'Facebook Is Dangerous': Firms In Hot Seat As Congress Probes Big Tech

Jul 16, 2019
Originally published on July 23, 2019 5:20 pm

Updated at 1:25 p.m. ET

Given Facebook's track record of broken promises over privacy, U.S. senators said Tuesday that the social media giant can't be trusted when it comes to plans to launch a digital currency.

"Facebook is dangerous," Sen. Sherrod Brown, D-Ohio, said at a Senate Banking Committee hearing. "Like a toddler who's gotten his hands on a book of matches, Facebook has burned down the house over and over, and called every arson a learning experience."

Brown said Facebook has helped destroy local news outlets. "This kind of creative disruption that doesn't actually create anything is just disruption," he said.

Facebook, Amazon, Google and Apple officials are testifying Tuesday at three separate congressional hearings on an array of issues, including whether they're so big they stifle competition.

The hearings reflect a new mood in Washington, where lawmakers, regulators and even President Trump are calling for more thorough reviews of the big tech companies, with a goal of tougher regulation to level the playing field.

The head of Facebook's effort to create a new digital currency called Libra told the Senate Banking Committee that the company wants to work closely with policymakers and regulators.

Those setting up Libra expect it to be "licensed, regulated, and subject to supervisory oversight," said David Marcus, who heads Calibra, Facebook's digital currency project.

Sen. Martha McSally, R-Ariz., cited Facebook's repeated violations of its users' privacy. "I don't trust you guys," she said. "So instead of cleaning up your house, now you're launching into another business model with Calibra here."

Sen. Pat Toomey, R-Pa., said it was too soon to dismiss Facebook's Libra plan. "I just think we should be exploring this. ... To announce in advance that we have to strangle this baby, I think, is wildly premature."

Marcus acknowledged Facebook's missteps. "Trust is primordial, and we've made mistakes in the past," he said. "And we have been working and are continuing to work really hard to get better." Because Facebook is launching Libra with 100 partners, "you will not have to trust Facebook," Marcus said.

Treasury Secretary Steve Mnuchin made it clear at a briefing on Monday that he's not ready to support Facebook's currency plan — at least not yet.

"I'm not going to publicly speculate how long I think it will take them to get to the point where we're comfortable with it," he said. "But they are a long way away."

Later on Tuesday, lobbyists for Google, Apple, Amazon and Facebook are scheduled to go before a House Judiciary subcommittee. Lawmakers there are expected to question the companies about how they dominate markets, making it difficult for other companies to be competitive or have access to advertising, app creation and media.

Also Tuesday, a Senate Judiciary subcommittee will ask a Google lobbyist about whether the company's search engine ranks posts by conservative media and bloggers lower than other kinds of search results. Trump and other conservatives have been alleging the big tech companies have anti-conservative bias. The tech giants have denied bias and studies have no found evidence of it.

Facebook has faced increasing scrutiny over privacy violations. The Federal Trade Commission reportedly voted recently to fine the social media giant about $5 billion to settle a case stemming from the Cambridge Analytica scandal. The firm, which worked on President Trump's 2016 campaign, acquired the personal data of millions of Facebook users.

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MARY LOUISE KELLY, HOST:

Well, while the House is looking today at whether Google and other tech giants are too big, across Capitol Hill, senators are debating whether it would be OK if Facebook creates its own currency - safe to say Facebook has not convinced either Republicans or Democrats so far. Some lawmakers are downright hostile to the idea that a company that has broken public trust repeatedly, especially in its handling of user data, would venture into high-stakes global finance. NPR's Aarti Shahani reports on today's hearing before the Senate Banking Committee.

AARTI SHAHANI, BYLINE: Facebook has proposed with partners to create digital money, a currency called the Libra. The move requires approval by regulators who are overseen by lawmakers who were on fire at today's hearing and using fire metaphors.

(SOUNDBITE OF ARCHIVED RECORDING)

SHERROD BROWN: Facebook is dangerous.

SHAHANI: Senator Sherrod Brown, Ohio Democrat...

(SOUNDBITE OF ARCHIVED RECORDING)

BROWN: Like a toddler who has gotten his hands on a book of matches, Facebook has burned down the house over and over and called every arson a learning experience.

SHAHANI: Money is a massive experiment in trust. We trust the dollar. We use it and don't burn it because we trust that it's backed by the full faith and credit of the United States government. Facebook does not have a great track record in trust, as David Marcus, the man at the company who oversees the new currency project, admitted repeatedly as he sat in the hot seat.

(SOUNDBITE OF ARCHIVED RECORDING)

DAVID MARCUS: Trust is primordial, and we've made mistakes in the past. And we have been working and are continuing to work really hard to get better.

SHAHANI: Primordial, meaning from the beginning of time. The endearing origin story of Facebook, the miracle of capitalism - started in a college dorm - was absent. Senators offered an alternative origin story that early on, Facebook killed the local newspapers that keep those with power accountable; that by making hate speech go viral, it helped fuel genocide in the country Myanmar; that Facebook turned a blind eye to Russian interference in the 2016 elections; that the company has lied repeatedly about how it handles users' personal data. Senator Martha McSally, Arizona Republican...

(SOUNDBITE OF ARCHIVED RECORDING)

MARTHA MCSALLY: Mr. Marcus, I don't trust Facebook, and it's because of the repeated violations of your users' privacy, repeated deceit. And I am not alone.

SHAHANI: Facebook's Marcus promised that if given permission to mint money, the company would monitor and report money laundering, but Facebook would not exploit users' spending data to target ads though Facebook has said one thing and done another before. The company promised to keep customer data private. Then, charged with lying, it entered a settlement with the Federal Trade Commission in 2011. And now caught up again, Facebook faces a $5 billion fine.

Marcus made this case. Digital currency is not a data grab. Rather, it will make Facebook more popular by making it a shopping destination kind of like Amazon. As he tried to explain to Senator McSally, that is a service to an estimated 90 million businesses on Facebook.

(SOUNDBITE OF ARCHIVED RECORDING)

MARCUS: If they now have the ability to sell to more constituents across the Facebook platform and more people have access to the services and products of those 90 million businesses, then more commerce will happen on the Facebook platform.

MCSALLY: Oh, that's wonderful public good that you guys are committed to. I know I'm way over time here, and that was extremely sarcastic. Thank you.

SHAHANI: Timing matters. The announcement by Facebook that it plans to create its own currency may be too soon after Wall Street's financial crisis or too soon after Facebook's data scandals, which are still ongoing. Though Senator Pat Toomey, Pennsylvania Republican, did offer some encouragement for the tech giant's foray into digital currency.

(SOUNDBITE OF ARCHIVED RECORDING)

PAT TOOMEY: To announce in advance that we have to strangle this baby in the crib I think is wildly premature.

SHAHANI: Tomorrow Facebook's Marcus appears before the House Financial Services Committee. This is one of a handful of hearings this week examining the power of big tech.

Aarti Shahani, NPR News. Transcript provided by NPR, Copyright NPR.