From social media plat­form to world dom­i­na­tion: all hail the rise of Face­book 2.0

Facebook’s new cryptocurrency, Libra, can handle 1,000 transactions per second (Bitcoin can only deal with seven) and early investors include Uber, Paypal, Spotify and Mastercard.

Mark Zucker­berg and the com­pa­ny he cre­at­ed in a Har­vard dorm room 15 years ago reach more than two bil­lion peo­ple every day. This fig­ure, eas­i­ly more than a quar­ter of the world’s pop­u­la­tion, is enough to make the eyes water; but one of the most telling indi­ca­tions of Facebook’s ever-increas­ing domin­ion is that it is becom­ing dif­fi­cult to imag­ine a world in which the com­pa­ny doesn’t exist. As its ten­ta­cles probe more and more inva­sive­ly into our homes, our polling sta­tions and, now, our wal­lets, it is worth paus­ing to reflect: exact­ly what kind of plat­form is Face­book becoming?

In June this year, Face­book – who already owns Insta­gram, What­sApp and Mes­sen­ger – announced that at the dawn of 2020 it will roll out its own cryp­tocur­ren­cy. The Guardian says that the name, Libra, derives from the Roman word mea­sure­ment for weight (£ comes from the L’ in Libra’ and lb’ is the short­hand for a pound). But Jemi­ma Kel­ly from The Finan­cial Times points out that the name could also be a jab at the Winkelvoss broth­ers, who cre­at­ed the dig­i­tal cur­ren­cy exchange Gem­i­ni in 2014. Libra has also been dis­parag­ing­ly referred to as Zuck-bucks’ or Face-coins’ in var­i­ous reports.

This mon­ey move wasn’t a shock to any­one who had been lis­ten­ing to the company’s CEO; at the begin­ning of 2018 Zucker­berg had explained in one of his noto­ri­ous (and slight­ly odd) pub­lic res­o­lu­tions’ that he want­ed to study the upsides and down­sides of cryp­tocur­ren­cies. By May, Face­book was estab­lish­ing a blockchain divi­sion and the infra­struc­ture began to take shape.

Libra can han­dle 1,000 trans­ac­tions per sec­ond; Bit­coin – the ready com­par­i­son in any dis­cus­sion of Libra – can only deal with seven.”

In a whitepa­per, Libra’s founders declare that their mis­sion is to help the 1.7billion peo­ple who remain out­side the finan­cial sys­tem”; peo­ple with less mon­ey pay more for finan­cial ser­vices, and Face­book hopes (it claims) to empow­er them through cryp­tocur­ren­cy. Its tar­get seems osten­si­bly to be the devel­op­ing world, a sec­tor in which, though Face­book growth is hap­pen­ing most rapid­ly, the com­pa­ny may actu­al­ly be strug­gling to make mon­ey. Its efforts to laser in on areas like South-east Asia through the Libra prism there­fore make sense. 

Seyi Tay­lor, a tech prod­uct man­ag­er who has writ­ten about the impact of the new cur­ren­cy on the devel­op­ing world and who speaks to me from Nige­ria, talks about peo­ple in the devel­op­ing coun­tries hav­ing Face­book and What­sApp but not nec­es­sar­i­ly being sources of mon­ey for Face­book. This may be part­ly because they are less like­ly to buy things online; in south Asia, about 625million peo­ple don’t have a bank account. The adver­tis­ing sec­tors in these coun­tries are also a frac­tion of those in the West. To actu­al­ly make mon­ey off these users, says Tay­lor, would involve pro­vid­ing them with a ser­vice that’s more nec­es­sary – more than just pro­vid­ing a plat­form for peo­ple to adver­tise to them, you might pro­vide a way for they them­selves to do some basic finan­cial transactions”.

Libra can han­dle 1,000 trans­ac­tions per sec­ond; Bit­coin – the ready com­par­i­son in any dis­cus­sion of Libra – can only deal with sev­en. In order to move Libra around, you can use Cal­i­bra, the dig­i­tal wal­let that Face­book will imple­ment (though oth­er wal­let providers will be avail­able). Libra’s devel­op­ment will be han­dled by a Gene­va-based not-for-prof­it con­sor­tium called Libra Asso­ci­a­tion’; each of its mem­bers – there are 28 at the moment, includ­ing Face­book – has to pay $10million to join. Uber, Pay­pal, Spo­ti­fy and Mas­ter­card have done so already, and Face­book hopes that by the time Libra launch­es there will be 100 members.

When Sky News’ tech­nol­o­gy cor­re­spon­dent Row­land Man­thor­pe heard about Libra before it was announced, his first reac­tion was I don’t get it.” He texted a friend who knows about cryp­tocur­ren­cies and asked them if it was a cryp­tocur­ren­cy. The friend told him not to be ridicu­lous; one of the hall­marks of a cryp­tocur­ren­cy is that it’s decen­tralised, and a cur­ren­cy owned and oper­at­ed by Face­book is the very def­i­n­i­tion of cen­tralised”. But he realised that a seman­tic dis­cus­sion was a red her­ring; the fact that Face­book is enter­ing the mon­ey are­na was huge news, irre­spec­tive of whether or not you con­sid­er Libra a cryp­tocur­ren­cy (he doesn’t). Hav­ing lived through the last 15 years of Face­book,” he says, I nev­er under­es­ti­mate what Face­book can do.” 

