Facebook’s planned currency not so sweet

THE German name Zuckerberg translates as “sugar mountain” and Facebook founder Mr. Zuckerberg has without a shadow of a doubt built for himself and his partners a very sweetly profitable mountain that dominates all the other social networks out there.

By allowing people to keep in touch effortlessly, follow and comment on products, services, causes, dear or not so dear to their hearts, and daily news, he has empowered 2.5 billion users, 1.5 billion of whom reportedly log in at least once a day. The current world population is around 7.7 billion. Facebook has therefore made its fortune by gathering and selling on to third parties, an extraordinary amount of detailed information on more than a third of the people on the globe. National regulations on privacy are proving largely puny in the face of the exploitation of these data by Zuckerberg’s empire. As for example in the EU, Facebook lawyers fight tooth and nail to head off governmental attempts to trim their ability to leverage the vast stores of personal details by marketing it to others.

The mystifying reality is that so many people are happy to sign up and express their preferences on the platform, and more bizarrely still think it is of interest to others when they post what they just had to eat. An innocent response such as “That sounds yummy” is likely to produce a targeted ad from the company that makes that particular food or something like it. And there is of course a darker side to the platform. The Cambridge Analytica scandal highlighted how a seemingly-innocuous posted quiz could produce screeds of useful data that were used to target voters and seek to influence their decisions at the ballot box.

Now Zuckerberg has seen another even more ambitious use for Facebook which is nothing short of creating Libra, a new global currency that would be available to a third of the world’s population and rising. When it was launched in June around a Swiss-based company, a raft of big names including Uber, PayPal, Mastercard, Visa and Spotify were backing it. However, one by one, most of them have since fallen away, in the face of a chorus of opposition from legislators and regulators around the world, not least in the United States. Central bankers, already challenged by the rise of blockchain currencies such as Bitcoin, could of course, be expected to demur. But legislators have understandably recoiled at the prospect that not only citizens’ opinions and their meal menus would become known to Facebook but also their spending and their financial worth.

Zuckerberg was back before Congress this week seeking to justify his Libra plans and he met with a frosty reception. His company is already challenging governments with its cross-border data reach; for it to have intimate insights into people’s finances is generally felt to be a step too far. One argument he made was that Libra would essentially be a dollar-based currency and he warned that there was a state-private partnership in China about to launch a rival on-line currency. The weak point here is that whatever data China might be vacuuming up through suspect spying components in its communications products, the Chinese do not, so far, have a social media platform with the global reach of Facebook.

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