.

Under continued criticism of Facebook’s handling of hate
speech and potential incitements to violence on its site, he said,
“We’re not perfect. We make a lot of mistakes.”

Trust was a
central theme of the hearing. Given Facebook’s history, “why should
Congress, regulators and the public trust you to create what amounts to
the world’s largest bank, what really amounts to a shadow sovereign
government?” asked Rep. Madeleine Dean, a Democrat from Pennsylvania.

Responded Zuckerberg: “Well, congresswoman, we are not creating a bank. We are helping an organization create a payment system.”

Zuckerberg held up China as a strong reason for encouraging innovation as embodied in the Libra project.

“While
we debate these issues, the rest of the world isn’t waiting,” he said.
“China is moving quickly to launch similar ideas in the coming months.”

Facebook also has cited competition from China as a compelling argument against breaking up the company.

Zuckerberg’s
China statements found a ready echo from some Republicans on the
committee, such as Rep. Patrick McHenry of North Carolina, who stepped
up to defend the Libra project and urge lawmakers not to put “innovation
on trial.”

But Democrats, in a rare tilt, allied themselves with
President Donald Trump and his Treasury secretary, Steven Mnuchin, who
have publicly criticized the Libra plan. Mnuchin and other regulators,
including Federal Reserve Chairman Jerome Powell, have warned that the
digital currency could be used for illicit activity such as money
laundering or drug trafficking.

Zuckerberg touted his optimistic
vision of Libra and what it could mean for people around the world who
don’t have access to bank accounts.

A bulk of the hearing also
focused on Facebook’s record on diversity and civil rights. Rep. Joyce
Beatty, a Democrat from Ohio and vice chair of the Congressional Black
Caucus, lambasted Zuckerberg over his company’s track record on both.

Demanding
yes or no answers, Beatty asked Zuckerberg, for instance, how many of
Facebook’s stable of big law firms are minority or woman-owned or how
many women or minority partners work on the company’s cases.

She told Zuckerberg Facebook works with civil rights groups only because of “the number of lawsuits you’ve had.”

A
subdued-looking Zuckerberg didn’t get in much in the way of answers.
Beatty finished by calling Facebook’s conduct ” appalling and
disgusting” and told Zuckerberg that “you have ruined the lives of many
people, discriminated against them.”

AP Technology Reporter Barbara Ortutay in San Francisco and AP Banking Reporter Ken Sweet in New York contributed to this report.