Highlights from Facebook’s Libra Senate hearing

https://techcrunch.com/2019/07/16/libra-in-messenger-whatsapp/

by lil-scamp • 7 years ago

113 110 7 years ago

Facebook’s core revenue model around Libra is that more online commerce will lead businesses to spend more on Facebook ads

That's not believable, but I think it was meant as a believable motivation that could be told to people to make them feel like they understood Facebook's motivation.

tmh79• 7 years ago

Agreed, its not believable at all.

It feels like when FB told everyone that they would never data mine whatsapp, and then started mining like 18 months after acquisition.

lawn• 7 years ago

It's painfully obvious FB will data mine Libra to the max and monetize it via even more targeted ads. Why would anyone believe otherwise?

SolaceQuantum2• 7 years ago

Funnily enough it was claimed that whatsapp is encrypted and thus not mineable in the senate hearing when a senator explicitly brought this up!

Hongwei• 7 years ago

It could be the most complete business model they've defined - that and interest on Libra deposits. Surely, the value of creating a new global financial payments platform and being the incumbent/biggest player will be fully realized in yet-to-be-imagined ways, but it would obviously sound bad for them to say that in a Senate hearing.

asveikau• 7 years ago

I would also guess that they don't actually know everything they want to use it for, but they know cryptocurrencies are hyped right now and don't want to miss out.

See also: VR.

epiphanitus4• 7 years ago

If Libra takes off, FB's AIs will not only know you and your friends talking about the flu, they will also know if that conversation ends with somebody purchasing more Purell. They might even boost the visibility of your conversation so that more people participate and more people buy Purell.

rufusroflpunch• 7 years ago

I genuinely hope this takes off. The idea of breaking the government money monopoly is very appealing to me.

colechristensen4• 7 years ago

You prefer government by Facebook shareholders instead of democracy?

sp3323• 7 years ago

I'm not a fan of Libra. But I don't think I would call the "Federal" Reserve a democracy.

sidr• 7 years ago

Facebook shareholder*. Zuck has 60% of voting power.

nishmastime3• 7 years ago

Having more than one option is worth infinitely more to me than just one option I can vote on. It's not like the US dollar is going away. You present a simple example of false dichotomy rhetoric which hurts discussion and is uncharitable to the reasons someone could see the upsides of having Libra around.

raxxorrax3• 7 years ago

Well, government in many countries is getting so detached from constituents that some people start to believe that unrestrained greed from corporations is the more dependable option. At least they behave in a predictable way that can be accomodated.

This comment may contain unrestrained cynism.

mola• 7 years ago

Yeah replace a monopoly you have a vote and moral grounds to demand changes in, with a dictator...eh.. a single board member majority ... Great idea, monarchy was so awesome!

nishmastime3• 7 years ago

Nobody said "replace."

smolder• 7 years ago

This genuinely confuses me. It’s not decentralized, Facebook and friends just become the new government, with no accountability when it counts.

tathougies3• 7 years ago

The government money monopoly is mandated by taxation, a defining feature of government. Without a money monopoly of some kind (including a demand that taxes be paid in a certain currency), there would be no government.

javert2• 7 years ago

That's not the case.

The government could choose to tax in gold, bitcoin, a foreign currency, or whatever.

There does not need to be a "government money monopoly" to have taxation and a government.

pretendscholar• 7 years ago

1836 called and they want their wildcat banking back.

dang3• 7 years ago

Please make your substantive points without being snarky on HN.

https://news.ycombinator.com/newsguidelines.html

groovybits2• 7 years ago

What is the difference between 'Calibra' and 'Libra'?

This article uses them interchangably, and does not seem to distinct between the two.

Edit: Looking more closely --

"That means that even though Facebook might not know how much money is in someone’s Calibra wallet or their other transactions [...]"

It seems that Calibra is the name of the 'wallet', and Libra is the name of the 'coin' itself.

SolaceQuantum2• 7 years ago

There's also this site: https://calibra.com/

groovybits2• 7 years ago

Thanks, I didn't even know Calibra existed. I had only heard about the Libra currency itself.

snek• 7 years ago

LGTM https://gc.gy/31025051.png

carlosdp5• 7 years ago

Calibra = Facebook's subsidiary Libra wallet company

Libra = currency itself

motohagiography2• 7 years ago

Any new system will necessarily have better oversight than the one that has co-evolved in a murky organic soup with cash and foreign exchange. Even bitcoin has more transparency than the majority of transactions today.

