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Version 2 Version 3
Zuckerberg, in Washington to Talk Cryptocurrency, Gets Grilled on Everything Facebook’s Zuckerberg, Accused of Lying, Withstands a Washington ‘Beating’
(about 5 hours later)
WASHINGTON — Mark Zuckerberg, Facebook’s chief executive, returned to the hot seat on Wednesday to defend a cryptocurrency project that has become the latest target of criticism from lawmakers frustrated with the social media giant. WASHINGTON — Mark Zuckerberg, the Facebook chief executive, traveled to Washington to defend a cryptocurrency project that has become the latest target of criticism from lawmakers frustrated with the social media giant.
He ended up defending Facebook on a range of issues, from political advertising to housing discrimination and child pornography. But he ended up answering for a smorgasbord of other issues on Wednesday, as members of the House Financial Services Committee took Mr. Zuckerberg to task for everything from political advertising and disinformation campaigns to work force diversity and child pornography.
In a hearing before the House Financial Services Committee, Mr. Zuckerberg presented a rosy view of how the cryptocurrency would provide a safe way for billions of people around the world without bank accounts to exchange money affordably. Representative Maxine Waters, the Democratic committee chairwoman, set the tone of the meeting early. She grilled Mr. Zuckerberg on Facebook’s willingness to allow virtually unfettered speech across the platform and its recent decision to take a hands-off approach to vetting political advertising.
And in a response to an outcry from financial regulators, he said Facebook would not offer Libra, its cryptocurrency initiative, anywhere in the world “unless all U.S. regulators approve it.” “The impact of this will be a massive voter suppression effort. Your claim to promote freedom of speech does not ring true,” Ms. Waters said.
Lawmakers have been unsparing in their criticism of Libra and Facebook’s leader. On Wednesday morning, they also took the opportunity to call Mr. Zuckerberg on the carpet on many issues of the last three years. In recent months lawmakers have been unsparing in their criticism of Facebook as well as Mr. Zuckerberg. On Wednesday, that criticism dragged on for more than five hours of political theater, making it glaringly apparent just how skeptical of Facebook Congress has become through nearly three years of controversy.
Representative Maxine Waters, the committee chairwoman, set the tone of the meeting early. She grilled Mr. Zuckerberg on the company’s political ads policy, Facebook’s willingness to allow virtually unfettered speech across the platform and the company’s shifting positions on how it wished to treat so-called blockchain advertising and technology across its services. That skepticism is not limited to Capitol Hill. The company now faces a range of investigations into its behavior by regulators in a number of countries and by 47 state attorneys general, as well as increasing calls that it should be broken up into a number of smaller, less powerful companies.
“The impact of this will be a massive voter suppression effort. Your claim to promote freedom of speech does not ring true,” she said. Mr. Zuckerberg acknowledged his company has a trust problem. “I get that I’m not the ideal messenger for this right now,” he said. “We certainly have work to do to build trust.”
Ms. Waters started the hearing with an opening statement that also touched on the company’s continued problems with foreign election interference, privacy violations, its poor record on work force diversity and allegations of housing discrimination from its ads platform. Despite occasional stumbles, Mr. Zuckerberg, surrounded at the hearing by a nearly full front row of Facebook lawyers, top lobbyists and public relations executives, stayed calm under the harsh questioning. He did what he was supposed to do as the chief executive of a big company called to heel in Washington. He took the heat.
Committee members said Facebook faced a credibility crisis. Representative Nydia M. Velázquez, a Democrat from New York, pointed to Facebook’s promise in its acquisition of WhatsApp in 2014 to keep the messaging app separate from the main Facebook platform. But a few years later, Mr. Zuckerberg announced it would merge data between the two apps. And Mr. Zuckerberg still brightened when the grab-bag discussion veered into the technical details of Libra.
While presenting a rosy view of how the cryptocurrency would provide a safe way for billions of people around the world without bank accounts to exchange money affordably, he pledged Facebook would not offer Libra anywhere in the world “unless all U.S. regulators approve it.”
But committee members questioned whether Facebook executives can be taken at their word.
Representative Nydia M. Velázquez, a Democrat from New York, pointed to Facebook’s promise in its acquisition of WhatsApp in 2014 to keep the messaging app separate from the main Facebook platform. But a few years later, Mr. Zuckerberg announced it would merge data between the two apps.
“Do you understand why this record makes us concerned with Facebook entering the cryptocurrency space? Have you learned that you should not lie?” Ms. Velásquez said.“Do you understand why this record makes us concerned with Facebook entering the cryptocurrency space? Have you learned that you should not lie?” Ms. Velásquez said.
Mr. Zuckerberg was defensive. “Congresswoman, I would disagree with the characterization,” he said before getting cut off again by further questions.Mr. Zuckerberg was defensive. “Congresswoman, I would disagree with the characterization,” he said before getting cut off again by further questions.
Representatives homed in on issues of national security, and the ways that bad actors have used cryptocurrencies to pursue illicit activity.Representatives homed in on issues of national security, and the ways that bad actors have used cryptocurrencies to pursue illicit activity.
“You’re creating a whole new currency, which could be anonymous, that could create a whole new threat to Americans and national security, which is a huge concern,” said Representative Carolyn Maloney, Democrat of New York.“You’re creating a whole new currency, which could be anonymous, that could create a whole new threat to Americans and national security, which is a huge concern,” said Representative Carolyn Maloney, Democrat of New York.
