Buy Facebook’s Libra and you are literally giving the social media giant a license to print money, in the form of its new cryptocurrency.
Facebook’s plan to operate its own digital currency poses risks to the international banking system that should trigger a speedy response from global policymakers, according to the organisation that represents the world’s central banks.
Although the move of big tech firms such as Facebook, Amazon and Alibaba into financial services could speed up transactions and cut costs, especially in developing world countries, it could also undermine the stability of a banking system that has only just recovered from the crash of 2008.
“Libra” will be pegged to a basket of mainstream currencies at a value of about a dollar, and rooted in the model of secure, immutable online transactions we know as blockchain. Its operations will be overseen by a new organisation based in Geneva, open to any company or corporation that has a value of at least $1bn (£790m) and will invest a minimum of $10m. There are currently 28 such participants, ranging from Uber and Spotify to Mastercard.
If you’re one of the site’s 2.6 billion users, Facebook’s operators know where you are all the time, whether you’re logged on or not. They know what you’re buying, even if you’re in a brick-and-mortar shop. They scan photos you upload for biometrics. They mine your data and sell it to advertisers, but they won’t say how much of it, only that it’s a small amount, promise.
Facebook’s not the product. We are.
There are vast markets in the developing world where Facebook and its subsidiaries have millions of users but are held back from creaming off advertising revenue by the simple matter of poverty. Libra offers new revenue opportunities, partly by inviting people to exchange national currencies for the new medium, thereby gifting Facebook and its partners a vast pool of funds. In these territories, and more affluent places, the new currency also offers Facebook the chance to accelerate what sits at the heart of everything it does: the harvesting of endless data, which can then be monetized.
Chris Hughes, a co-founder of Facebook, last week added his voice to concerns being expressed over big tech’s move into finance, warning that Libra could shift power into the wrong hands.
Hughes, who is co-chair of the Economic Security Project, an anti-poverty campaign group, said: “If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies. If global regulators don’t act now, it could very soon be too late.”
At that point, surveillance capitalism would colonize the shrinking parts of our lives it has so far left relatively untouched. It would amass mountains of lucrative information about everything from our friends to when we last paid a speeding fine – and in the process, bring unlimited corporate power into areas we still consider subject to the checks and balances of democracy. The state could also have a field day: can you imagine the glee at the Department for Work and Pensions if it was able to monitor not just people’s universal credit payments but how they spent them?
But the biggest question of all is screamingly obvious, and worth asking for the thousandth time: how, in any meaningful way, can we hold Facebook – and Google – to account, and drastically limit their power?