Watching some of those Senate hearings is like a trial organized by superstitious villagers. Libra is just a company scrip, like poker chips, which happens to be facilitated by a distributed ledger. I don't use Facebook because it is an abomination, but given the trend toward de-dollarization, the return of currency baskets and reserves made of special drawing rights, and effective negative interest rate policies, Libra may be the last best hope of the US to maintain its current level of influence in the international currency market. Only thing I recommend is that the company should just change it's name to Statebook.

hash872• 7 years ago

Libra may be the last best hope of the US to maintain its current level of influence in the international currency market

Sorry- what's the connection here? Libra will apparently be a basket of different major currencies, how does this benefit the US specifically? I say this as someone who would like to preserve dollar hegemony, I just don't see the connection

solotronics2• 7 years ago

If the US doesn't take a lead in the fintech race China will take over the world. Imagine everyone in Africa, S.E. Asia, etc using Alipay. This takes away power from the US in control and de-dollarization.

motohagiography2• 7 years ago

Even though Libra will be HQ'd in Switzerland, FB control means US and State Dept. control by extension. If a Chinese company dominates payments for the unbanked, the dollar and SWIFT partners hegemony ends and that lever is much weaker.

Social network payments will be a "radical monopoly," and the ability to manipulate exchange rates on that platform gives absolute power over import/export prices. Probably not something you want to yield.

umeshunni• 7 years ago

> Watching some of those Senate hearings is like a trial organized by superstitious villagers

Once you accept that senate hearings are more political posturing than an actual trial, they make more sense.

The output of a senate hearing is not a guilty/not-guilty verdict or a vote or a decision, but soundbites and video clips that a politician can use for their next re-election campaign to demonstrate that they care about their constituents and are tough on the boogeyman of the year.

Just do a search for "Senator X destroys Y for Z" - e.g. https://www.facebook.com/watch/?v=10156919959142908 or https://twitter.com/SenSanders/status/1085637715998195717 (not to pick on a single politician or company - these were just the first few I found)

Lucadg3• 7 years ago

agree. It was pretty weird to hear that politician repeating "Arizona constituents" in every sentence.

As if Libra was an Arizona issue only.

raxxorrax3• 7 years ago

But in the end cash does provide benefits to me that libra doesn't. I am probably not the target group, but evidently this murky, organic soup can indeed net advantages.

"Better oversight" could just mean better oversight from facebook and affiliates. I fail to see the advantage.

I agree about the negative interests rates. Currencies like Dollar and Euro provide cash, but they are essentially configured to speed up consumption. So in that regard they are not sustainable.

olyjohn• 7 years ago

It is “not the intention at all” for Calibra to sell or directly monetize user data directly, though if it offered additional financial services in partnership with other financial organizations it would ask consent to use their data specifically for those purposes.

And of course, they'll get consent with a small EULA update to their existing users, knowing they won't read it.

neura• 7 years ago

This all comes down to Facebook and friends holding on to your money, making interest on it, while everybody passes their tokens around. Many other companies have been doing this for a very long time, just not in such a widespread way and opening their currencies up to whoever wants to use it.

Take xbox live's original currency (still in use) where you pay $X for Y coin. They had your money in the bank, while you had some coins in your account, just sitting there, doing nothing for you. They had a bit more control and you could only buy amounts of coin that were not equal to the amount of coin you had to spend to buy anything, so you always had some left in your account.

In Facebook's case, just the time it takes to convert money to Libra and then back into actual money will net them some interest on it. On such a large scale, that's a constant income.

They're trying to be a non-profit because they don't actually charge for the service, but the investors still make money by way of holding on to your cash while it's in Libra form.

dllthomas4• 7 years ago

They're trying to be a non-profit because they don't actually charge for the service, but the investors still make money by way of holding on to your cash while it's in Libra form.

