Washington, Jul 16 (AP/UNB) — Facebook's ambitious plan to create a financial eco-system based on a digital currency faces questions from lawmakers, as it's shadowed by negative comments from President Donald Trump, his treasury secretary and the head of the Federal Reserve.
Congress begins two days of hearings Tuesday on the currency planned by Facebook, to be called Libra, starting with the Senate Banking Committee. Meanwhile, a House Judiciary subcommittee will extend its bipartisan investigation of the market power of Facebook, Google, Amazon and Apple.
Trump tweeted last week that the new currency, Libra, "will have little standing or dependability." Both Treasury Secretary Steven Mnuchin and Fed Chair Jerome Powell have expressed serious concerns recently that Libra could be used for illicit activity.
The Treasury Department has "very serious concerns that Libra could be misused by money launderers and terrorist financers," Mnuchin told reporters at the White House on Monday. "This is indeed a national security issue."
Facebook has "a lot of work to do before we get to the point where we're comfortable with it," Mnuchin said.
Already under intense scrutiny from regulators and Congress over privacy and market dominance, Facebook stirred anger on Capitol Hill last month with the unveiling of its plan to create a financial ecosystem based on a digital currency. Senate and House hearings went on the calendar, and the Democratic head of the House Financial Services Committee, which is holding Wednesday's hearing, called on Facebook to suspend the plan until Congress and regulators could review it.
Rep. Maxine Waters, D-Calif., said that Facebook, with some 2 billion users around the world, "is continuing its unchecked expansion and extending its reach into the lives of its users." She called Libra "a new Swiss-based financial system" that potentially is too big to fail and could require a taxpayer bailout.
David Marcus, the Facebook executive leading the project, says in his testimony prepared for Tuesday's hearing by the Senate Banking Committee that Libra "is about developing a safe, secure and low-cost way for people to move money efficiently around the world. We believe that Libra can make real progress toward building a more inclusive financial infrastructure."
Facebook agrees with Powell's view that the government's review of Libra must be "patient and thorough, rather than a sprint to implementation," Marcus' statement says. "The time between now and launch is designed to be an open process and subject to regulatory oversight and review. In fact, I expect that this will be the broadest, most extensive and most careful pre-launch oversight by regulators and central banks in FinTech's history. We know we need to take the time to get this right."
The planned digital currency is billed as a "stablecoin" backed by deposits in sovereign currencies such as the dollar, euro and Japanese yen — unlike bitcoin, ether or other digital currencies. Promising low fees, it could open online commerce to millions of people around the world who lack access to bank accounts and make it cheaper to send money across borders. But it also raises concerns over the privacy of users' data and the potential for criminals to use it for money laundering and fraud.
To address privacy concerns, Facebook created a nonprofit oversight association, with dozens of partners including PayPal, Uber, Spotify, Visa and MasterCard, to govern Libra. As one among many in the association, Facebook says it won't have any special rights or privileges. It also created a "digital wallet" subsidiary, Calibra, to work on the technology, separately from its main social media business. While Facebook owns and controls Calibra, it won't see financial data from it, the company says.
Mnuchin's comments came a few days after Trump tweeted: "I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity."
If they want to get into the financial business, Facebook and its dozens of partner companies in the venture will have to accept the kind of tight regulation that banks are under, Trump said.
Powell, a powerful financial regulator who is independent of the Trump administration, told Congress last week that Facebook's plan "raises a lot of serious concerns, and those would include around privacy, money laundering, consumer protection, financial stability. Those are going to need to be thoroughly and publicly assessed and evaluated before this proceeds."
Facebook's challenges in Washington go beyond Libra. Later Tuesday, at a Judiciary subcommittee hearing, Facebook will be among four big tech companies — along with Google, Amazon and Apple — testifying about their impact on the innovation and entrepreneurship of smaller companies. It's the latest chapter in lawmakers' examination of the industry.
"What happens in tech is that one big company grows to control a lot of stuff, and if it's allowed to stay there for too long, it slows down the sector," Timothy Wu, a professor of law, science and technology at Columbia Law School, has said. "Companies like Google and Facebook have come to hold too much power. There's a growing sense that they have too much control over information, news, advertising, even who we are and what's going on."
Wu is among the expert witnesses scheduled to appear before the antitrust panel, which also will hear from executives from the four tech companies.
Dhaka, Jul 13 (AP/UNB) - The FTC has voted to approve a fine of about $5 billion for Facebook over privacy violations, the Wall Street Journal reported Friday. The report cited an unnamed person familiar with the matter.
Facebook and the FTC declined to comment. The Journal said the 3-2 vote broke along party lines, with Republicans in support and Democrats in opposition to the settlement.
In most cases the Justice Department's civil division will review settlements by the FTC, and it is unclear how long the process would take. A Justice Department spokeswoman declined to comment on the Facebook matter.
