Facebook’s bold “new global currency,” Libra, was hit by an antitrust probe from regulators in the European Union because it could unfairly dominate the market, according to a document seen exclusively by Bloomberg.
The Executive Commission of the EU is studying Libra to see if it could breach anti-competition laws. Considering Facebook’s historic use of consumer data and how it exchanges information, scrutiny of Libra mirrors concerns recently voiced by top officials and financial institutions across Europe, said Bloomberg.
Libra Association under scrutiny
The report Bloomberg examined did not disclose many specific concerns held by the EU’s top branch, but did say they revolve around the “governance structure and membership” of the Libra Association, the Switzerland-based non-profit that governs the prospective digital currency.
Regulators, industry experts, and the general public have not hidden their skepticism for what privacy protections Facebook affords consumers, especially after scandals including Cambridge Analytica, among several others.
Now, Libra could appear as the most powerful monopoly on consumer data to date, seeming to some as an attempt by the social media platform to seize power over not only over people’s social networks but the monetary system at large.
Corporate giants such as Uber, Vodafone, PayPal, Visa, Mastercard, Naspers, and Stripe are included as founding members of the Libra Association, and per the Libra whitepaper will be directly involved in the network’s upkeep as node operators. Yet, Congress and the Senate both have concerns that Facebook will have de facto control over the association.
Can Facebook be trusted?
Facebook has attempted to soothe concerns that Libra will outmuscle competition or violate privacy, saying the network will decentralize after five years. Many experts, however, disagree with this, stating the Libra Association will have significant access to information and data as it builds its own global central bank—arguing that it’s unlikely that the corporations involved will give up this power.
The probe comes as the latest pothole in Libra’s evidently bumpy road to regulatory approval, with Facebook having told investors in July the plan may be scrapped if it can’t get clearance from policymakers.
Nonetheless, the firm has voiced its intention to work with lawmakers internationally to gain approval. Facebook is currently hiring a public policy manager in London to “focus on Europe and MENA on a team working on payments and blockchain regulatory policy development.” It seems the social media giant will need all the lobbying help it can get.
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