A not-for-profit can charge for service, and cannot return a profit to investors. Maybe they've ways to wiggle around the latter, but not charging for the service is simply irrelevant.

solotronics2• 7 years ago

The non-profit could sell your financial transaction data to a for profit corp. for basically nothing. The for-profit then makes all the money selling the data to other corporate partners. Just one of the many ways I can see this being abused.

mywittyname• 7 years ago

What they can do is pay massive bonuses and give their employees very nice perks. I attended a holiday party for non-profit where the prizes consisted of vacations, electronics, and plain old cash. We're talking about Disney Vacations for four, Mediterranean cruises, tropical resort packages, etc. I took home a sweet 65" LED TV and the prizes for the "games" (think musical chairs, limbo) started at $20 and went up to $1000. They easily gave away $50k in prizes to like 200 people.

Oh, and they had fire dancers, an open bar, and taxi reimbursement.

10/10 would Christmas party again.

serkanyersen• 7 years ago

Isn't this what happens to your money when it's in your checking account? How is this different?

jachee• 7 years ago

To my (admittedly ancient at 41) eye, it's not different enough to warrant all the hubbub that's been raised around it.

LudwigNagasena• 7 years ago

Regulations.

thinkloop3• 7 years ago

The most important quote might be from Mnuchin yesterday:

"Treasury takes very seriously the role of the US Dollar as the world's reserve currency, and will continue our efforts to protect our country". [1]

Are you supposed to say that out loud?

[1] https://youtu.be/zAICzg8ir50?t=370

ForHackernews2• 7 years ago

Huh? Why not?

The US gains strategic advantage from the power of the USD, and signalling their intention to protect that advantage will only help reinforce it.

thinkloop3• 7 years ago

Well there's this whole thing about fighting terrorism and money laundering, and individual rights and small government, etc. In this context it's odd for the government to be picking winners. We are also the leaders in crypto. Many US citizens are involved in crypto. It's almost as if the government had a stake in GM and so started making rules against Ford under the guise of public safety. Doesn't it seem like this should have zero effect on policy decision? If not, shouldn't the rest of the world then also be looking out for their own interests and make sure that the dollar reserve status is undermined? The latter isn't beneficial to the US, so framing it that way seems like a bit of a slip.

golemiprague• 7 years ago

How do we ensure that they don't politically discriminate against people? What happen if they block you on facebook? At least if the government is doing something I don't like I can vote for a different one, how can I influence facebook decisions? I'd rather have someone who must uphold the first amendment managing my money than someone who don't or even worst, will take the interest and demands of countries like China into consideration.

raxxorrax3• 7 years ago

Mastercard and Paypal have already done this, so getting any different payment provider would be a success already.

epiphanitus4• 7 years ago

Isn't this currency play just a way for Facebook to get more data? Data about social interactions and how they influence purchase decisions would be very marketable, especially to e-commerce businesses that want to take on Amazon.

It's also a potential moat for FB to protect its ad business against encroachment by Amazon's own ad business.

carlosdp5• 7 years ago

No, it's about increasing revenue per user for their fastest growing market (emerging market) by giving access to the 500m+ unbanked people that have internet/cells/FB/WhatsApp in these markets a way to access the digital economy, so they can actually buy things people advertise on Facebook, driving up the price for those ads.

They can make a killing on this without needing to touch anyone's data.

epiphanitus4• 7 years ago

Why not both?

Besides, the lions share of FB's current revenue still comes from US Ad spending. Amazon's dominance of e-commerce threatens this because people who want to buy something increasingly just go to Amazon.com. Amazon's ads offer the opportunity to influence consumers at the end of the conversion funnel.

But this means that Amazon will get a bigger slice of both the ad spend and the purchase data which FB doesn't yet have. Their ad business already makes almost $3B a quarter - that's almost 1/5th of FB's revenue. This is money that likely would otherwise have gone to FB/Google, but isn't anymore.

This is big threat to FB's core business in what is their most lucrative market right now. Would they leverage this data to try to keep their ad business competitive? I certainly think so. Just imagine how much stuff an AI that knows your purchases and your social life can get you to buy.

stock_toaster• 7 years ago

Maybe some of it is also a play to attempt to head off WeChat/Tencent in China and other developing countries?

(WeChat is very popular for p2p payments, as well as social networking)

epiphanitus4• 7 years ago

FB is banned in China but outside of China I definitely could imagine a fierce competition between FB and a Chinese tech conglomerate over payments. I think the challenge for FB will be govts. China is investing huge money in developing countries around the world, and they may pressure the host countries to make life harder for FB so their companies have an advantage.

carlosdp5• 7 years ago

I think a lot of the confusion around Facebook's motivations with Libra lie around the fact that Americans think they're the main target customer. It becomes more clear when you realize (by literally reading the copy on the front page of the Libra website, mind you) that the emerging markets (FB's fastest growing sector) are the real target.

