Big tech behemoths face grilling from US lawmakers as hearings kick off

A Senate banking committee will question Facebook on its Libra project, while the House takes aim at Google, Apple and Amazon

Big tech will be in the hot seat this week as US lawmakers turn their attention to the growing power of these corporate behemoths in two days of hearings.

Facebook will face scrutiny on Tuesday morning, when lawmakers in the Senates banking committee are set to question the companys executives on its cryptocurrency project, Libra. On Tuesday afternoon, representatives of Facebook, Google, Apple and Amazon will face questions on online monopolies at the House subcommittee on antitrust, commercial and administrative law. And on Wednesday morning, it will be the Houses turn to probe Facebook over its cryptocurrency venture.

Facebooks crypto launch faces potential roadblocks

Facebook announced its plans for Libra in June, detailing ambitions to launch a digital currency in 2020 that would allow its billions of users to make financial transactions across the globe. Facebook says Libra will be managed by the Libra Association, an organization made up of more than 100 companies that have bought into the currencys launch, and will be based in Switzerland. The company claims user payment data will be independent from existing Facebook advertising profiles and will not be sold.

The plans could potentially shake up the worlds banking system, and drew immediate concerns from lawmakers and experts alike over privacy and anti-fraud measures. The US Security and Exchange Commission is currently debating whether Libra resembles an exchange-traded fund. If it does, the SEC will need to approve Libra before its launch. Even Donald Trump has spoken out against the effort. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International, he tweeted last week.

At this weeks hearings, Facebook is expected to make the argument that its new currency is primarily a payment tool, not an investment.

In statements released ahead of the hearing, David Marcus, the former PayPal executive leading Facebooks cryptocurrency initiative, said the company will not launch Libra until it has fully addressed regulatory concerns.

We recognize the authority of financial regulators and support their oversight of this project, he said.

The company will also emphasize the Libra Association, arguing the currency wont be run by Facebook itself but by the collection of companies.

The Libra Association maintains that financial inclusion, regulatory harmony and consumer concerns are not competing objectives, but rather work in lockstep with the Associations goals of offering a simple, global currency and financial infrastructure that empowers billions of people, said Dante Disparte, head of policy and communications for the Libra Association.

Ahead of the hearings, many in the crypto space rallied around Facebook, noting that responses from Congress and the Trump administration regarding Libra are indicative of a larger resistance to the blockchain technologies.

Facebook is todays convenient punching bag, and gives politicians a straightforward opportunity to raise their profile, said Roneil Rumburg, CEO and co-founder of blockchain-based streaming service Audius. The crypto-community will likely end up being collateral damage in their spat. While some of us may or may not agree with Libras approach, we should all be able to agree that their right to experiment and innovate is worth defending.

House sets its sights on tech monopolies

At the House subcommittee on antitrust, commercial and administrative law, the tech giants will face lawmakers who are increasingly skeptical of the incredible power large tech firms hold over markets such as digital advertising (in Facebook and Googles case) ; and e-commerce and cloud computing (for Amazon).

On Friday, David Cicilline, who chairs the antitrust subcommittee, lambasted reports that the Federal Trade Commission will fine Facebook $5bn over privacy violations, calling the settlement a Christmas present five months early and warning, If the FTC wont protect consumers, Congress surely must.

The anti-trust hearings are part of a recently launched bipartisan investigation into online monopolies. The first hearing of the investigation in June focused on the effects of online platforms on the new industry, while Tuesdays inquiry will address innovation and entrepreneurship.

The major tech companies will likely testify to how great they are for small businesses, said Sarah Miller, deputy director of the Open Markets Institute, a progressive think tank that advocates against monopolies. But that is not true.

We have allowed these companies to gain monopoly power and now theyre actually killing innovation because of their control over key arteries of commerce, Miller added. Theres no one silver-bullet solution, but any solution must get at the fundamentally dangerous level of power that these companies have been able to acquire Its not just one bill thats going to neutralize the power of these platforms.

Still, Miller said that the Senate and House hearings on Facebooks proposed cryptocurrency are a sign that her groups antitrust arguments are catching on with lawmakers.

If two years ago, Facebook had announced that it was creating a cryptocurrency, I think people would have been like, Oh, how innovative, she said. Now its being slapped down. Thats the power of really educating policy makers.

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