The fine would be the largest the FTC has levied on a tech company. But it won't make much of a dent for Facebook, which had nearly $56 billion in revenue last year. Facebook has earmarked $3 billion for a potential fine and said in April it was anticipating having to pay up to $5 billion.
The report did not say what else the settlement includes beyond the fine, though it is expected to include limits on how Facebook treats user privacy. Some have called on the FTC to hold Facebook CEO Mark Zuckerberg personally liable for the privacy violations in some way, but based on the party line vote breakdown experts said this is not likely.
Marc Rotenberg, president of the nonprofit online privacy advocacy group Electronic Privacy Information Center, said he was "confused" as to why the Democratic commissioners didn't support the settlement and said he suspects, without having seen the actual settlement, that this was due to the Zuckerberg liability question.
"But I thought that was misguided," he said, adding that EPIC instead supports more wholesale limits on how Facebook handles user privacy.
Since the Cambridge Analytica debacle erupted more than a year ago and prompted the FTC investigation, Facebook has vowed to do a better job corralling its users' data. That scandal revealed that a data mining firm affiliated with President Donald Trump's 2016 campaign improperly accessed private information from as many as 87 million Facebook users through a quiz app.
Other leaky controls have also since come to light. Facebook acknowledged giving big tech companies like Amazon and Yahoo extensive access to users' personal data, in effect exempting them from its usual privacy rules. And it collected call and text logs from phones running Google's Android system in 2015.
Wall Street appeared unfazed at the prospect of the fine. Facebook's shares closed at $204.87 on Friday and added 24 cents after hours. The stock is up more than 50 percent since the beginning of the year.
"This closes a dark chapter and puts it in the rearview mirror with Cambridge Analytica," said Wedbush analyst Daniel Ives. "Investors still had lingering worries that the fine might not be approved. Now, the Street can breathe a little easier."
Rep. David Cicilline, a Democrat from Rhode Island, said in a statement that the fine gives Facebook "a Christmas present five months early. It's very disappointing that such an enormously powerful company that engaged in such serious misconduct is getting a slap on the wrist. This fine is a fraction of Facebook's annual revenue."
Cicilline leads the House Judiciary subcommittee on antitrust, which is pursuing a bipartisan investigation of the big tech companies' market dominance.
Dhaka, Jul 6 (UNB) - Chinese police have arrested a man in connection with an incident that left the boss of tech giant Baidu drenched with water, reports the BBC.
Chief executive Robin Li was giving a speech when a man climbed on stage, grabbed him and upended a bottle of water over him.
The incident happened at the Baidu Create 2019 conference in Beijing.
The annual conference showcases the technology firm's work on artificial intelligence and other innovations.
Beijing police said a man had been placed in administrative detention on suspicion of "picking quarrels and provoking trouble". The detention can last for up to five days.
After wiping away the water, Mr Li continued with his talk.
Baidu is China's top search provider and has regularly faced criticism from the public over the quality of the search results it provides.
In a similar incident in early July, an animal rights activist got within 3ft (1m) of Amazon boss Jeff Bezos during a presentation he was making at a conference in Las Vegas.
Priya Sawhney, of the Direct Action Everywhere group, was protesting about the treatment of animals at a farm that suppliers Amazon and others with meat.
Paris, July 4 (AP/UNB) — France’s lower house of parliament approved Thursday a small, pioneering tax on internet giants like Google, Amazon and Facebook — and the French government hopes other countries will follow suit.
The bill aims to stop multinationals from avoiding taxes by setting up headquarters in low-tax EU countries. Currently, the companies pay nearly no tax in countries where they have large sales like France.
The bill foresees a 3% tax on the French revenues of digital companies with global revenue of more than 750 million euros ($847 million), and French revenue over 25 million euros.
The bill adopted by the National Assembly goes to the Senate next week, where it is expected to win final approval.
The tech industry warns it could lead to higher costs for consumers.
It could affect U.S. companies including Airbnb and Uber as well as those from China and Europe. It primarily targets those that use consumers’ data to sell online advertising.
The French Finance Ministry has estimated the tax will raise about 500 million euros ($566 million) a year this year but that should increase “quickly.”
France failed to persuade EU partners to impose a Europe-wide tax on online giants, but is now pushing for an international deal with the 34 countries of the Organization for Economic Cooperation and Development.
Dhaka, July 3 (UNB) Some Facebook, Instagram and WhatsApp users cannot upload photos, videos and files.
A spokesman for Facebook, which owns all three apps, told BBC News: "We're working to get things back to normal as quickly as possible."
Together, the social networks have billions of users worldwide, reports BBC.
In March, Facebook and Instagram suffered their longest period of disruption ever. Problems also struck both apps as well as WhatsApp in April.
The Facebook Messenger app, which is often installed separately, is also affected.