In some devel­op­ing coun­tries, says Man­thor­pe, where Face­book basi­cal­ly is the inter­net and there are already prob­lems mov­ing mon­ey, Libra could be huge. But Facebook’s moti­va­tion won’t be a sole­ly altru­is­tic effort to help the unbanked: as Man­thor­pe points out, there are already com­pa­nies like Azi­mo or Trans­fer­wise try­ing to make this prob­lem eas­i­er, and Face­book could have sim­ply part­nered with them. I speak to Jonathan Taplin, author of Move Fast and Break Things: How Face­book, Google and Ama­zon Cor­nered Cul­ture and Under­mined Democ­ra­cy, and he is of very much the same opin­ion. It’s not as if there aren’t ways to deal with this prob­lem with­out hand­ing all the data over to Face­book,” he says. Imag­ine, once Face­book knows exact­ly what your bank bal­ance is and what your total net worth is, them using that on an e-com­merce platform…or sell­ing data like that so that some­body can charge you more for an aero­plane tick­et than they charge me because they know you have a big­ger bank balance.”

With Face­book, as ever, it comes down to pri­va­cy and data. Face­book claims that Libra won’t be able to use your data to sell ads if you don’t want it to. But, Man­thor­pe says, you will need to con­sent to it using your data to sell ads because it will be too dif­fi­cult to use Libra if you don’t. If you do opt in, obvi­ous­ly Face­book will then have access to your social graph and they’ll be able to see who you’re send­ing mon­ey to and why.” When I ask Face­book about this, a spokesper­son says that peo­ple can open a Cal­i­bra account with­out hav­ing a Face­book or What­sApp account, and that, aside from lim­it­ed cas­es”, Cal­i­bra won’t share account infor­ma­tion with Face­book. The lim­it­ed cas­es where this data may be shared reflect our need to keep peo­ple safe, com­ply with the law, and pro­vide basic func­tion­al­i­ty to the peo­ple who use Calibra.”

Man­thor­pe doesn’t think there’s much evi­dence that the Cam­bridge Ana­lyt­i­ca scan­dal has changed people’s deci­sion-mak­ing about the social net­work. (Face­book is expect­ed to be fined around $5billion by the Fed­er­al Trade Com­mis­sion for allow­ing a polit­i­cal con­sult­ing firm to access mil­lions of users’ data, which influ­enced the 2016 US elec­tions.) When the sys­tem works, Man­thor­pe thinks, peo­ple use it. For most peo­ple, Face­book works.

One group who are wor­ried about Libra is the US Congress…”

One group who are wor­ried about Libra is the US Con­gress, who issued Face­book with a mora­to­ri­um on July 2. The scant infor­ma­tion pro­vid­ed about the intent, roles, poten­tial use, and secu­ri­ty of the Libra and Cal­i­bra expos­es the mas­sive scale of the risks and the lack of clear reg­u­la­to­ry pro­tec­tions,” the let­ter read. As Tay­lor puts it: Gov­ern­ments might not be com­fort­able with a cor­po­rate enti­ty with a user base larg­er than the largest coun­try in the world essen­tial­ly launch­ing its own cur­ren­cy.” (The Face­book spokesper­son: We look for­ward to work­ing with law­mak­ers as this process moves for­ward, includ­ing answer­ing their ques­tions at the upcom­ing House Finan­cial Ser­vices and Sen­ate Bank­ing Com­mit­tee hearings.”)

But no one I speak to thinks that this warn­ing will make any dif­fer­ence to Face­book, and they describe the gov­ern­ment as for­ev­er being sev­er­al steps behind Sil­i­con Val­ley. Taplin goes so far as to say that this is one of the moti­va­tions behind Libra’s incep­tion: The whole rea­son to have a cur­ren­cy that is out­side the con­trol of any gov­ern­ment is so that you can do things that you don’t want gov­ern­ments to know you’re doing. If you go onto any ille­gal drug mar­ket online, what do they use? They use bitcoin.”

Con­gress doesn’t under­stand Face­book, says Den­nis Yu, a dig­i­tal mar­keter who helped build Yahoo’s ana­lyt­ics almost 20 years ago. Face­book and Google are like Coke and Pep­si, he says – laws unto their own. They’re now so big that there needs to be some reg­u­la­tion but they want to avoid it.” In Europe the reg­u­la­tors have been quick­er to clamp down on vast tech com­pa­nies; Amer­i­ca, the land of the free, is play­ing catch-up. 

