| Facebook's Crypto Dream Faces Deep Mistrust |
 | | Mark Zuckerberg, the chief executive of Facebook, will have to sell regulators on the idea of the company's cryptocurrency. Amy Osborne/Agence France-Presse — Getty Images | |
| Each week, we review the week's news, offering analysis about the most important developments in the tech industry. |
| Hi, I'm Jamie Condliffe. Greetings from London. Here's a look at the week's tech news: |
| How much trust does a company need among its customers? |
| It's nice, but it's clearly not essential. A lot of people don't trust Uber to look after its drivers or Amazon to pay taxes, but they still use their services. |
| It can often come down to a judgment call. With Facebook, until now, that has been: Do you trust it with your data enough to use the service? And for most people, the answer is still (just about) yes. |
| Soon you may have another: Do you trust Facebook with your cash and transaction history enough to use it for a bank? |
| The company on Tuesday unveiled plans for a new cryptocurrency called Libra. Due to be in use next year, the digital token's value would be tied to traditional currencies like the dollar or euro to keep it stable. |
| It would initially be used for money transfers. But one day, the company hopes, it will lead to other financial services, like loans and credit. And ultimately, Facebook would like it to become a universal digital currency for the internet. |
| Many people's first taste of Libra would be through Facebook's own financial platform, Calibra, whose app and integration with Messenger and WhatsApp could allow billions of users to make and receive payments. |
| "It's the first time we have the prospect of a cryptocurrency being accessible to so many people," said Michel Rauchs, a cryptocurrency expert at the Center for Alternative Finance at Cambridge University. |
| This could be Facebook's lifeboat if targeted ad revenues decline in the privacy-focused future that the company is pursuing in the wake of its data scandals. |
| Libra could allow Facebook to become intimately intertwined with the e-commerce industry, noted Rajesh Kandaswamy, an analyst at Gartner. From that, it could skim a healthy cut. It could also win part of the financial transactions market in developing countries. |
| Unsurprisingly, Facebook is doing what it can to gain trust for the initiative. It says it will vest control of the currency to members of the so-called Libra Foundation, which already comprises 27 companies like Visa, Mastercard, eBay, PayPal and Uber, so it will have only limited influence on how it works. And its privacy document is surprisingly extensive. |
| But there's no escaping the deep links to Facebook. The underpinning technology has been created entirely by the company. Its staff put together the Libra Foundation. Most people will experience it on the company's platforms. |
| Scratch at the documentation that describes Libra, and there's more to be skeptical about. Its promise to diffuse control — at some point in the future — relies on technology that is not yet developed. And its privacy promise says Calibra would not share financial data with Facebook except in "limited cases," but that seems to provide plenty of wiggle room. |
| It's not just journalists looking for holes: Regulators and lawmakers are skeptical, too. The Senate Banking Committee plans to scrutinize Libra at a July 16 hearing. And the Group of 7 nations is apparently planning to investigate so-called stablecoins like Libra and how they will affect financial stability and money laundering. |
| Such concerns are obviously heightened by Facebook's data privacy and election interference scandals. And now, it will ask users to accept all that and still trust it with their money and transaction records. Libra's success — maybe even Facebook's — may depend on it. |
| So, back to that question: How much trust does a company need among its customers? We're about to find out. |
| Big Tech's censorship headache |
| Feel aggrieved that a social network took down your post? Why not sue, claiming that the company provides a digital public square that's protected by First Amendment free-speech rights? |
| That's increasingly a concern for big tech companies, as demand for takedowns of troubling content swells. They had been holding their breath for the outcome of a seemingly unrelated court case about cable TV that could have made dealing with the problem harder. |
| The Manhattan Neighborhood Network disciplined two contributors after a film received complaints for allegedly inciting violence. The contributors sued, claiming that MNN violated their First Amendment rights. |
| If the contributors prevailed and a ruling was vague enough, it could have left the tech companies open to being sued, too. Even the Electronic Frontier Foundation, a digital rights group that frequently criticizes Big Tech's content moderation, thought it could be problematic. |
| "If you force platforms to not moderate speech at all, you have a free-for-all online," Sophia Cope, a senior staff attorney at the foundation, said. "There are benefits to moderated platforms," she continued — say, to create coherent, niche communities. |
| In a 5-to-4 decision this past Monday, the Supreme Court ruled that MNN couldn't face the lawsuits. Merely providing a forum for speech wasn't enough to open an organization up to free-speech rights. |
| So, Big Tech dodged a bullet. But later in the week, Senator Josh Hawley, a Republican from Missouri, proposed a bill that would dent immunity of social media platforms from liability for illegal content posted by users. The new bill would demand that companies prove their content-removal practices were "politically neutral" to maintain immunity. |
| The tech industry wasn't thrilled. "This bill forces platforms to make an impossible choice: Either host reprehensible but First Amendment-protected speech, or lose legal protections that allow them to moderate illegal content like human trafficking and violent extremism," Michael Beckerman, president and chief executive of the Internet Association, said in a statement. |
| Senator Hawley's bill is unlikely to become law. But it underscores the narrow line that social media companies have to walk as they balance free speech, moderation, regulation and legal action. |
| Some stories you shouldn't miss |
| ■ The United States has been hacking Russia's power grid. The Trump administration used new authority to deploy potentially crippling malware deep inside the Russian systems. |
| ■ YouTube is being investigated by the Federal Trade Commission over video for kids. There's a chance of a fine for the way YouTube collected data about children and allowed them to see harmful content. The company has been weighing changes to the way it handles children's videos. |
| ■ You don't want to work at a Facebook moderation center. At its worst-performing such sites in North America, one contractor has died at his desk and conditions are often unsanitary. |
| ■ Slack went public. After Slack listed its shares directly on the New York Stock Exchange, they began trading on Thursday at $38.50, valuing the company at $23.1 billion — more than triple the $7.1 billion valuation from its last funding round. |
| ■ Huawei predicts a huge hit from President Trump's attacks. Sales expectations fell to $100 billion for this year and next, from estimates of $125 billion for this year, after the company was blacklisted from trading with American businesses. |
| ■ Google pledged to help ease the San Francisco housing crisis. It will invest $1 billion in land and money to build homes in the Bay Area. |
| ■ Big Tech antitrust battles could take us back to the future. They are reviving decades-old debates about how to police competition, and some historic rulings could play out badly for big tech companies. |
| ■ Hospitals are being overwhelmed by robocalls. Some have received thousands of calls an hour. |
| ■ Social media influencers aren't even human anymore. From Calvin Klein to KFC, computer-generated celebrities are now being used to sell us stuff. |
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