Representative Ann Wagner, a Republican from Missouri, said she was troubled by Facebook’s history of dealing with child pornography on the site. The company has reported discovering millions of exploitative images and videos.Representative Ann Wagner, a Republican from Missouri, said she was troubled by Facebook’s history of dealing with child pornography on the site. The company has reported discovering millions of exploitative images and videos.
“You are not working hard enough, and end-to-end encryption is not going to help the problem,” Ms. Wagner said.“You are not working hard enough, and end-to-end encryption is not going to help the problem,” Ms. Wagner said.
Mr. Zuckerberg acknowledged the difficulties of policing a global platform, but was again defensive as he was challenged on his company’s ability to respond to the proliferation of images on it.Mr. Zuckerberg acknowledged the difficulties of policing a global platform, but was again defensive as he was challenged on his company’s ability to respond to the proliferation of images on it.
”We work harder than any other company to identify this behavior,” Mr. Zuckerberg said.”We work harder than any other company to identify this behavior,” Mr. Zuckerberg said.
Republican members of the committee were generally more supportive of Mr. Zuckerberg. Representative Patrick McHenry of North Carolina, the top-ranking Republican, said that Democrats were going too far in trying to reign in new technology like Libra. Representative Rashida Tlaib, Democrat of Michigan, clashed with Mr. Zuckerberg on his company’s lax attitude around its speech policies — particularly the company’s desire not to fact-check political campaign advertising.
Ms. Tlaib said the practice has resulted in widespread hate-mongering and a flurry of false information about her, personally. “It is hate speech, it’s hate, and it’s leading to violence and death threats in my office,” she said.
And in a particularly intense round of questioning, Representative Joyce Beatty, Democrat of Ohio, said she found Facebook’s track record on issues of diversity and inclusion at the company “appalling and disgusting.”
“It’s almost like you think this is a joke, when you have ruined the lives of many people,” Ms. Beatty said.
Republican members of the committee were generally more supportive of Mr. Zuckerberg. Representative Patrick McHenry of North Carolina, the top-ranking Republican, said that Democrats were going too far in trying to rein in new technology like Libra.
“American innovation is on trial today in this hearing,” Mr. McHenry said.“American innovation is on trial today in this hearing,” Mr. McHenry said.
Mr. Zuckerberg followed on that point, saying if American regulators managed to stop Libra, it would help countries like China develop their own similar financial projects — efforts that could hurt the United States and the dominant role of the dollar.Mr. Zuckerberg followed on that point, saying if American regulators managed to stop Libra, it would help countries like China develop their own similar financial projects — efforts that could hurt the United States and the dominant role of the dollar.
“While we debate these issues, the rest of the world isn’t waiting,” Mr. Zuckerberg said. “If America doesn’t innovate, our financial leadership isn’t guaranteed.”“While we debate these issues, the rest of the world isn’t waiting,” Mr. Zuckerberg said. “If America doesn’t innovate, our financial leadership isn’t guaranteed.”
A torrent of criticism has been directed toward Facebook’s cryptocurrency effort since it was announced in June. But Mr. Zuckerberg, who is personally fascinated by cryptocurrencies, is committed to the project.A torrent of criticism has been directed toward Facebook’s cryptocurrency effort since it was announced in June. But Mr. Zuckerberg, who is personally fascinated by cryptocurrencies, is committed to the project.
In the past week, Facebook officials have been on a charm offensive with regulators and lawmakers, leading up to the hearing on Wednesday. And Mr. Zuckerberg has taken on a more assertive role in defending the social network in Washington in recent weeks.In the past week, Facebook officials have been on a charm offensive with regulators and lawmakers, leading up to the hearing on Wednesday. And Mr. Zuckerberg has taken on a more assertive role in defending the social network in Washington in recent weeks.
Facebook has one of the biggest influence operations in Washington and has fortified its lobbying in response to the increased government scrutiny this year. The company is on track to spend $12.3 million to lobby the federal government in the first nine months of the year, compared with $12.6 million for all of last year, according to public filings. Facebook has one of the biggest influence operations in Washington and has fortified its lobbying in response to the increased government scrutiny this year. The company now works with 60 internal and contract lobbyists, about twice the number it had in 2016.
The company is on track to spend $12.3 million to lobby the federal government in the first nine months of the year, compared with $12.6 million for all of last year, according to public filings.
But the financial industry and tech companies are growing increasingly leery of the cryptocurrency project. Facebook originally brought on 27 partners to join a Libra Association in Switzerland that is supposed to govern the network. But several big-name partners, including PayPal, Mastercard and Visa, have dropped out.But the financial industry and tech companies are growing increasingly leery of the cryptocurrency project. Facebook originally brought on 27 partners to join a Libra Association in Switzerland that is supposed to govern the network. But several big-name partners, including PayPal, Mastercard and Visa, have dropped out.
Mr. Zuckerberg described Libra as a democratizing financial system that would benefit mostly poor consumers, as well as the estimated 14 million people in the United States who do not have access to bank accounts and who cannot afford banking fees. Though Mr. Zuckerberg remained collected during the marathon session, it was made clear how difficult it will be to win the confidence of lawmakers.
“People pay far too high a cost — and have to wait far too long — to send money home to their families abroad. The current system is failing them,” Mr. Zuckerberg said in the advance version of his testimony. “The financial industry is stagnant and there is no digital financial architecture to support the innovation we need. I believe this problem can be solved, and Libra can help.” “It’s good to have someone that’s sturdy and resilient,” Representative Juan Vargas, Democrat of California, said to Mr. Zuckerberg. “You’re probably the right person at the right time to take this beating.”
This is a developing story. It will be updated.