We'd just be a nice to have.

wmf• 7 years ago

But it looks like Facebook doesn't know much about emerging markets either. Internet.org didn't go over well in some places. Letting Americans set moderation policy for Myanmar. Now they're talking about supporting unbanked people in the developing world... with KYC. Many unbanked people do not have "proper" ID and Facebook probably doesn't know how to parse such IDs anyway.

ajxs5• 7 years ago

There are some very interesting posts being flagged and killed in this thread that I feel raise some very valid points. My chief contention with allowing Facebook and ilk the ability to expand their influence and authority is that the motivations of such entities are, at best, amoral. There seems to be a troublingly significant movement of people who seem to think that Facebook, Google et al are doing god's work when it comes to their political involvement. But these companies ultimately will only serve their own interests. Democracy has its obvious pitfalls. You may often feel like you as an individual are not well served by the democratic process, as I often do not, but the democratic process _is_ there. It provides a mechanism that is fundamentally egalitarian for society to steer the direction of its governing bodies by voting. FAANG is not bound to such a restrictive system, their motivations concede no moral imperative. There is no incentive for them to suffer the inconveniences of egalitarian principles any further than it serves their agenda.

dang3• 7 years ago

What posts are being flagged and killed in this thread? I don't see any.

If you a [dead] post that shouldn't be dead, you should vouch for it by clicking on its timestamp, then clicking 'vouch' at the top of its page. This is precisely why we added that feature.

ajxs5• 7 years ago

There was one in particular post I was referring to, it looks like someone has vouched for it since my noting it. Thanks for pointing that out, I was unaware. I'm not sure I have the rep necessary however.

mrguyorama• 7 years ago

That's an bit undiscoverable. I was wondering how people accomplished that

chillacy2• 7 years ago

I can’t say it’s been a particularly good time for democracy in America. We’ve elected a narcissist reality tv star to the highest office, we have mass political gridlock, more political games than actually getting things done (infrastructure, healthcare, etc), and we’re feeling the heat from a rising billion person economy run under a non democratic system.

ajxs5• 7 years ago

Be that as it may, none of this is a good justification for moving further towards oligarchy or totalitarianism. There has been much talk about how support of big-tech censorship is skewing left, which I consider to be quite ironic since I had always associated the left, at least historically, with egalitarianism.

Lucadg3• 7 years ago

in other words: "let us create Libra otherwise Bitcoin wins. We have the technical capabilities, you write the laws. Let's fight it together."

Put like this it will start making sense to the institutions. Just give them some time to digest it.

willvarfar• 7 years ago

Moving social networks into banking seems to be an excellent business opportunity for social networks!

Suddenly they can make money from their users directly, rather than from selling their users to advertising customers.

I think Apple should investigate doing the same; make it so you can have an iBankAccount, and use phones to transfer money and pay etc using Apple as a bank. Apple could beat Facebook at this. And with Tim Cook at the helm, we might actually trust them more than Facebook and the current crop of actual banks.

The thing I don't get is the 'crypto' part of the currency; why that? Why not just become FaceBank and do it the old fashioned way?

lasagnaphil• 7 years ago

I want to note that KakaoTalk [0], which is the de-facto messenger service of Korea, is exactly going this route. Although having a straightforward monopoly on messenger services in the country, it has failed to find a sustainable business model in the past. However, five years ago they launched a service called KakaoPay [1], which lets you send money across KakaoTalk friends right in the app. And quite recently it launched its own bank called KakaoBank [2], and is nowadays even issuing debit cards. I expect many social network companies to move in similar directions; once you have a monopoly on communications, network effects are too strong to ignore.

[0] https://en.wikipedia.org/wiki/KakaoTalk

[1] https://en.wikipedia.org/wiki/KakaoPay

[2] https://en.wikipedia.org/wiki/KakaoBank

jmalkin• 7 years ago

Is it unusual or unheard of for a senate hearing to be held into an unreleased product?

qqn2• 7 years ago

I can't believe no one's mentioned that Mr. Robot scene yet: http://youtube.com/watch?v=1ee-cHbCI0s

Highlights from Facebook’s Libra Senate hearing

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