No, seriously. Facebook really doesn’t care. Amazingly, there are still some people who either don’t believe that, or aren’t too worried about it. But it is time to start worrying, especially if you are interested in either investing, using, or supporting its latest technovation, Libra.
First things first: a recap. We’ve seen Facebook founder Mark Zuckerberg’s face testifying in front of Congress a lot lately, and they’re not done with him yet. Most recently, Rep. Katie Porter (D-CA) ripped him a new USB-hole, calling him a hypocrite by falsely claiming that Facebook users control their privacy when we all know, or should know, that they don’t—far from it. This latest round of testimony comes after being slapped with the Federal Trade Commission’s largest fine in history–$5 billion—this past summer. Even then, Facebook went on to brush off its pants and celebrate with an uptick in stock prices. That’s right: the Teflon tech company actually saw earnings increase after receiving a $5 billion fine, largely because while $5 billion seems like a lot of money, it’s not—for Facebook.
Up until now, that’s been the pattern: Facebook gets in trouble for some type or privacy infraction but somehow dances away with barely a scratch. Now, however, that might be changing. It was recently announced that early investors in its Libra blockchain / cryptocurrency project aimed at capturing the “unbanked” market might want to leave the deal. Regulators are simply breathing too far down Facebook’s neck for them to feel comfortable. Could this be the beginning of the end for Libra—and maybe even Facebook?
It’s too early to tell, but at least on the Libra front, things don’t look good. U.S. regulators aren’t the only ones in Facebook’s business right now. French leaders also recently announced that Libra is a no-go in France, posing far too many risks than its worth at this juncture. So, does that mean the Libra project will go belly-up—or will Facebook push ahead (as is usually the case) regardless of potential privacy concerns?
My guess is that Libra will continue to move forward with its global launch, but I also suspect that it will be a quiet one. International governments are finally starting to understand just how large Facebook’s grip on global data is right now, and some may not be willing to get in bed with its sticky fingers. Another guess is that Facebook will be forced to launch its Libra project outside the United States, focusing on the largely unbanked populations of Asia or India, where there are fewer regulations in place to protect users and consumers. If the company can prove it is actually helping users in that region (which it does claim to want to do by democratizing banking), perhaps we’ll see a roll-out elsewhere. I, however, am not holding my breath.
One thing Facebook needs to realize is that we’re on to them. The company may be the biggest social media network, but it’s also the oldest. And as we’ve seen with many technologies throughout history, the first to grow its kingdom isn’t always the last kingdom to stand. Users have lots of different apps available now to pay digitally and store currency. We don’t necessarily need a giant focused on nabbing our life’s savings worth of data to provide that service. It’s my belief Facebook has overplayed its hand and will end up empty on Libra—as well as its streaming content service, Facebook Watch (but that’s another story altogether.)
Yes, many of us still use Facebook to communicate with friends and family. Some of us even get lured into ads and end up buying things we didn’t know we needed—or voting for people we didn’t even know we liked—because of how much Facebook knows about us. But for now, there is no way Facebook will be managing our wallets via Libra.
Although I have to admit—it’s kind of fun seeing Mark Zuckerberg squirm.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.