I ask Yu if Face­book might be mov­ing into cur­ren­cy as a sort of plan B – in a decade, peo­ple may not post any­thing on Face­book but in the mean­time they may have become depen­dent on Libra. Yu says that it is less of a plan B and more of a grad­u­a­tion that they knew has been com­ing all along”. Years ago, Face­book saw that micro­com­mu­ni­ties were becom­ing more impor­tant and that cryp­tocur­ren­cies were tak­ing off; now, it is con­cen­trat­ing its efforts on these two areas. (“I believe a pri­va­cy-focused com­mu­ni­ca­tions plat­form will become even more impor­tant than today’s open plat­forms,” Zucker­berg wrote in March.) Besides, Yu points out, it doesn’t mat­ter if users drift away from Face­book to anoth­er net­work because Face­book, as it has with com­par­a­tive upstarts Insta­gram and What­sApp, can sim­ply buy any­one it con­sid­ers to be a com­peti­tor. As Anto­nio Gar­cia Mar­tinez points out in his book Chaos Mon­keys: Obscene For­tune and Ran­dom Fail­ure in Sil­i­con Val­ley, Face­book has two pri­or­i­ties: growth and mon­eti­sa­tion. It has been dif­fi­cult to prove that any­thing else matters.

Taplin, how­ev­er, thinks that Face­book could be wor­ried. Trust in the com­pa­ny has plum­met­ed and growth in the US has stalled. He thinks the right men­tal­i­ty for a Sil­i­con Val­ley com­pa­ny is, as the the Amer­i­can busi­ness­man Andrew Grove once said, Only the para­noid sur­vive.” To the man on the street, says Row­land Man­thor­pe, it is easy to regard colos­sal com­pa­nies like Face­book as unstop­pable behe­moths; but in real­i­ty they are like­ly to be look­ing over their shoul­der, ever-anx­ious that a new­er mod­el might replace them. There’s a lot of ambi­tion that dri­ves them,” he says, but also a lot of anx­i­ety.” This is the mind­set that cre­ates Libra: Face­book still needs to find more ways to keep peo­ple attached to Facebook. 

Tay­lor thinks that Libra could have immense ben­e­fits for the Face­book Mar­ket­place app. The app is already begin­ning to inte­grate ship­ping ser­vices into Face­book Mar­ket­place, strength­en­ing its posi­tion against retail giants like ebay and Ama­zon. But with Libra, Tay­lor explains in his blog, instead of just con­nect­ing buy­ers and sell­ers, Face­book might be able to take part in the trans­ac­tions them­selves. The fol­low­ing will depend on the lim­it­ed cas­es” in which Face­book shares users’ data but if you use Cal­i­bra to buy an adver­tised prod­uct, Face­book – and in turn the adver­tis­er – may have more infor­ma­tion about your trans­ac­tion habits, mak­ing it eas­i­er to tar­get adver­tis­ing to you.

The plat­form to which Face­book might be aspir­ing, says Yu, is WeChat, the mul­ti-pur­pose Chi­nese mes­sag­ing app used by more than one bil­lion peo­ple a month. On WeChat you do every­thing,” he says. It’s like Face­book plus AirBnB plus Google – it’s every­thing all in one.” WeChat already has a dig­i­tal pay­ment wal­let, WeChat Pay, embed­ded into its sys­tem, and the app is con­sid­ered a poten­tial com­peti­tor to giants like Visa and Mas­ter­card. When Face­book has become more like WeChat, says Yu, it will out­strip the com­pe­ti­tion. They become stick­i­er,” he says. Peo­ple will live their lives around Facebook.”

The well-doc­u­­men­t­ed role that Face­book has played in syphon­ing users into echo cham­bers, obliv­i­ous to peo­ple unlike them­selves, has made its for­mer mot­to –​‘mak­ing the world more open and con­nect­ed’ – increas­ing­ly ironic.”

Becom­ing stick­i­er, becom­ing tru­ly essen­tial, is what a com­pa­ny as ambi­tious as Face­book must aspire to. Look­ing around at the breadth of its domain and see­ing that there are very few worlds left to con­quer, it is the only option left – to grow until every­one is using it. Libra could be the gold­en tick­et to con­vert the uncon­vert­ed. Once you have a large role in the way that mon­ey moves around, then you are essen­tial,” Man­thor­pe says. If Face­book plays a big role in how we move mon­ey around, it doesn’t mat­ter if every­one stops using Face­book and moves onto a cool­er social net­work like Tik­Tok or what­ev­er – Face­book will be in their lives.”

The well-doc­u­ment­ed role that Face­book has played in syphon­ing users into echo cham­bers, obliv­i­ous to peo­ple unlike them­selves, has made its for­mer – mak­ing the world more open and con­nect­ed’ – increas­ing­ly iron­ic. It would be dif­fi­cult to say this mot­to out loud with a straight face in 2019. But Face­book has sur­vived the storms that have bat­tered its sails and it shows no sign of sink­ing. As for Libra, its fate is yet to pan out, and, as Tapli says, It’s a fool’s errand to try and pre­dict what will exist in 50 years.” But whether it flies or whether it flops like many for­got­ten Face­book ven­tures, for the time being Face­book isn’t going any­where. Its scope is too wide, its dreams too grand. To quote Taplin one last time: It’s not so easy to knock off the king.”

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